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In the first 6 months of 2014, SteadyOptions produced non-compounded ROI of 95.3% (based on fixed $1,000 allocation per trade). The return on the whole account is 57.2% (based on 10% per trade allocation).
We closed 84 trades. Winning ratio was 65% and average return per trade 7%. The biggest loser was 31.8% and only 5 traders have lost more than 20%. We had 6 consecutive winning months in 2014.
Check out the Performance page to see the full results. Please note that those results are based on real fills, not hypothetical performance, and exclude commissions, so your actual results will be lower.
How many times did you hear the following claims:
"Our system has 90% success ratio".
"Our trades have 1 to 4 risk reward".
Lets examine those statements and see how you should put them in context and consider other parameters as well. We will use vertical spread strategy as an example.
Shares of SodaStream International rose by 25% in intraday trading yesterday on a Bloomberg News report that it is in talks with an investment firm to be taken private in a transaction that would value the Israeli home soda system manufacturer at $40 per share. What would you do if you knew the news are coming ahead of time?
I got the following email today from tastytrade:
"We Put The Nail In The Coffin On "Buying Premium Prior To Earnings"
"We look at whether or not you could make money on the implied volatility expansion leading up to an earnings announcement."
Since buying pre-earnings straddles is one of our key strategies, I went to watch the segment.
Option trading is not something you want to do if you just fell off the turnip truck. But when used properly, options allow investors to gain better control over the risks and rewards depending on their forecast for the stock. No matter if your forecast is bullish, bearish or neutral there’s an option strategy that can be profitable if your outlook is correct.
I came across an excellent post from Brian Overby, Senior Options Analyst at TRADEKING. He outlines the top 10 mistakes that new options traders make. Here are the highlights:
Over the last few years, Tesla used to report earnings during the first week of the second month of the earnings cycle (February, May, August and November). This cycle was expected to be no different. However, yesterday Tesla surprised the trading community and announced that they will report earnings on Thursday, July 31. What does it mean for the options traders?
Iron Condor is a very popular strategy used by many traders and investment newsletters. There are many variables to the Iron Condor strategy. One of the most important ones is time to expiration of the options you use. The time to expiration will impact all the Greeks: the theta, the vega and the gamma.
In this article, I would like to show how the gamma of the trade is impacted by the time to expiration.
Here are some misconceptions about credit spreads:
"One of the many drawbacks of a credit spread is that it will tie up so much capital."
“Selling credit spreads is like picking up pennies in front of a steam roller.”
"Credit spreads are different from debit spreads. One has a low probability of success, the other has a high probability of success."
I hope that after reading this article, some of those misconceptions will be cleared.
By Kim Klaiman
We are getting a lot of questions about our auto-trading program. Specifically, people want to know how it works, why we auto-trade some strategies and don't auto-trade others etc. Many members know that I was a big opponent to auto-trading, so I would like to share some thoughts about this program.
We are pleased to announce some exciting changes to the Steady Condors service effective for the next expiration cycle. We are confident that these changes will make the service even more compelling for current and potential members.
Financial crises come around every seven years on average. There was the stock market crash of 1987, the emerging market meltdown in the mid-1990s, the popping of the dotcom bubble in 2000-2001 and the collapse of Lehman Brothers in 2008. If history is any guide, the next crisis should be coming along some time soon.
At SteadyOptions, we are not trying to predict when the next crash or meltdown will come. We are just trying to be prepared for all scenarios.
We all would like all our trades to be winners, but we know this is not possible. We know some of the trades will be losers (at least I know that, I hope you don't expect all your trades to be losers).
What separates good traders from bad is how you react to your losses.
"There's a difference between knowing the path... and walking the path." - Morpheus
Many traders think that if a trade has lost money, it was a bad trade. They try to identify what errors they made that lead to losses. Why? "Because I lost money! So surely I have made a mistake somewhere?”
Was it the right conclusion? Is any losing trade necessarily a bad trade?
The Right Way to Trade Options by Mike Swanson
When it comes to options trading in order to make money you need a strategy that treats options as trading vehicles in their own right and not as mere leverage tools. But a lot of people that get into options trading do not do this.
I know because I wrote a top selling investment book titled Strategic Stock Trading and run the financial blogging site wallstreetwindow.com so I get emails from hundreds of new traders a month.
SteadyOptions continues to deliver outstanding gains. Our alerts produced a 69.2% ROI in the first quarter of 2014. That's over 40% return on the overall portfolio, based on 10% per trade allocation. We closed 45 trades, 32 winners and 13 losers. Check out the Performance page to see the full results.
Please note that those results are based on real fills, not hypothetical performance, and exclude commissions, so your actual results will be lower. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissected topic for more details.
I'm pleased to introduce an article from a well known Seeking Alpha contributor Regarded Solutions.
Regarded Solutions offers a subscription based e-mail service for investors who seek an education on portfolio management as well as watching 3 unique portfolios develop. The cost of a subscription for 2014 is only $75.00 for the whole year. These exclusive emails will not be found published on any website, they will be delivered directly to your email inbox, just for you.
Email at: firstname.lastname@example.org to subscribe today.
I'm asked many times which product is better to trade: Index options or ETF options? Is IWM better than RUT? Is SPX better than SPY? There is no simple answer to that question. If one product was superior to other, the other would not be trading anymore. There are pros and cons to each product, and this article describes different aspects of trading Index options vs. ETF options.
SteadyOptions is pleased to introduce a new addition to our products - the Long-Short Strategy. This strategy is offered as a managed product only in the form of a managed account or auto-trade. The LS strategy can be auto-traded through Lorintine Capital as part of a Steady Condors subscription for $10,000-120,000 accounts. For accounts larger than $120,000, it can be implemented in a managed account.
The strategy is a combination of multiple non-correlated models designed to take advantage of the intermediate to longer term supply and demand realities of the markets through actively risk managed exposure to traditional, leveraged, and inverse mutual funds and ETF’s.
A calendar spread is a strategy involving buying longer term options and selling equal number of shorter term options of the same underlying stock or index with the same strike price. Calendar spreads can be done with calls or with puts, which are virtually equivalent if using same strikes and expirations. They can use ATM (At The Money) strikes which make the trade neutral. If using OTM (Out Of The Money) or ITM (In The Money) strikes, the trade becomes directionally biased.
The maximum gain is realized if the stock is near the strike at expiration of the short option. If this happens, the short options will expire worthless but the long option will still have value. How much value? Depends on IV (Implied Volatility) at that moment.
A while ago I got an email from one of my Seeking Alpha readers. He told me that he is a big fan of my articles and asked how he can learn more. He wanted to make it his new career. He asked me if I can recommend any books or internet sites to learn/practice the options strategies. Then he said that he is new to trading options, he set aside a small amount of money in hopes of doubling it at least yearly.
Don't you find it amazing? The guy admits he is new to options, but wants to double the account "at least yearly".
For those not familiar with the straddle strategy, it is a neutral strategy in options trading that involves the simultaneously buying of a put and a call on the same underlying, strike and expiration. The trade has a limited risk (which is the debit paid for the trade) and unlimited profit potential. If you buy different strikes, the trade is called a strangle.