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SteadyOptions 2016 - Year In Review

2016 marks our firth year as a public service. We had a good year overall. We closed 127 trades in 2016. The model portfolio produced 40.1% compounded gain on the whole account based on 10% allocation. The winning ratio was pretty consistent around 66%. We had three losing months in 2016.

Calculating ROI in Options Trading

Our readers know that our returns have been tracked by Pro-Trading-Profits, an independent third party website that tracks performance of hundreds investment newsletters. They provided an excellent explanation how to analyze and compare performance of different trading systems. 

Can Assignment Cause Margin Call?

I've had three emails in the past month on people being assigned on positions and receiving margin calls, and generally not knowing what happened. I advise everyone to completely research and become familiar with the exercise/assignment aspect of option trading. If you don't you can find your entire account blown out over a weekend.

Calculating ROI on Credit Spreads

The trigger to this article was a discussion I had with someone on Reddit. There is a common misconception about calculating gains on trades that require margin, like credit spreads and short options (naked puts/calls, strangles or straddles). I believe it is important to explain how to do it properly.

Should You Leg Into Iron Condor?

The wings of an iron condor options trading strategy consist of two vertical credit spreads; i.e., a bull put spread and a bear call spread. The process of "Legging In" offers the promise of higher yields and enhanced probabilities of options trade success, but the question is whether it is worth the risk.

Should You Add to a Losing Trade?

I'm sure most traders are familiar with this situation. You find a good setup, watch it for a while, then enter a trade, and it goes down right after you entered. Should you double down and add to your losing trade, or should you cut the loss and exit? That depends who you ask.

Top 5 Options Trading Myths

There are a lot of myths and misconceptions about options trading. Many traders refrain from trading options because they consider it too risky. The only dangerous part of options trading is the risk-insensitive trader who buys and sells options with little or no understanding of just what can go wrong.

Selling Strangles Prior to Earnings

Question from a reader: What is your opinion on a short strangle vs a short straddle? I understand the same unlimited risk will be there because you are trading naked options. I found that one strategy I have had some success with in paper trading is using short strangles around earnings to take advantage of large drops in volatility.

How We Nailed The Implied Volatility Game

Oracle (ORCL) has been following a similar pattern in the last few years. They announce their earnings date on the first week of the third month of the quarter and report during the third week of the month. Yet many times the options market "assumes" earnings during the fourth week and under-prices the third week options.

See What You Are Missing

SteadyOptions started 2017 with a bang. We closed 21 trades so far in 2017, 17 winners and 4 losers, and our model portfolio is up 19.7% so far in 2017. We left the 2016 drawdown far behind, and the model portfolio is up 140%+ since April 2016. SteadyOptions 5 year Compounded Annual Growth Rate is 83.3% (including commissions).

Profit With Non-Directional Trading

Directional and non-directional are two variations of trading strategy. Directional trading strategy is simpler, but many traders are successfully using non-directional trading strategy. Non-directional trading strategy is the best option for traders who do not want to bet on the direction of the markets or individual stocks.