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Steady Options 2013 - Year In Review


2013 marks our second year as a public service. Overall, we had an excellent year. We closed 186 trades in 2013 which produced 91.7% ROI, based on fixed $1,000 allocation per trade (non-compounded) and 6 trades open. The winning ratio was pretty consistent around 60%. We had only two losing months in 2013. Check out the Performance page to see the full results. Please note that those results are based on real fills, not hypothetical performance.

Performance dissected

 

It is important to mention that those numbers are pre-commissions, so actual results will be lower. As with every trading system which uses multi leg trades, commissions will have a significant impact on performance, so it is very important to use a cheap broker. We have extensive discussions about brokers and commissions on the Forum (like this one) and help members to select the best broker. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissected topic for more details. Depending on your commissions and allocation, the return on the total account including commissions would be in the 50-60% range in 2013.

 

eptember-October was our worst losing streak since inception. We let few trades to get out of control and the losses were higher than we would like. We expect to have a better risk management going forward.

 

Our strategies

 

SteadyOptions uses a mix of non-directional strategies: earnings plays, Iron Condors, Calendar spreads etc. The pre-earnings strategy is based on my Seeking Alpha articles ‘Exploiting Earnings Associated Rising Volatility’ and ‘How To Rent Your Options For Free’. This strategy aims for consistent and steady gains with holding period of 2-7 days.

 

SO model portfolio is not designed for speculative trades although we might do some in the speculative forum. SO is not a get-rich-quick-without-efforts kind of newsletter. I'm a big fan of the "slow and steady" approach. I aim for many singles instead of few homeruns. My first goal is capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come.

 

We continue expanding the scope of our trades beyond the earnings trades, Iron Condors and calendars. We started trading SPY, GLD and VIX and added the double calendar as an additional earnings strategy. We also started trading weekly trades to boost the returns. We will continue refining those strategies to get even better results. This gives members a lot of choice and flexibility.

 

Looking at specific strategies, VIX calendars and pre-earnings calendars were big winners in 2013. VIX put calendars produced 7 out of 7 winners with average return of 35%. Pre-earnings calendars produced 20% average return with 88% winning ratio. Due to low IV environment, the earnings straddles did not perform as well, but still produced overall positive returns. We will continue trading what works the best and adapt to the market conditions.

 

What makes SO different?

 

First, we use a portfolio approach, that may include a variety of non-directional strategies. We balance the portfolio in terms of options Greeks. The earnings trades are vega/gamma positive and theta negative. To balance them we might open calendars, Iron Condors or butterfly trades which are theta positive. We might use a mix of different expirations to balance the gamma.

 

Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently.

 

Our performance reporting is completely transparent. All trades are listed on the performance page, with the exact entry/exit dates and P/L percentage.

 

We place a lot of emphasis on options education. There is a dedicated forum where every trade is discussed before the trade is placed. We discuss different strategies and potential trades. Unlike most other services that just send the trade alerts, our members understand the rationale behind the trades and not just blindly follow the alerts. SO actually helps members to become better traders.

 

New services

 

In 2013 we launched two new services:

  • Anchor Trades - Stocks/ETFs hedged with options for conservative long term investors.
  • Steady Condors - Hedged monthly income trades managed by the Greeks.

 

We will have separate posts discussing those services. We intend to start auto-trading the Steady Condors soon, and we also offer Managed Accounts for those two services. You can read about all the different options here.

 

Let me finish with my favorite quote from Michael Covel:

 

"Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between."

 

Subscription is now open to new members for a limited time.

 

Happy Trading from SO!

 

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