SteadyOptions is an options trading forum where you can find solutions from top options traders. TRY IT FREE!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

Systematic vs. Discretionary Trading


Much of the discussion in finance is about "active" vs. "passive". Active management typically uses security selection and/or market timing to make portfolio management decisions. Passive management typically does not, instead, focusing on market risk premiums as the source of expected return. So which is better?

I personally think it's the wrong question to ask, instead, investors should determine if the approach is systematic (rules-based) or discretionary (human judgement based).

If you decide to keep it simple and buy either an S&P 500 or US Total Stock Market index fund to represent all or most of your portfolio, recognize that you've made an active management decision. This is because the US represents approximately half of the global equity market, and excluding International and Emerging Markets from your portfolio is an active bet on the US outperforming the rest of the world over your lifetime. So even buying a passively managed cap weighted index fund can be an active management decision. Perhaps only the "global market portfolio" is truly passive investing.

 

Instead, examine your personal beliefs on whether human based judgement can reliably add value over the long term vs. a well researched evidenced based investing approach that is implemented in a systematic manner. I'll disclose my bias with a quote from Daniel Kahneman:

 

image.png

 

Also, consider Ray Dalio's point of view on this topic:

 

image.png

 

If you're still not convinced, think about how you feel this month with the equity markets around the world dropping like a rock. Do you think that acting on emotions you feel during times like these will be based on well thought out long-term analysis? From my personal experience along with working with others, the answer to that question is obvious.

 

Jesse Blom is a licensed investment advisor and Vice President of Lorintine Capital, LP. He provides investment advice to clients all over the United States and around the world. Jesse has been in financial services since 2008 and is a CERTIFIED FINANCIAL PLANNER™. Working with a CFP® professional represents the highest standard of financial planning advice. Jesse has a Bachelor of Science in Finance from Oral Roberts University. Jesse is managing the LC Diversified portfolio and forum, the LC Diversified Fund, as well as contributes to the Steady Condors newsletter. 

What Is SteadyOptions?

Full Trading Plan

Complete Portfolio Approach

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Try It Free

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles

Articles

  • Using ORATS Wheel To Test Entries and Exits

    My favorite option strategy backtester is ORATS Wheel, which includes a free trial for those interested. In the Steady Momentum PutWrite Strategy (SMPW), we sell out of the money puts on global equity indexes and ETF’s while holding our collateral in short and intermediate term fixed income ETF’s.

    By Jesse,

    • 0 comments
    • 37 views
  • Estimating Delta for Calls or Puts

    Options trading relies on many estimates of value and volatility. Among these, the most useful estimate is Delta. Even knowledgeable options traders might not fully understand the “Greeks” and how they operate, especially with one another. They are directly related and are useful in making comparisons of market risk and volatility.

    By Michael C. Thomsett,

    • 0 comments
    • 200 views
  • Are Covered Calls a ‘Sure Thing?’

    Most covered call writers enjoy the regularity and reliability of the position. In the majority of cases, the covered call will be profitable, even when underlying shares are called away. This assumes that the strike is higher than the basis in the underlying, and that the call writer understands the real limitations to the strategy.

    By Michael C. Thomsett,

    • 0 comments
    • 536 views
  • Lessons from Bill Ackman's comeback

    Bill Ackman is an American investor, hedge fund manager and philanthropist. He is the founder and CEO of Pershing Square Capital Management, a hedge fund management company. Ackman is considered by some to be a contrarian investor but considers himself an activist investor.

    By Kim,

    • 1 comment
    • 1,682 views
  • Steady Futures 2019 Performance Analysis

    Steady Futures began trading the 50K portfolio in July 2019. It produced a 8.5% return during its 6 months of performance (18.0% annualized). We had three goals when we developed this system. First, we wanted a robust system that benefits from turmoil in the markets.

    By RapperT,

    • 0 comments
    • 357 views
  • SteadyOptions 2019 - Year In Review

    2019 marks our 8th year as a public service. It was a good year overall. We closed 151 winners out of 232 trades. Our model portfolio produced 41.7% compounded gain on the whole account based on 10% allocation per trade. We had only two losing months in 2019. 

    By Kim,

    • 0 comments
    • 536 views
  • Momentum 2019 Performance Analysis

    Steady Momentum had an excellent first year of publication, producing significant gains in both of the published strategies. The most popular strategy writes (sells) out of the money puts on equity indexes and ETF’s, and returned 19.1% for the year, beating our benchmark by approximately 5.5%.

    By Jesse,

    • 1 comment
    • 614 views
  • SteadyOptions 2019 Performance Analysis

    Steady Options model portfolio produced 41.7% gain in 2019. This is a very good return by any standards, but well below our long term returns. In the name of full transparency and our continuous learning, we are providing a full analysis of the 2019 numbers.

    By Kim,

    • 0 comments
    • 1,541 views
  • Anchor 2019 Performance Analysis

    Steady Options now has a full year of trading the Leveraged Anchor Account under its belt. (Technically since today is December 30, the values used herein are one day off.) To say things went as designed is an understatement - the strategy outperformed the S&P 500 in 2019 by 7.2% while being hedged.

    By cwelsh,

    • 1 comment
    • 770 views
  • A Reliable Method for Picking the Underlying

    A lot of emphasis is placed on selection of one strategy over another. Are you conservative or a speculator? Are you trying to make fast money or hedging equity positions? In fact, this is a primary concern among traders. The strategy should match the risk profile, of course. But there is much more to how and why you trade options.

    By Michael C. Thomsett,

    • 0 comments
    • 574 views

  Report Article

We want to hear from you!


There are no comments to display.



Your content will need to be approved by a moderator

Guest
You are commenting as a guest. If you have an account, please sign in.
Add a comment...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

Options Trading Blogs Expertido