(DISCUSSION) AAPL August 2013 trade

[thanitp]

I have a general question regarding with our edge in SO strategy. Would it be possible that "smart money" can outsmart us (by taking the opposite side) if our community is larger and it seems many people implement the same strategy? It may not happen with big stocks like AAPL, but would this be possible for smaller ones?

[Kim]

I have a general question regarding with our edge in SO strategy. Would it be possible that "smart money" can outsmart us (by taking the opposite side) if our community is larger and it seems many people implement the same strategy? It may not happen with big stocks like AAPL, but would this be possible for smaller ones?

If you are referring to the earnings trades, the prices of the straddles are set by market makers based on the expectations of the post-earnings move. Those expectations are set by historical moves, market conditions, company specific news etc.

 

In some cases, for less liquid stocks, there might be a temporary dis-balance, but it will be gone very quickly. 

 

That said, I'm limiting the number of SO members so we don't become too big, and closing the service from time to time to ensure that members can get the best possible fills. I don't know many services (if any) that are doing this.

[jfouche]

This seems like a spot to just add some puts to the trade and go for the 400/450 strangle.

If we never get our spike it seems set up for a RIC held through earnings,

but this is for the aggressive player only.

[thanitp]

OK, we have till Tuesday for this trade to recover, right? Do you have any backup plan for this? Even with the current price, I think the loss is substantial. If somehow stock goes down on Mon/Tue, then we're doomed.

[Kim]

Yes, if the stock goes down, not much we can do. But if IV goes up even 5 points (which still be much less than any previous cycle), the trade will be around BE even at the current stock price.

[thanitp]

Kim, you kept mentioning that it's nearly impossible that the IV stays this low. Is it true that you just compared this with previous cycles or short-term history?

 

My point is - how can one be so sure about the "cheap" IV since at the end of the day, it's just a number. It can theoretically be lower for sure, right?

 

Sorry that I don't have a more specific question to ask, but just try to open up a discussion about this. By analogy, if one trades a technical pattern, he would have a stop loss and exit without questioning. This is because technical pattern is just a statistical edge, and it's NOT 100% every time. On the other hand, it seems we stick with this IV so strongly that we refused to close the trade around breakeven a few days ago.

[Kim]

Kim, you kept mentioning that it's nearly impossible that the IV stays this low. Is it true that you just compared this with previous cycles or short-term history?

 

My point is - how can one be so sure about the "cheap" IV since at the end of the day, it's just a number. It can theoretically be lower for sure, right?

 

Sorry that I don't have a more specific question to ask, but just try to open up a discussion about this. By analogy, if one trades a technical pattern, he would have a stop loss and exit without questioning. This is because technical pattern is just a statistical edge, and it's NOT 100% every time. On the other hand, it seems we stick with this IV so strongly that we refused to close the trade around breakeven a few days ago.

In hindsight, you are absolutely correct - we should have closed it for breakeven few days ago. 

 

We trade probabilities. There is a big difference between probability and certainty. There was a high probability that IV will not stay that low, based on historical patterns. However, high probability is still not certainty, and IV did not rise as I expected. Obviously this was a bad call and we are paying the price now.

 

Many mistakes have been made with this trade, I will do a full analysis after we close the trade. 

[Guest jozsika]

In hindsight, you are absolutely correct - we should have closed it for breakeven few days ago. 

 

We trade probabilities. There is a big difference between probability and certainty. There was a high probability that IV will not stay that low, based on historical patterns. However, high probability is still not certainty, and IV did not rise as I expected. Obviously this was a bad call and we are paying the price now.

 

Many mistakes have been made with this trade, I will do a full analysis after we close the trade. 

I think the OP raises an important question. As long as we discuss underlying assumptions, for the sake of accuracy, I want to point out that (with due respect) your reply is not 100% accurate either.

 

We are _not_ trading probabilities. We are trading _statistics_. The same way as you (correctly) point out that there is a difference between certainty and probability, there is a difference between probability and statistics.

 

Long term statistics on a sample may (or may not) approach probability. There are statistical methods to determine this. I don't expect that you run full statistical analysis on your samples, but the OP's questions, i.e. that how big is your sample, how many earnings did you examine, how long did you go back in your analysis are quite reasonable. Or to put it differently: when you say that "There was a high probability that IV will not stay that low, based on historical patterns." what exactly do you mean? What is the "high probability" in the statistical sense? 4 out of 4 is 1.0, sounds pretty high, but in reality it is lower (in the statistical sense) then 99 out of 100.

 

This is by no means splitting hair or an academic question. Last year I followed one of the countless "AAPL gurus" who claimed that he could predict AAPL price action. He brought up a few technical indicators, ran a historical test on them and announced that AAPL would go up. And it did. So he was right? Not exactly. I looked out of my window. I saw my neighbor walking his dog. So AAPL would go up. And it did. This is the amazing 'dog indicator.' Unfortunately we know what happened to AAPL. (My neighbor still walks his dog. Now I apply it to GOOG. Works like a charm. :-) This is just an anecdote. I know that we are trading non-directionally! Just an illustration how misleading indicators can be.

 

Cheers,

 

--joseph

[thanitp]

I think the OP raises an important question. As long as we discuss underlying assumptions, for the sake of accuracy, I want to point out that (with due respect) your reply is not 100% accurate either.

 

We are _not_ trading probabilities. We are trading _statistics_. The same way as you (correctly) point out that there is a difference between certainty and probability, there is a difference between probability and statistics.

 

Long term statistics on a sample may (or may not) approach probability. There are statistical methods to determine this. I don't expect that you run full statistical analysis on your samples, but the OP's questions, i.e. that how big is your sample, how many earnings did you examine, how long did you go back in your analysis are quite reasonable. Or to put it differently: when you say that "There was a high probability that IV will not stay that low, based on historical patterns." what exactly do you mean? What is the "high probability" in the statistical sense? 4 out of 4 is 1.0, sounds pretty high, but in reality it is lower (in the statistical sense) then 99 out of 100.

 

This is by no means splitting hair or an academic question. Last year I followed one of the countless "AAPL gurus" who claimed that he could predict AAPL price action. He brought up a few technical indicators, ran a historical test on them and announced that AAPL would go up. And it did. So he was right? Not exactly. I looked out of my window. I saw my neighbor walking his dog. So AAPL would go up. And it did. This is the amazing 'dog indicator.' Unfortunately we know what happened to AAPL. (My neighbor still walks his dog. Now I apply it to GOOG. Works like a charm. :-) This is just an anecdote. I know that we are trading non-directionally! Just an illustration how misleading indicators can be.

 

Cheers,

 

--joseph

 

To elaborate this point further, can you first confirm that you said high probability based on just 4-5 quarters? And Why? Does that mean you just feel that this timeframe is appropriate? (I'm not saying I agree or not, just want to be clear).

 

What's more interesting, however, is how you handle "bad" candidates. I'm not here long enough to see how you drop out candidates, but I would be interested to see how? Two losses in the last two quarters and you drop it out? Did you get burned a lot by this? 

 

As a side note, I mean I assume I know how you would include a candidate you never traded before - just by backtesting and getting good results, right?

[Kim]

How many quarters back would you expect to go? 4-5 quarters represent the most relevant data. It is not feasible to go 8-10 quarters back.

 

For AAPL trade, the biggest mistake was not relying on "expected" IV spike which did not come. The biggest mistake was not adjusting when the stock moved outside the "tent".

 

As for good and bad candidates - yes, I'm looking 4 quarters back. Two losses are not enough to drop bad candidates, but two 15-20% losses probably are. 

 

The difference between statistics and probability is only the sample size. To say that I have 70% success ratio in ICs based on 10 trades - is it meaningful? Probably not. You need at least 50-70 trades to do that, but that would take 5-7 years. Is it practical? We do what we can based on historical data and practical limitations. Loss like AAPL was not necessary - even with wrong assumption about IV spike that did not happen and big swings, it could still be closed for 15-20% gain with proper adjustments.  

[Kim]

My point is - how can one be so sure about the "cheap" IV since at the end of the day, it's just a number. It can theoretically be lower for sure, right?

To elaborate on this point - I cannot be sure. It always can go lower (or not to spike as expected). However, this is once again the difference between probability and certainty. I traded VIX 8 times this year (except for the last one which is still open). I entered each time when VIX was around 13 or lower. Could it go any lower? Yes, but probability of it going higher was higher than probability of going lower. It resulted 8 out of 8 winners, with average gain of ~30%. Will it always be a winner? No, but I like the odds. 

 

Dan Sheridan likes to enter calendars when IV is at the low third of the recent 6 months range. Why 6 months? Because this is the most relevant period. Does it mean it cannot go lower? Sure it can, but the odds are it will go higher not lower. Again, probability vs. certainty.

[Kim]

Just closed the calls at 3.50. Total loss: 35%.

[Kim]

I think we need to put things in perspective.

 

First, the model portfolio does not include commissions, which I mention on every opportunity, so you should not really even try to replicate it. Second, yes, we had few bad trades, and I did a full analysis of the AAPL trade (show me another service doing that). But we need to look at the long term. Yes, we do have an edge - as long as we stay focused and manage the trades correctly. The buy-and-hold crowd do look like geniuses right now, but look at periods like August 2011, May 2012, July 2012 or April 2013 and compare SO performance with S&P 500.

 

​The AAPL, VIX and RUT losses are definitely higher than I would like, but look at the full track record and tell me how many 30%+ losses do you see. I counted less than 10 out of 460 trades. Regarding VIX loss - again, I don't remember people complained when we had 8 out of 8 VIX winners with average gain of 30%.

 

I know that people remember the pain from the losses much longer than the satisfaction from the gains, it's just a human nature. I just hope that some historic perspective might help.

[indiana*josh]

I personally don't know how long I can stay because I live the other side of the world. I have to stay to 2-3 am to make sure you no longer have alerts! This of course affects my everyday life a lot.

 

2) You said you have done a full analysis of this trade - where is that?

 

Here is Kim's analysis: http://steadyoptions.com/forum/topic/1379-aapl-calendar-trade-post-mortem/

 

Wow, you stay up until 3am doing this?  In that case, I can see where this system might not be a good fit for you.  Just for the record, even though it's been a rough 4 months, I plan to stay for awhile longer and see if I can make this work.  I haven't always been down.  I was up 15% at my highest point about two months in.  Part of my bad luck was that I doubled down on my portfolio at that point and then took a string of losses which quickly erased the gains, which were relatively smaller in absolute dollars.

Edited July 24, 2013 by indiana*josh

[Guest jozsika]

I think we need to put things in perspective.

 

First, the model portfolio does not include commissions, which I mention on every opportunity, so you should not really even try to replicate it. Second, yes, we had few bad trades, and I did a full analysis of the AAPL trade (show me another service doing that). But we need to look at the long term. Yes, we do have an edge - as long as we stay focused and manage the trades correctly. The buy-and-hold crowd do look like geniuses right now, but look at periods like August 2011, May 2012, July 2012 or April 2013 and compare SO performance with S&P 500.

 

​The AAPL, VIX and RUT losses are definitely higher than I would like, but look at the full track record and tell me how many 30%+ losses do you see. I counted less than 10 out of 460 trades. Regarding VIX loss - again, I don't remember people complained when we had 8 out of 8 VIX winners with average gain of 30%.

 

I know that people remember the pain from the losses much longer than the satisfaction from the gains, it's just a human nature. I just hope that some historic perspective might help.

First of all, thank you very much for reading all of your customers comments and taking the time for detailed replies. Much appreciated!

 

Your service is indeed of the few ones that publishes detailed track records (and I would never subscribe to a service that doesn't do that.)

 

But (sorry, there is always a 'but' :-) transparency doesn't mean realistic.

 

I am in the same boat as some of the others here (net loss since I joined) and I analyzed the data you published to figure out how to improve my results.

 

Some observations, questions and suggestions.

 

(1) You indeed emphasize that the model portfolio doesn't include commission. This is perfectly fine for a service that trades straight options or stocks or trades longer term. E.g. for the AP (that I also subscribe to) commission is only noise (as you --correctly-- point it out somewhere.) But for SO this is not true. E.g. the IBM double calendar that you mention consisted of 12 trades and generated $0.88 profit (in the model.) Commission here is significant. I think to subtract 1 cent / leg from the results would be realistic.

 

(2) The results you list are in %. Again, given that SO trades low price option combinations this is extremely sensitive to the smallest slippage. If a service (e.g.) recommends to buy AAPL (or even only MSFT) shares, sending out the trade signals (as you do, thank you for that!) over twitter , then the slippage would be insignificant. But for a complex (at least 2- but often time 4-legged), low priced and occasionally not too liquid option combination it can be significant. Do you have (and if you do, are you willing to share?) a version of your track record (or a subset, like this years trades only) where you have the actual entry/exit prices (and maybe all the 'legs', including adjustments) of the trades, instead of only the percentages?

 

(3) Related to this: I noticed (and some users also mentioned) that the trades you post, 'run away' from us. For some of these trades I noticed that the e-mail you send out follows the actual trade that you make (based on the published screenshots, again: thanks for that!) by several minutes, occasionally by half an hour. I understand that you have a _lot_ to do during the day and I also understand that your 'usual' response to this that 'in some cases you get a better fill, in some cases worse, it will zero out.' It is hard to verify this (and my experience so far that I am _behind_ you, it did not zero out -- so far.) Would you consider 'drinking your Kool aid' and check this theory yourself? I.e. send out the trade suggestions _first_ (maybe with the mid-price or limit order suggestion) and set up the trades yourself _later_. I would say, 'deterministically' later, so that we don't 'pollute' the results, e.g. always 10 minutes later, market price. This would _greatly_ improve the transparency of your model and gives us a more realistic feel about performance than just our own, individual experience and 'gut feeling.'

 

Thanks again,

 

--joseph

[Kim]

First of all, thank you very much for reading all of your customers comments and taking the time for detailed replies. Much appreciated!

 

Your service is indeed of the few ones that publishes detailed track records (and I would never subscribe to a service that doesn't do that.)

 

But (sorry, there is always a 'but' :-) transparency doesn't mean realistic.

 

I am in the same boat as some of the others here (net loss since I joined) and I analyzed the data you published to figure out how to improve my results.

 

Some observations, questions and suggestions.

 

(1) You indeed emphasize that the model portfolio doesn't include commission. This is perfectly fine for a service that trades straight options or stocks or trades longer term. E.g. for the AP (that I also subscribe to) commission is only noise (as you --correctly-- point it out somewhere.) But for SO this is not true. E.g. the IBM double calendar that you mention consisted of 12 trades and generated $0.88 profit (in the model.) Commission here is significant. I think to subtract 1 cent / leg from the results would be realistic.

 

(2) The results you list are in %. Again, given that SO trades low price option combinations this is extremely sensitive to the smallest slippage. If a service (e.g.) recommends to buy AAPL (or even only MSFT) shares, sending out the trade signals (as you do, thank you for that!) over twitter , then the slippage would be insignificant. But for a complex (at least 2- but often time 4-legged), low priced and occasionally not too liquid option combination it can be significant. Do you have (and if you do, are you willing to share?) a version of your track record (or a subset, like this years trades only) where you have the actual entry/exit prices (and maybe all the 'legs', including adjustments) of the trades, instead of only the percentages?

 

(3) Related to this: I noticed (and some users also mentioned) that the trades you post, 'run away' from us. For some of these trades I noticed that the e-mail you send out follows the actual trade that you make (based on the published screenshots, again: thanks for that!) by several minutes, occasionally by half an hour. I understand that you have a _lot_ to do during the day and I also understand that your 'usual' response to this that 'in some cases you get a better fill, in some cases worse, it will zero out.' It is hard to verify this (and my experience so far that I am _behind_ you, it did not zero out -- so far.) Would you consider 'drinking your Kool aid' and check this theory yourself? I.e. send out the trade suggestions _first_ (maybe with the mid-price or limit order suggestion) and set up the trades yourself _later_. I would say, 'deterministically' later, so that we don't 'pollute' the results, e.g. always 10 minutes later, market price. This would _greatly_ improve the transparency of your model and gives us a more realistic feel about performance than just our own, individual experience and 'gut feeling.'

 

Thanks again,

 

--joseph

You are raising valid points and I will try to address them. 

 

1) We discussed the impact of commissions many times. On average, commissions reduce return per trade by 1.2-1.4% if you trade with IB. You can do the math how this will impact the overall performance. I even mention this on the Subscribe page:

• "Impact of commissions: About 2-3% per month, depending on the broker"
• I really don't know how can I be more transparent than that.

 

2) You really cannot compare options trading with stocks, especially stocks like AAPL or MSFT. This is not a fair comparison. As for my trades - all of them come with screenshots where you can see the fills for all legs. The percentage P/L is calculated in the alert post based on those fills. Since those are real results, there is no slippage here. Again, I'm not aware of ANY service doing that.

 

3) "For some of these trades I noticed that the e-mail you send out follows the actual trade that you make" - not some but ALL trades are based on my real trades. ALL posts are posted 1-2 minutes after the actual fill, there is NEVER a half an hour delay. In addition, I always post a discussion topic first where I make the analysis and suggest an approximate price. Members always have an option to act after doing some due-diligence based on the discussion topic. Again, NO service does that. 

I'm aware that in some cases the prices will be slightly different few minutes after the alert. But it can work both ways. Today was a perfect example. I closed RUT calendar at 9.50, half an hour later the price was over 10 (it is 10.50 as I type this). V was closed at 5.50 and could be closed at 6.50 just an hour later. Members will always remember when they get worse fills than me, but will rarely mention the cases where they could do much better.

 

 

•  

[Guest jozsika]

 

You are raising valid points and I will try to address them. 

 

1) We discussed the impact of commissions many times. On average, commissions reduce return per trade by 1.2-1.4% if you trade with IB. You can do the math how this will impact the overall performance. I even mention this on the Subscribe page:

• "Impact of commissions: About 2-3% per month, depending on the broker"
• I really don't know how can I be more transparent than that.

 

2) You really cannot compare options trading with stocks, especially stocks like AAPL or MSFT. This is not a fair comparison. As for my trades - all of them come with screenshots where you can see the fills for all legs. The percentage P/L is calculated in the alert post based on those fills. Since those are real results, there is no slippage here. Again, I'm not aware of ANY service doing that.

 

3) "For some of these trades I noticed that the e-mail you send out follows the actual trade that you make" - not some but ALL trades are based on my real trades. ALL posts are posted 1-2 minutes after the actual fill, there is NEVER a half an hour delay. In addition, I always post a discussion topic first where I make the analysis and suggest an approximate price. Members always have an option to act after doing some due-diligence based on the discussion topic. Again, NO service does that. 

I'm aware that in some cases the prices will be slightly different few minutes after the alert. But it can work both ways. Today was a perfect example. I closed RUT calendar at 9.50, half an hour later the price was over 10 (it is 10.50 as I type this). V was closed at 5.50 and could be closed at 6.50 just an hour later. Members will always remember when they get worse fills than me, but will rarely mention the cases where they could do much better.

 

 

•  

 

Hi Kim,

 

(1) I did _not_ say that you disclosure about commissions is not 'transparent' What I _did_ say that b/c of excluding commissions from the results, the published results are not _realistic_. And with due respect I stick to this. The estimate that you mention is way off! 1.5% on a $0.80 profit trade is less than 1.5 cents! And the trade has at least 4 legs, in the case of the quoted IBM trade 12 legs! Nobody on this board can trade 4 (or 12) legs for 1.5 cents!

(2) My comparison to stock trading was an _illustration_ why slippage can be significant in your service. Again: I stick to this statement and asked you to give us access to $ results in addition to %. It would be easier for me to use as I could simulate 'what-if' scenarios, like 'what if I subtract 1 cent/leg for commission' or 'what-if I assume 5 cents slippage per leg', etc. I really think it would be useful.

 

(3) Members actually do mention a lot their fill price. I don't _know_ whether them mentioning worse price more than better price is caused by they ignoring the latter _or_ by simply having the latter less frequently. With my suggestion (you trade _after_ you post the signal) we wouldn't have to guess this. When this issue comes up (and it comes up quite frequently) you quote some anecdotal evidence that not _all_ of your fills are impossible to get. If you traded _after_ you post the recommendations, no such argument is needed. So I ask it again: do you _really_ believe that on the average, on the long run your results can be replicated with a 1-2-5 minute delay? If you do, then why not implement it? If you don't then how do we make $$?

Your claim that ALL (emphasis is yours) of your trades are posted in 1-2 minutes is not entirely accurate.

This alert was sent out with 13 minutes delay:

http://steadyoptions.com/forum/topic/1332-trades-jpm-july-2013-straddle/?p=22056

Another one with 13 minutes delay:

http://steadyoptions.com/forum/topic/1365-trades-amzn-august-2013-double-calendar/?p=22837

 

I am sure there are good explanation for this and I can indeed testify that _most_ (but not "ALL") of your trades are sent out with much less delay.

 

On this note here is a 4-leg trade that you set up 50 minutes apart (and sent out the alert after the _second_ part was set up):

http://steadyoptions.com/forum/topic/1245-trades-rut-june-2013-double-calendar/?p=20357

What is disturbing about this that obviously you got this fill price by legging in (and notifying us after the second entry.) Nobody questions here that _you_ are an excellent trader! But we are not here to witness your excellent trades after the fact. We are here to make $$.

 

Thanks again for listening,

 

--joseph

[Guest Pilgrim]

 

 

(3) Members actually do mention a lot their fill price. I don't _know_ whether them mentioning worse price more than better price is caused by they ignoring the latter _or_ by simply having the latter less frequently. With my suggestion (you trade _after_ you post the signal) we wouldn't have to guess this. When this issue comes up (and it comes up quite frequently) you quote some anecdotal evidence that not _all_ of your fills are impossible to get. If you traded _after_ you post the recommendations, no such argument is needed. So I ask it again: do you _really_ believe that on the average, on the long run your results can be replicated with a 1-2-5 minute delay? If you do, then why not implement it? If you don't then how do we make $$?

 

 

 

Kim...You are a sharp man with a good idea in Steady Options. That said, I humbly suggest that perhaps you aren't listening to your clients.

 

As you know, I discontinued service after 2 months because of an inability to get filled which resulted in my account being well below the posted results of SO. You responded to this by saying that _every time_ someone discontinues with SO you've found that the fault was with the subscriber and not with the SO service. I initially thought, "He's right...it must be me." After following many posts from other subscribers with similar experiences, however, this just isn't realistic Kim, and perhaps demonstrates a blind spot in my limited opinion.

 

I have found that when most people see things that I don't it's usually in my best interest to take a closer, second look. There are a lot of subscribers saying the same things here Kim. For your benefit and for the benefit of your subscribers I humbly suggest you take a closer, second look.

 

This is just the opinion of a novice trader with many blind spots of his own. 

 

Cheers!

[Kim]

 

Hi Kim,

 

(1) I did _not_ say that you disclosure about commissions is not 'transparent' What I _did_ say that b/c of excluding commissions from the results, the published results are not _realistic_. And with due respect I stick to this. The estimate that you mention is way off! 1.5% on a $0.80 profit trade is less than 1.5 cents! And the trade has at least 4 legs, in the case of the quoted IBM trade 12 legs! Nobody on this board can trade 4 (or 12) legs for 1.5 cents!

(2) My comparison to stock trading was an _illustration_ why slippage can be significant in your service. Again: I stick to this statement and asked you to give us access to $ results in addition to %. It would be easier for me to use as I could simulate 'what-if' scenarios, like 'what if I subtract 1 cent/leg for commission' or 'what-if I assume 5 cents slippage per leg', etc. I really think it would be useful.

 

(3) Members actually do mention a lot their fill price. I don't _know_ whether them mentioning worse price more than better price is caused by they ignoring the latter _or_ by simply having the latter less frequently. With my suggestion (you trade _after_ you post the signal) we wouldn't have to guess this. When this issue comes up (and it comes up quite frequently) you quote some anecdotal evidence that not _all_ of your fills are impossible to get. If you traded _after_ you post the recommendations, no such argument is needed. So I ask it again: do you _really_ believe that on the average, on the long run your results can be replicated with a 1-2-5 minute delay? If you do, then why not implement it? If you don't then how do we make $$?

Your claim that ALL (emphasis is yours) of your trades are posted in 1-2 minutes is not entirely accurate.

This alert was sent out with 13 minutes delay:

http://steadyoptions.com/forum/topic/1332-trades-jpm-july-2013-straddle/?p=22056

Another one with 13 minutes delay:

http://steadyoptions.com/forum/topic/1365-trades-amzn-august-2013-double-calendar/?p=22837

 

I am sure there are good explanation for this and I can indeed testify that _most_ (but not "ALL") of your trades are sent out with much less delay.

 

On this note here is a 4-leg trade that you set up 50 minutes apart (and sent out the alert after the _second_ part was set up):

http://steadyoptions.com/forum/topic/1245-trades-rut-june-2013-double-calendar/?p=20357

What is disturbing about this that obviously you got this fill price by legging in (and notifying us after the second entry.) Nobody questions here that _you_ are an excellent trader! But we are not here to witness your excellent trades after the fact. We are here to make $$.

 

Thanks again for listening,

 

--joseph

 

(1) Publish the results ex-commissions is the industry standard. It is not fair to expect from me to put myself in disadvantage when comparing performance between different services. Do you have experience with any service which reports say 5% per month in their performance page and you were able to make 5% on your real portfolio (unless it is a stock service)?  

 

My estimate of 1.2-1.4% is actually pretty conservative. Please look at report from pro-trading-profits:

 

 

Based on 100k portfolio and 15% allocation, they report average trade of $14,862 and average commissions of $186.82 - that's 1.25%. Based on the same commissions structure, they also report (based on 100k portfolio):

 

 

Total Net Profit/Loss      $310,421 Average Annual Profit/Loss      $143,271 Average Monthly Profit/Loss      $11,939.25

 

(2) "asked you to give us access to $ results in addition to %" - I'm not sure what you are asking here. Since all trade alerts include entry and exit prices, you can easily calculate the $ results, slippage, commissions etc. based on your portfolio size and allocation.

 

I did not say that "are _no_ other services that publish their real trade results". What I do is 1) open a discussion before doing the trade and give members heads up; 2) send the alert within 2-4 minutes of my fill 3) attach screenshots to all trades. The combination of those 3 things is what sets SO apart. Opening a discussion before the trade is equal to giving members the chance to enter the trade before I do, and many members do just that.

 

(3) I can give you dozens of examples where members mention better prices, or report gains on trades that I did not take. Out of 400+ trades you managed to find 2 which were delayed by 13 minutes, and one which was delayed by 50 minutes (please note that I specifically mentioned on the discussion topic that I'm going to enter the RUT double calendar). The reason for the delay is simple. I usually prepare the trade alert email and set a limit order. It might be hard to believe, but from time to time I need to eat and go to washroom. If my order was filled during my lunch or washroom time, the alert will be delayed by few minutes. In some cases, the price can be actually better when the alert is sent - again, I can find a LOT of examples when this happened. 

 

If you think that you are here 'to witness your excellent trades after the fact", then you are missing the whole point of SO. I want members to be full participants in what we are doing, this is why I open a discussion on EVERY trade I plan to enter so members can do a full due-diligence based on the info we provided and make their own decisions. 

 

Taking AAPL trade as an example, look at this discussion topic and see how many members did MUCH better than me on this trade.

 

I don't expect everyone to agree with me and I know that no matter how honest and transparent you are, you just cannot satisfy everyone.

[Kim]

Kim...You are a sharp man with a good idea in Steady Options. That said, I humbly suggest that perhaps you aren't listening to your clients.

 

As you know, I discontinued service after 2 months because of an inability to get filled which resulted in my account being well below the posted results of SO. You responded to this by saying that _every time_ someone discontinues with SO you've found that the fault was with the subscriber and not with the SO service. I initially thought, "He's right...it must be me." After following many posts from other subscribers with similar experiences, however, this just isn't realistic Kim, and perhaps demonstrates a blind spot in my limited opinion.

 

I have found that when most people see things that I don't it's usually in my best interest to take a closer, second look. There are a lot of subscribers saying the same things here Kim. For your benefit and for the benefit of your subscribers I humbly suggest you take a closer, second look.

 

This is just the opinion of a novice trader with many blind spots of his own. 

 

Cheers!

Here are just few examples from the recent alerts:

 

CVX: members got same fill.

 

RIG: members paid 1-3 cents higher than my fill.

 

WFM: did not enter, members reported 12% gains.

 

GRMN: one member got the same fill, another got 3% gain compared to my 5% loss.

 

ESRX: members paid 1-3 cents higher than me.

 

LNKD: I paid 2.35, the price was 2.15-2.20 half an hour later.

 

MA: I paid 2.40, many members missed it but some got filled slightly higher than my fill.

 

AMZN: most members got filled slightly higher than my fills, but also had the chance to sell higher than me.

 

V: most members got better fills than me in both the entry and the exit. Some members reported 8-10% gains, compared to my 8% loss.

 

GOOG: did not enter, members reported 32% gains.

 

NFLX: most members missed it but some got filled at prices similar to mine.

 

RUT calendar: traded lower couple hours after I entered.

 

Do we need more examples?

[Guest jozsika]

Well, I deserved this. I sent out a long e-mail and you replied in a long e-mail. Problem is that in these long e-mails somehow the essence is lost.

 

So here is a short one:

 

Are you willing to experiment with _reversing_ the order how trade alerts are sent out? I.e. _first_ you send out the alert and _next_ you trade it yourself?

 

Advantage: _real life_ proof that your recommendations _can_ be traded. The proof is YOU. Sometimes (as you said) it will be better, sometimes it will be worse. No need for anecdotes, no need to track 400 forums, etc. 

 

Disadvantage? I don't see any. Do you?

 

Cheers,

 

--joseph

[Guest jozsika]

Here are just few examples from the recent alerts:

 

[...]

 

Do we need more examples?

No, we don't.

 

As a matter of fact we don't need ANY examples.

 

We need a STRATEGY. Sending out the alerts BEFORE you trade is easy and simple and nobody can argue with timestamped alerts and trade-confirmations! One less recurring set of complaints you have to deal with! A perfect win-win!

 

What do you think?

[Guest Hal]

I've been following this discussion with great interest. Like many other "newbies", I too have struggled to replicate Kim's results. But I think the criticism I'm hearing of Kim's service is misplaced. Please let me explain.

 

The purpose of SO isn't just to follow Kim's trades. Steady Options teaches a technique that requires EACH of us to:

• Identify suitable candidates for pre-earnings straddles, strangles, and calendar trades
• Back-test trades to identify suitable risk/reward
• Monitor the trades we're stalking for optimum entry points
• Use options Greeks to track performance
• Balance risk at a portfolio-wide level

When I look at the people who have been successful here, it is clear to me that each of them has been able to take these techniques and make them their own. In fact, a number of members enter trades earlier than Kim, or take on additional trades that are NOT part of Kim's official portfolio, but are based on the same underlying concepts. For me, this has been one of the strengths of this service.
 

Now let me be honest: I've had trouble being successful with this strategy. My portfolio is down a fair bit, largely because I took an over-large position on the AAPL calendar trade, and simultaneously got in the VIX and RUT trades that were pretty bad losers. I also failed to participate in the earlier VIX calendars, and some of the more successful straddles, which would have recouped some of my losses.

 

But this is not Kim's fault.

 

As it turns out, I'm pretty lazy when it comes to back-testing. I prefer to take Kim's word for it. And unfortunately, that makes it difficult for me to make this technique my own.

 

Marty Schwartz, the famous "Pit Bull", said that his goal in his first year as a trader was to find a trading style that suited him psychologically. Each of us has to judge for ourselves whether we're up to the task of back-testing, tracking Greeks, and so on. It may be that we're not – and BTW, there's nothing wrong with that! But if all we're doing is following Kim's trades and hoping to make 100% return every year, I'm afraid we're bound to be disappointed. 

[Kim]

No, we don't.

 

As a matter of fact we don't need ANY examples.

 

We need a STRATEGY. Sending out the alerts BEFORE you trade is easy and simple and nobody can argue with timestamped alerts and trade-confirmations! One less recurring set of complaints you have to deal with! A perfect win-win!

 

What do you think?

Every member can handle the discussion topic as an alert and act on it. This is exactly the purpose of the discussion topic where I give guidelines on the trades and the suggested prices. What you suggest is a duplication of the discussion topic. In the discussion topic, I always suggest potential strategy, strikes and prices and then adjust them as we go.The whole purpose of the discussion topic is to give members a heads up what I'm about to do. As mentioned in the examples, many members take some trades that I don't. Please show me another service doing that. 

 

You need a STRATEGY?? We are talking about our strategies and how to balance the portfolio every day (unlike most other services that just send a bunch of unrelated trades).

 

What really matters is not how much SO makes, is how much you make. This is what important. I'm giving members the tools and the strategies and hopefully help them to become better traders. The rest is up to you.

[PaulCao]

Hi, 

 

In my humble opinion, trade alerts are the least valuable thing in any newsletter. Price move, liquidity in options are not so great, you are stuck in a meeting and by the time you get back to your desk, the price has moved on. 

 

For a slightly off-the-topic but relevant topic about edge and learning about trading, 

 

When I started trading, I thought the holy grail is to find an edge through some kind of statistical anomaly in complicated products or identifying the next Google. In another words, I cared a lot about trade entry. I had a huge ego and I worked with similarly full-of-themselves co-workers who had graduated from MIT to build machine-learning tools and backtesters to find the perfect conditions to enter a trade. We reasoned, "if we only if we could build the perfect correlation model between Southwest stock and Crude oil, or if the option skew is off by 0.50% in a OTM option strike in a really long-dated month, we could arbitrage this and make millions," 

 

Now the older I get, the dumber I realize that I am and I only hope to accelerate this learning of realizing how dumb I'm. I realize that I don't have the speed as the nimble high frequency trading companies who co-located their trading servers right to the exchange, my account is an speck of sand compared to the hedge fund/prop desks on Wall Street who can move mountains and my brain is a pea in comparison to the combination of econometrics/statistical analysis performed by those with Astrophysics PhD quants. 

 

I know nothing about the market and when I make a feeble attempt to guess where it's going, it's as good as a monkey's. So to protect myself from myself, I consider risk management and what-to-do after you enter a trade to be the most important. I follow about half of Kim's trades and honestly, he has had some bad trades (sorry Kim, but no one is immune to statistics).

 

But honestly his good trades/performance doesn't interest me, a monkey can guess correctly some of the time how a stock is range-bound and put on a iron condor and it'll get profitable most of the time. But the one time when it fails, it can wipe you out of the market for good. So honestly, I perk up when I see how Kim reacts to his bad trades, like the AAPL August calendar or the August RUT iron condor. There's no fun in watching someone pick up pennies in front of a slow moving steam-roller but it's more fun to see how they react when they are about to get run over - they get squashed completely or they manage a daring escape; either way, it'll be a poignant lesson for me as a bystander. 

 

More concretely, what I learned from SO is: trade adjustment, what to do when the stock moves against you; how to adjust your trade to still keep a favorable risk-reward ratio; overall portfolio management, how to balance your vega, delta positive trades against your negative one's to keep the whole porfolio as neutral as possible; thinking about risk, not to get hung up or married to a single position and learn to when to fold them and keep a steady routine of trade identification, trade management, trade exit and calm regardless of wild portfolio swings

 

Best,

PC

[Marco]

If ideally you'd want an auto trade service where someone just books profitable trades into your portfolio and you don't care to much why these trade are put on and why they make or lose money - then maybe SO is not the ideal service for you.

I think a very big part of it is to learn about options, numerous strategies and in the end be able to find your own trades and strategies that work for you and look at the number of suggestions (each discussion topic is basically a trade idea to start with) and make your own decision if and when you want to enter the trade.

Kim makes a lot of effort to educate people. I trade options since over a decade and many years I was a professional option trader and yet I still find a different angle to look at a trade or a new way to adjust here once in a while. If you are new to options and are willing to learn I think you wont find too many places where you can learn (more than) the basics and get someone to answer your questions for the price that you pay here.

In terms of performance reporting -  while I'd agree that despite the disclosures its easy to underestimate the impact of commisions on the overall SO performance I also see Kims point that literally no service is taking commisions into account. In fact there are many services who use various dodgy pratices to inflate performance. So I would say dispite the commision issue this is the most honest performance reporting I've come across! And while you might not achive the model portfolio performance I think higher double digit returns are not out of reach.

 

- find a broker with low commisions. If you have 10k in my opinion IB has the best combo of low comm and good execution but if you go elsewhere if you pay much more than 1$ a lot you'll have quite a headwind to your performance.

 

- paper trade Kims trades for a while or better do everything in 1 lot  (if you are with broker who doesn't charge a minimum trade fee) that will give you a feeling for how these trades move.

 

- in the mid term try to understand options and the strategies that Kim plays here. Then you'll be able to find your own trades or at least your own entry and exit points - Kim usually gives the price that he is targeting in each discussion topic. This way you are not chasing the entry after the alert.

[Kim]

I think that the posts from Hal, PC and Marco show how members can make the best use of SO.

 

Speaking of auto-trading - does anyone really believe that you can place your trading on auto-pilot and just make 5-7% every month with no effort? Does anyone believe that auto-trading services don't have slippage? That all auto-trading members get the same fills? And how auto-trading services report performance if some members get better fills than others, or some members don't get a fill at all?

 

Lets assume I go on the path that joseph suggests. Lets say I issue an alert with limit price. Some members get the trade at that price, but I don't. How should I report it? Should I include it in the performance or not? If I don't and the trade ends up a loser, wouldn't members complain that their performance is worse than the official one?

 

Members who think that my performance is not transparent/honest/realistic etc. should read this post and compare what we do at SO with how other services report performance.

[Guest Pilgrim]

On 8/1/2013 at 5:05 PM, Marco said:

If ideally you'd want an auto trade service where someone just books profitable trades into your portfolio and you don't care to much why these trade are put on and why they make or lose money - then maybe SO is not the ideal service for you.

 

I'm trying to put your thoughts in context Marco, but am having difficulty finding their relevance. For instance, you use the second person pronoun "you," (3x above) as if you're addressing someone specific, but you've quoted no one. I've followed this thread closely and don't see any post wherein a preference for an auto trade service is even hinted at. In the same way, what post in this thread suggests that the author doesn't care why these trades are initiated? Likewise, which comment states that an SO subscriber doesn't care about why they may make and/or lose money?

 

I think a very big part of it is to learn about options, numerous strategies and in the end be able to find your own trades and strategies that work for you and look at the number of suggestions (each discussion topic is basically a trade idea to start with) and make your own decision if and when you want to enter the trade.

 

I agree, but that's not what is being discussed here. I (and I'm probably not alone) joined this service to make money. This, in no way, diminishes the many subordinate reasons for joining. Part of the lure for joining is a very high advertised return (verified return). 

 

I don't care to learn about options or their various strategies. In fact, I just want someone to book profitable trades into my account, because I also don't care why a trade is initiated or why they may/may not make money.

[tjlocke99]

Hi, 

 

In my humble opinion, trade alerts are the least valuable thing in any newsletter. Price move, liquidity in options are not so great, you are stuck in a meeting and by the time you get back to your desk, the price has moved on. 

 

For a slightly off-the-topic but relevant topic about edge and learning about trading, 

 

When I started trading, I thought the holy grail is to find an edge through some kind of statistical anomaly in complicated products or identifying the next Google. In another words, I cared a lot about trade entry. I had a huge ego and I worked with similarly full-of-themselves co-workers who had graduated from MIT to build machine-learning tools and backtesters to find the perfect conditions to enter a trade. We reasoned, "if we only if we could build the perfect correlation model between Southwest stock and Crude oil, or if the option skew is off by 0.50% in a OTM option strike in a really long-dated month, we could arbitrage this and make millions," 

 

Now the older I get, the dumber I realize that I am and I only hope to accelerate this learning of realizing how dumb I'm. I realize that I don't have the speed as the nimble high frequency trading companies who co-located their trading servers right to the exchange, my account is an speck of sand compared to the hedge fund/prop desks on Wall Street who can move mountains and my brain is a pea in comparison to the combination of econometrics/statistical analysis performed by those with Astrophysics PhD quants. 

 

I know nothing about the market and when I make a feeble attempt to guess where it's going, it's as good as a monkey's. So to protect myself from myself, I consider risk management and what-to-do after you enter a trade to be the most important. I follow about half of Kim's trades and honestly, he has had some bad trades (sorry Kim, but no one is immune to statistics).

 

But honestly his good trades/performance doesn't interest me, a monkey can guess correctly some of the time how a stock is range-bound and put on a iron condor and it'll get profitable most of the time. But the one time when it fails, it can wipe you out of the market for good. So honestly, I perk up when I see how Kim reacts to his bad trades, like the AAPL August calendar or the August RUT iron condor. There's no fun in watching someone pick up pennies in front of a slow moving steam-roller but it's more fun to see how they react when they are about to get run over - they get squashed completely or they manage a daring escape; either way, it'll be a poignant lesson for me as a bystander. 

 

More concretely, what I learned from SO is: trade adjustment, what to do when the stock moves against you; how to adjust your trade to still keep a favorable risk-reward ratio; overall portfolio management, how to balance your vega, delta positive trades against your negative one's to keep the whole porfolio as neutral as possible; thinking about risk, not to get hung up or married to a single position and learn to when to fold them and keep a steady routine of trade identification, trade management, trade exit and calm regardless of wild portfolio swings

 

Best,

PC

 

PC - I have read a few articles with a similar sentiment - essentially efficient market theory.  HOWEVER, perhaps someone can clarify something for me.  I also read folks like Jeff Augen and a few other authors who say that small time traders can have an edge in options because lit is difficult for large institutions to trade large volumes of option shares on anything but the handful of very big underlyings (SPX, SPY, VIX, AAPL).  The latter, Augen theory, is one that I had personally put some faith in.

 

 

BTW, what I am saying isn't entirely pertinent to this conversation, but I personally have been a member from the beginning.  Kim probably doesn't remember, but I won the contest to choose the site name  

In the last 10 months or so I haven't taken a single earnings trade and only entered one IC and one calendar.  The reason I continue to pay for this site is because Kim and many of the members are responsive, kind, and honest, and I learn alot from it.  Yes this is irrelevant to the portfolio and trade alert issue, but I'd give the site 5 stars just for the knowledge and community aspects.

 

Good luck to all of you.

[Guest Pilgrim]

Every member can handle the discussion topic as an alert and act on it. This is exactly the purpose of the discussion topic where I give guidelines on the trades and the suggested prices. What you suggest is a duplication of the discussion topic. 

 

If the discussion topics were actually as you describe them here all of this would be a moot point and a "duplication of the process." The discussion topics, however, are not consistently as you suggest...unless I'm just not reading them rightly. Take AAPL for example. In the initial post you said:

 

"I'm looking to enter the August/July 450 call calendar, currently trading around 5.50...I'm looking to enter in the next few days."

 

I (call me crazy) don't see that as a suggested entry price Kim. You are merely stating where the play is currently. "In the next few days" it could be anywhere (even though you did get in at 5.50).

 

Stating where the current price is and stating a suggested entry (or even a range for entry) are two different things.

[Kim]

If the discussion topics were actually as you describe them here all of this would be a moot point and a "duplication of the process." The discussion topics, however, are not consistently as you suggest...unless I'm just not reading them rightly. Take AAPL for example. In the initial post you said:

 

"I'm looking to enter the August/July 450 call calendar, currently trading around 5.50...I'm looking to enter in the next few days."

 

I (call me crazy) don't see that as a suggested entry price Kim. You are merely stating where the play is currently. "In the next few days" it could be anywhere (even though you did get in at 5.50).

 

Stating where the current price is and stating a suggested entry (or even a range for entry) are two different things.

Matter of interpretation. When I consider the trade too expensive, I specifically say so. For example:

 

This topic is to discuss the DIS trade.

The August 65 straddle trading around $2.73 implying 4.2% move, with IV around 24%. This is slightly cheaper than previous cycles. Backtesting shows good results. I would like to see the stock slightly closer to the strike and ideally the straddle trading around 4.0% IM which is $2.60

 

OR:

 

This topic is to discuss the PCLN trade.

The straddle usually did not make money, but the monthly straddle has lost less than the weekly which makes it a good candidate for a double calendar. Historically, entering when the spread was 0.4% or less produced good results. 0.4% means 3.50-3.60 price for the double calendar (890*0.4%). Currently the prices fluctuate between 1.80-1.90 so slightly higher than I would like to see, and 8 days is too early for a stock like PCLN which can move a lot. I will probably be waiting till Thursday-Friday and watch the prices. If I can get any of the spreads around 1.50, I will be entering before. I'm referring to long August (monthly) short August week2.

 

This guidance includes: 1) Historical analysis; 2) Preferred entry price; 3) Expected time to enter.

How much more guidance could I possibly give???

[CJFerreira]

Just to throw my 2 cents in here.

 

I look at this site as an opportunity to watch a successful trader do his thing in as close to real-time as possible, with a willingness to provide insight and rationale for each trade.

 

I often see a trade discussion open up with an analysis of a trade that has not been made yet, often with a target price and strategy. Follow-on discussions may reveal further information about what makes this a good or poor possibility. This is about as close as someone can reasonably get to posting the trade before it happens.

 

I figure that I'm paying for the ability to watch over Kim's shoulder, and I hope to gain insight into what appears to be a successful trading strategy.

I've missed a lot of good trades because I was too cautious in chasing the trade. I have also missed some losers. If I can ride Kim's coattails while I learn and experiment, then I will not complain if I can't do *quite* as well as Kim. Perhaps someday I will. And that is an in-the-trenches sort of education that I am happy to have.

[Marco]

Just to throw my 2 cents in here.

 

I look at this site as an opportunity to watch a successful trader do his thing in as close to real-time as possible, with a willingness to provide insight and rationale for each trade.

 

I often see a trade discussion open up with an analysis of a trade that has not been made yet, often with a target price and strategy. Follow-on discussions may reveal further information about what makes this a good or poor possibility. This is about as close as someone can reasonably get to posting the trade before it happens.

 

I figure that I'm paying for the ability to watch over Kim's shoulder, and I hope to gain insight into what appears to be a successful trading strategy.

I've missed a lot of good trades because I was too cautious in chasing the trade. I have also missed some losers. If I can ride Kim's coattails while I learn and experiment, then I will not complain if I can't do *quite* as well as Kim. Perhaps someday I will. And that is an in-the-trenches sort of education that I am happy to have.

Thanks CJ that's basically what I wanted to say but I think you bring it much better to the point than me!

[equus]

One point worth making is that Kim can't always know what price he's going to get to enter or exit a trade, part of his approach seems to be to try limit orders at different levels until it finally gets executed.

[Kim]

No more examples needed. Point taken: if there is any need for improvement it is on the part of the subscriber.

I never said that. In fact, I made a LOT of changes over the last year. The daily update for example is one of them.

 

btw, I suggest looking at the CF discussion to see how members booked 26% and 42% in few hours based on the discussions we had. I'm not even in that trade. 

[Guest jozsika]

I've been following this discussion with great interest. Like many other "newbies", I too have struggled to replicate Kim's results. But I think the criticism I'm hearing of Kim's service is misplaced. Please let me explain.

 

The purpose of SO isn't just to follow Kim's trades. Steady Options teaches a technique that requires EACH of us to:

• Identify suitable candidates for pre-earnings straddles, strangles, and calendar trades
• Back-test trades to identify suitable risk/reward
• Monitor the trades we're stalking for optimum entry points
• Use options Greeks to track performance
• Balance risk at a portfolio-wide level

When I look at the people who have been successful here, it is clear to me that each of them has been able to take these techniques and make them their own. In fact, a number of members enter trades earlier than Kim, or take on additional trades that are NOT part of Kim's official portfolio, but are based on the same underlying concepts. For me, this has been one of the strengths of this service.

 

Now let me be honest: I've had trouble being successful with this strategy. My portfolio is down a fair bit, largely because I took an over-large position on the AAPL calendar trade, and simultaneously got in the VIX and RUT trades that were pretty bad losers. I also failed to participate in the earlier VIX calendars, and some of the more successful straddles, which would have recouped some of my losses.

 

But this is not Kim's fault.

 

As it turns out, I'm pretty lazy when it comes to back-testing. I prefer to take Kim's word for it. And unfortunately, that makes it difficult for me to make this technique my own.

 

Marty Schwartz, the famous "Pit Bull", said that his goal in his first year as a trader was to find a trading style that suited him psychologically. Each of us has to judge for ourselves whether we're up to the task of back-testing, tracking Greeks, and so on. It may be that we're not – and BTW, there's nothing wrong with that! But if all we're doing is following Kim's trades and hoping to make 100% return every year, I'm afraid we're bound to be disappointed. 

 

 

Excellent post!

 

Thank you, Hal!

 

This is definitely a perspective I didn't have when joining and when trying to follow this service (I stopped it for now.)

 

I will think about this over the weekend and will decide what to do.

 

Here are some things I will consider (YMMV):

 

I was attracted to this service based on its published and marketed performance record.

 

What you are saying now (and you may be right) that it is up to ME to replicate that performance record. [And to some extent this is what Kim says too] So (1) I will have to find and allocate the time to learn the methodology; and (2) I will need to decide --based on the Forum discussions, torrents of daily e-mails we receive, the timing of these, etc, etc-- whether this trading style fits my life style or not.

 

I don't know the answer yet to either of these questions, I will think about it.

 

But. Something for our consideration. There is no question in my mind --and there shouldn't be any in yours-- that Kim is the master of these techniques both in theory and in practice (his lifestyle.)

 

So all what any of us can hope that we approximate his results and it will take months or years!

 

In this sense the marketing material is somehow misleading (no offense!) as it somehow implies that this is the performance I can expect! Also (again: no offense) the claim that 'you lose some, you win some, but based on examples on average you make as much money as I do' is a little bit of BS (sorry!) Sure, I can match your performance, after I build up your experience and match your lifestyle! When (according to your post) all what you need an occasional pit-break and an occasional lunch-break? Well, I need a pretty constant stream of work-breaks too :-)

 

And on the practical (materialistic) side: let's assume that I take a 2 week vacation, and read everything on these forums and all Kim's articles on SA. And I learn all the things (greeks, history, etc) that you so well summarized in your post. At that point what is the value I get for $125/month? The way you paint this subscription now is something like a continuing education class and not a service at all.

 

Somehow a balancing act for Kim (and he takes both sides, at his convenience.) He can either say that "I can teach you my methodology in practice and you will be able to match my performance" -- but then why is this a service? Publish a book, charge $100 for it, I buy it, end of story. Or he can say that you need me for $125/month because without my guidance there is no way you can do this. But then I need reproducible trade recommendation and not this fishing analogies.  You can't have both ways. I think. 

 

--joseph

[Kim]

Joseph,

 

I think it really comes to expectations. I believe I'm very honest and transparent when it comes to expectations, you can read my post about expectations here.

 

So yes, SO does require time and effort commitment, and I realize it's not for everyone. Many services advertise "make 10% per month with no effort". I never did that, and if this was your expectation, then maybe SO is not for you. 

 

90% of retail traders lose money in the stock market. You know why? Because they give up too quickly. Success in trading requires long term commitment, determination and discipline. Unfortunately, many people concentrate on short term performance instead of investing in their education and build long term goals. New traders expect to make money with a new strategy after few months which is usually not realistic.

 

Getting good fills is part of the learning process. Over time when members gain more experience, they learn how to get better fills, when to chase a little bit and when to let it go. Many SO members started as complete novices and now they take the trades even before I do and get better results in some cases. But those things take time.

 

If you really believe that you can learn all we teach here from a book, then by all means, buy a book - you don't need SO. If you don't believe that SO helps you to become a better traders, then you don't need SO.

 

SO is a combination of continuing education class and a trading alerts service. It's up you what to take from it. Personally I think for all you get here $99 is a bargain (similar services charge 3-4 times that, PM me for some examples), but that's really up to you. You might also refer to this post for some thoughts about price of education.

[Kim]

On 8/3/2013 at 1:30 AM, jozsika said:

I was attracted to this service based on its published and marketed performance record.

 

In this sense the marketing material is somehow misleading (no offense!) as it somehow implies that this is the performance I can expect! Also (again: no offense) the claim that 'you lose some, you win some, but based on examples on average you make as much money as I do' is a little bit of BS (sorry!) Sure, I can match your performance, after I build up your experience and match your lifestyle! When (according to your post) all what you need an occasional pit-break and an occasional lunch-break? Well, I need a pretty constant stream of work-breaks too :-)

I guess everyone sees what he wants to see.

 

FYI, I don't have any marketing material because I don't do any marketing. If I did, I would probably have double number of members and the subscription fee would be double as well. But if you do find it misleading, then maybe SO is not for you after all.

 

Here is what I present on the subscription page:

 

What do you get when you subscribe?

•  10-15 trading ideas per month, mostly earnings trades and other non-directional strategies. 
•  Full followup, including real time entry and exit alerts, rationale behind the trade etc. 
•  24/7 access to members only forum and chatroom with dozens experienced traders. 
•  High quality education, including basic concepts, risk management, the Greeks, etc. 
•  Continuous learning and sharing resources, exploring different strategies. 
•  A full access to us. You will be able to ask questions about all aspects of options trading. 
•  Special brokerage commissions rates at ThinkOrSwim. 
•  A complete portfolio approach and not just few Iron Condors each month. 
•  Complete transparency. The performance data includes real fills, not hypothetical performance.

 

Please show me which part is misleading here.

 

On the performance page, commissions are mentioned not once but twice. They are mentioned in performance report.

 

P.S. I also believe you will have a hard time to find a similar discussion on any other service/forum (or whatever you prefer to call it). 

[Guest jozsika]

Here is what I present on the subscription page:

 

What do you get when you subscribe?


 Full followup, including real time entry and exit alerts, rationale behind the trade etc. 
 Complete transparency. The performance data includes real fills, not hypothetical performance.

 

Please show me which part is misleading here.

 

 

These two.

 

 

These two combined imply for the (non-lawyer) reader that the performance data (mentioned in the second bullet) is based on the real time entry and exit alerts (mentioned in the first bullet.) And this is not the case.

 

Yes, legally this is not so. But this is the implication.

 

You are not sending out 'real time entry and exit alerts.' You are sending out 'instant notifications and confirmation about your trades.' I am not a copywriter, but you see what I mean. And sure, the rest is accurate about rationale, education, forums, access, etc. And those (as I always said and I repeat now) much appreciated!

 

Cheers,

 

--joseph 

[Kim]

Not sure if you had a chance to read this post - I think you should. As a reminder, some other services report performance as "The highest price the option achieves is recorded as the result since this was historically what the option price reached.", among other tricks.

 

Compared to those tricks, if the only misleading part in SO is the difference between 'real time entry and exit alerts.' and 'instant notifications and confirmation about your trades.' and you think it should be defined as 'continuing education class' and not a service, I think I can live with that.

 

At this point, we will have to agree to disagree. I really prefer to concentrate on finding us the best trading setups and responding to real questions from members and not analyzing semantic mumbo jumbo. 

[Guest jozsika]

 

Ok, I read it. What is your point? Looks like those [alleged] services disclose, transparently how they report performance. (How else would you know?) You just happen to disagree with their methods. As I do with yours.

 

Compared to those tricks, if the only misleading part in SO is the difference between 'real time entry and exit alerts.' and 'instant notifications and confirmation about your trades.' and you think it should be defined as 'continuing education class' and not a service, I think I can live with that.

 

Actually, I did not say that (i.e. the "only" part). You asked me a question and I answered it. If you accept my answer (if this is what you mean by "I can live with it"), there is no disagreement.

 

At this point, we will have to agree to disagree. I really prefer to concentrate on finding us the best trading setups and responding to real questions from members and not analyzing semantic mumbo jumbo. 

 

There is no reason to insult me. Again: you asked me a question, I answered it. I don't think that reporting something _before_ it happens vs. _after_, is a "semantic mumbo jumbo." You do. Fine.

 

And yes, as Pilgrim mentioned:
 

"I don't care to learn about options or their various strategies. In fact, I just want someone to book profitable trades into my account, because I also don't care why a trade is initiated or why they may/may not make money."

[Kim]

"disclose, transparently how they report performance?"

Well, not necessarily and not always. Sometimes you have to dig really dip to find that fine print saying "The highest price the option achieves is recorded as the result since this was historically what the option price reached." And when they report return on naked put or other margin trades as return on cash (showing 1,000%+ returns when the real return is ~10%), you need to understand "return on margin" vs. "return on cash" to see how deceiving this is. Are you comparing those methods with my method of "reporting something _before_ it happens vs. _after_"? Are you really putting them in the same category?

 

It was not my intention to insult anyone. I just don't see a difference between 'real time entry and exit alerts.' and 'instant notifications and confirmation about your trades.' 

 

You also need to understand that I have to be careful how I issue my alerts/notifications. I'm not a financial adviser, so I cannot say "buy xxx at $yyy". I know that some services do that, they are breaking the law. I'm not going to do that.

 

To emphasize again how I see things:

• The discussion topic is to discuss trades, to provide as much information and guidelines as possible about the trade, to answer questions and to provide the necessary updates. In some cases there will be more information, in some cases less - the markets are dynamic and things change. Again, I'm trying my best to provide as much guidelines as possible, but sometimes there are limitations.
• The trades topic is to share my trades and to show what was possible based on the information provided in the discussions topic. Members can select to act after the discussion topic has been posted, or after the trade topic has been posted, or start with half position first and then try to get into the second one. There are a lot of options how to manage the portfolio. I cannot tell members what to do.

 

Taking the last PCLN trade as an example, I provided the following guidelines:
 

Quote

Historically, entering when the spread was 0.4% or less produced good results. 0.4% means 3.50-3.60 price for the double calendar (890*0.4%). Currently the prices fluctuate between 1.80-1.90 so slightly higher than I would like to see, and 8 days is too early for a stock like PCLN which can move a lot. I will probably be waiting till Thursday-Friday and watch the prices. If I can get any of the spreads around 1.50, I will be entering before. I'm referring to long August (monthly) short August week2.

 

This guidance included: 1) Historical analysis; 2) Preferred entry price; 3) Expected time to enter.

So Thursday arrived, the price came down to 1.70-1.80 per spread and I entered the trade.

 

Now a simple question: what additional information/guidance would you expect in the discussion topic? If the information provided was enough, and you agreed with the thesis, what prevented you to place orders at 1.70-1.80 per spread? If the information/guidance was not enough, why didn't you request more details?