Popular Post Yowster Posted December 28, 2020 Popular Post Posted December 28, 2020 As I’ve done the past few years, I’ve broken down the Steady Options 2020 trade performance by trade type. Numbers were taken directly from the data in the Performance screen. Here’s are this year’s stats along with some comments from my perspective. Where applicable, I added totals from prior years for comparison... A note on prior year comparisons. 2020 was a year unlike any other in recent history so any comparison to other years will certainly have an apples vs oranges aspect to it – prior to 2020 we went through 8 years where the VIX barely got above 20, and when it did it only stayed there for a few days at most, this year we’ve had VIX above 20 for ~10 months straight with some historic highs as well. Pre-Earnings Calendars 33 Trades – 28 win, 5 loss (85% win) – Average Gain +21.97% 2019: 54 trades (65% win) – Average Gain +9.27% 2018: 40 trades (78% win) – Average Gain +9.61% 2017: 31 trades (84% win) – Average Gain +13.81% 2016: 44 trades (80% win) - Average Gain +15.07% 2015: 51 trades (80% win) – Average Gain +12.67% 2014: 48 trades (71% win) – Average Gain +13.80% 2013: 24 trades (88% win) – Average Gain +20.60% Comments: Lower number of trades this year, as high market volatility made finding good entry levels difficult (25 of 33 trades were made in the first 2 months of the year before Covid hit). The trades we did make had a very high win/loss percentage and the highest average gain we’ve had since we started using these trades. Contribution was very positive on overall portfolio performance. Straddles/Strangles (earnings and non-earnings) 118 Trades - 76 win, 42 loss (64% win) – Average Gain +2.80% Breaking down further by hedged and non-hedged: Hedged – 48 win, 24 loss (67% win), average gain +2.68% Non-Hedged – 28 win, 18 loss (61% win), average gain +2.99% 2019: 106 trades (68% win) – Average Gain +3.58% 2018: 72 trades (83% win) – Average Gain +5.40% 2017: 77 trades (79% win) – Average Gain +5.02% 2016: 18 trades (72% win) – Average Gain +5.19% 2015: 44 trades (68% win) – Average Gain +2.61% 2014: 74 trades (62% win) – Average Gain +2.54% 2013: 104 trades (57% win) – Average Gain +1.35% Comments: We did a lot of non-earnings hedged straddle (NEHS) trades this year during periods of elevated volatility, but to separate those will require a deeper dive into the data. So, for now, this data has all straddle trades grouped together, both earnings and non-earnings. It's safe to say that the NEHS trades had both bigger winners and bigger losers. Hedged straddle winning percentage was a tiny bit lower than prior years, but average gain per trade was down a bit more. Given the large volatility swings this year, I think we had some larger than normal losing trades when volatility dropped more than anticipated – part of trading in a year like this. Very low risk trades as it takes RV levels going much lower than prior cycles for these trades to be significant losers – although we did see a few of those this year. I am not surprised that the average gain for all straddles (hedged and non-hedged) is lower, as this is a result of short-term straddle trades held open for only a few days. The positive aspect of this is we were able to open more trades, so when you multiply the average gain x number of trades the positive contribution to the overall portfolio performance was good and in line with prior years. Index trades (TLT, EEM, SPY, UNG, USO, EEM) 19 Trades – 12 win, 7 loss (63% win) – Average Gain 9.54%. 2019: 20 trades (60% win) – Average Loss -7.71% 2018: 22 trades (86% win) – Average Gain +15.35% 2017: 9 Trades (89% win) – Average Gain +19.72% 2016: 27 Trades (67% win) – Average Gain +3.01% Comments: Longer duration trade with many big winners and big losers, many more big winners than big losers so average gain was very good. Reverse Iron Condor (RIC) trades 6 trades – 4 win, 2 loss (67% win) – Average Loss -5.17% 2019: 13 trades (62% win) – Average Loss -4.39% 2018: 7 trades (100% win) – Average Gain +30.96% Comments: One big loser offset the winners. Switched to NEHS setups instead of RIC trades, as downside risk is lower with NEHS setup. Ratio Trades 10 trades – 7 win, 3 loss (70% win) – Average Gain +2.50% 2019: 28 trades (64% win) – Average Gain +2.01% Comments: Trade count was lower, due to not finding good entry levels with elevated volatility for much of the year. We’d like to do more of these in 2021, especially for stocks who have stock rising tendencies into earnings. We’ve learned a lot about different hedging scenarios as we’ve done more of these trade. Other Trades 7 other trades than had an average loss of -8.46%. Nothing significant to note regarding them. Summary 2020 Steady Options model portfolio is likely to be around +120% for the year, so a very good return. Key to this was avoiding any big losing months, which was a significant accomplishment given the huge market swings this year. This year was one when our traditional bread & butter trades were not possible for a larger percentage of the year due to the very high market volatility. We adapted the best we could and avoided entering trades just for the sake of entering them. We had some bigger winners and bigger losers compared to prior years – but that is to be expected given the volatility. I hope 2021 returns to more normal market behavior where we can get back to our standard trades. I’d like to highlight and thank the SO community. We really have a bunch of very smart people who share their ideas and knowledge – this is what makes SO great. This year saw the development and enhancement of many different trade analysis tools put together by members and shared with the community. These things really do have a big impact on making trade analysis easier. Looking forward to a great, and hopefully more normal, 2021 2019 Year End Performance by Trade Type 2018 Year End Performance by trade type. 2017 Year End Performance by Trade Type 2016 Year End Performance by Trade Type 2015 Year End Performance by Trade Type 5 6 5 Quote
Kim Posted December 29, 2020 Posted December 29, 2020 Thank you @Yowster Great analysis as usual. And now we have a full bear market in our track record, and we proved once again that "making money in any market" is not just a mantra, but a reality for us. 9 straight years of outsized gains, with very few drawdowns. I'm not sure there is another service that can show results that come even close. Please remember that 2020 was a very unusual year. With volatility declining pretty constantly since April but still pretty high, it was a tough environment for our strategies. Hopefully the markets will return to more normal environment in 2021. I would like to take this opportunity and thank everyone for your support, and wish you and your families Happy and HEALTHY 2021! 2 2 Quote
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