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  1. Today
  2. baron2

    SteadyOptions Bundles

    Please notify me of an opening in Steadyoptions. Thank you.
  3. Yesterday
  4. Yes, the heatmap on the backtesting page. It would be great if you could include the PUT selection in the strategy area. Thank you.
  5. @poseidolginko which heatmap do you mean, on the backtesting page?
  6. Hello @Christof+. Would you be able to include a single put selection for the heatmaps? Thank you.
  7. Michael C. Thomsett

    Premium at Risk

    Premium at risk is not often brought up in the discussion of options, but it should be considered as one of many factors in identifying the true risk involved. Strategies such as covered calls tend to exhibit great variance based not only on time decay, volatility, and open interest, but also on one other factor: selection of the underlying security. Many traders tend to think of the underlying only as the vehicle for protecting option risks, or for reducing required collateral in order to enter a position. The selection of one underlying over another often defines and even sets risk levels. It is even more variable based on the covered call strategy a trader picks: Because there are so many choices, covered call strategies usually fluctuate widely from one trader to the next. Some traders opt to write long-term calls in order to eliminate the hassle of rolling their positions every month. Others choose to write significant out-of-the-money calls in order to maximize the upside potential of their portfolio. [Longo, M. (2006). Buying a young index: A new wrinkle in familiar strategy. Trader Magazine, 1] To many traders, this selection and timing of the call itself is the only variable that matters. But this means the underlying selection often is overlooked, and this is a mistake. An appreciation of the relationship between return and risk is a constant concern for trading options, but this extends beyond the option alone, and must be applied to the underlying, or the premium at risk calculation. Behavior of the underlying should be used to identify an exit strategy or when the time to roll out of danger appears. Focus only on the option easily overlooks this key analysis of risk assessment: One of the simplest exit strategies for securities is selling if the given security falls by a certain percentage. If the underlying security drops by a certain percentage, the option position is closed … there are also stay-the-course strategies such as double-up, covered call and the rollover. These strategies attempt to make the most of a bad situation by increasing the chances to recoup or limit any loss. [Elenbaas, T. & Tsou, D. (Fall 2006). Risk management for option writers. Futures, 35, 22-24] The inherent problem in the strategies designed to offset losses is that they often represent ramping up of the risk. The chances of increasing the loss rather than becoming a viable recovery strategy, involve both the option positions and the underlying. This could be taken to mean it is more conservative to take losses when they occur and free up capital to move to another position. The premium at risk extends beyond the option itself, so rolling over or increasing covered call positions, is not always reasonable. Traders also need to be aware of the risks of holding on to the underlying when the value is declining. If no options were involved, a trader might exit to cut losses, and this is a rational approach to risk management. But when option positions are open, judgment might not be as clear. A trader might stubbornly want to avoid losses and will increase option positions with the idea of recapturing paper losses. But at the same time, the underlying is losing value and the longer this continues, the worse the position might become. For analysis of how risk affects a portfolio, option traders are vulnerable. They may be analyzing impressive annualized returns from relatively limited dollar value of covered calls, for example, while ignoring what is going on with the underlying. Even if the underlying holds value without much change, is it a “good investment?” Options traders may view the underlying as a vehicle for reducing option risks, but does it make sense to keep capital tied up in a position that is not growing in value? It must be assumed that even covered call writers will prefer to see underlying equity positions becoming profitable over time. This is especially true if the covered call strategy is to write deep out of the money positions. If the underlying price moves upward and surpasses the strike, profits are possible from three sources: covered call premium, capital gains on the underlying, and dividends. This is the best of all worlds, but options traders might also tend to sabotage their original good intentions. Increasing the exposure (premium at risk) often is how this occurs. A trade is nice and profitable on a percentage basis, but the dollar amount was not that great. The next position might involve buying more shares and writing several calls, with the idea of greater dollar returns. This ignores the premium at risk, because price movement does not always move in the desired direction – as every experienced options trader knows. The real profit from options trading should take every aspect of risk and return into consideration and increasing the risk in hopes of realizing equally higher return should not be taken up in isolation. There are three factors to be brought into the assessment: The original price per share. If the underlying has appreciated in value since entry, much greater flexibility in the option is possible. This means a strike should be selected out of the money, but able to produce a respectable capital gain in the event of exercise. Options traders may avoid exercise by rolling, but it often makes more sense to take the gain and move to another trade. Price of the underlying when the trade is opened. How does this price compare to basis in the underlying? While this is an obvious factor to consider, some traders set up trades when the price is lower than basis, meaning a strike is selected poorly as well. If exercise would create a capital loss in the underlying (especially one higher than the profit on the call), this entry makes no sense. Strike of the option. The timing of the covered call matters, and the “best” available strike must be selected with the basis in the underlying in mind as well. The analysis of premium at risk should encompass risk and return, not just return. Too many traders have a blind spot about this, which explains why consistent profits often are elusive. Michael C. Thomsett is a widely published author with over 90 business and investing books, including the best-selling Getting Started in Options, now out in its 10th edition with the revised title Options. He also wrote the recently released The Mathematics of Options. Thomsett is a frequent speaker at trade shows and blogs on Seeking Alpha, LinkedIn, Twitter and Facebook. Related articles Human Nature and Option Risk Relative Yield of an Option Long Option Risks Option Payoff Probability Fundamental Volatility and Stock Prices
  8. Last week
  9. IncomeTrader1

    TrustPilot Reviews

    Can someone share any feedback about TrustPilot reviews? Seem legitimate?
  10. Guest

    Welcome to Steady Options

    Please put me on the wait list for SO. Thanks.
  11. @Alan Unfortunately, there is currently no way to display HV together with IV.
  12. @Christof+ Is there a way to see HV(30) & IV (30) on the same chart?
  13. chopperrider

    spread sell

    I placed a put option order for 10 contracts at $0.20/per with TD Canada brokerage service before the market was open. My order was never executed though the lowest published sell order was $0.11/per. Multiple sources showed $0.11/per was the lowest for that day. After a day of investigation TD got back to me saying that $0.11/per was a spread sell that was not available to me. Could anyone enlighten me what spread sell is and why it is not available to the public?
  14. Guest

    Diversified Leveraged Anchor Performance

    Hi, I am a disabled veteran and am going into Mass.General for major spine surgery. I have wanted to join this fund for 3 or 4 years now. I just think that this diversified strategy is a very smart way to go. Especially after this past spring with the virus spreading. I lost $71,000 in my 401K plan. Just not that good. The manager of this fund (steady options) really knows what he is doing. I think I will join this fund and could use some good news for a change. Have to replace our tankless water heater ( new water heater + installation =$4,000 ). I have 4 skunks under my shed, it will cost $600 to have them removed. Looking forward towards making money in this fund.
  15. One of the largest reasons for this is that different asset classes tend to outperform other classes in any given year: As well as Leveraged Anchor has performed over the past couple of years, a large part of that performance can be attributed to the S&P 500 simply performing well – a trend that may or may not continue. Given that the developers of the Leveraged Anchor strategy developed it in part on the premise of “we don’t know what the market is going to do over the next year,” diversification of the strategy only makes sense. In furtherance of this, the strategy was diversified into four different indexes: SPY – S&P 500; QQQ – Nasdaq; EFA – Large cap international excluding US and Canada; and IWM – Russell 2000 (small caps). While there is some overlap between the S&P 500 and the Nasdaq, the two indexes have had differing performances over the last decade: Given the popularity of the two indexes, we wanted to gain exposure to both. A driving factor in selecting the above instruments was volume of their option markets, as our strategy is almost entirely option driven. All four of the above are top 10 instruments in total daily option volume and number of open contracts. Liquidity should not be a major concern on any of the above except for the very largest of portfolios (and in which case there are ways to trade the indexes more directly than ETFs). Consideration was given to including real estate through a REIT or REIT ETF, but the only possible instrument identified that traded weekly options was IRY and it has fairly low option volume so was excluded. Consideration was also given to adding in commodities (such as GLD or SLV) or bonds (such as HYG) but such instruments did not perform well in testing of the Leveraged Anchor strategy – at all – in any market conditions, so such instruments were excluded. This does not mean such instruments do not have a place in a full portfolio – they absolutely do – but they just do not currently have a place in a Diversified Leveraged Anchor portfolio. Theory is one thing, but how has it worked in practice since going live? Too often in stock and option trading theory does not match reality. Fortunately, several months in, diversification has worked exactly as intended. The first EFA Leveraged Anchor position was opened on April 14, 2020. Through July 1, 2020, the underlying EFA stock position was up 8.91% and the Leveraged Anchor EFA position was up 7.28%. The first QQQ Leveraged Anchor position was opened on April 17, 2020. Through July 1, 2020, the underlying QQQ stock position was up 17.44% and the Leveraged Anchor QQQ position was up 21.64%. The first IWM Leveraged Anchor position was opened on April 28, 2020. Through July 1, 2020, the underlying IWM stock position was up 9.27% and the Leveraged Anchor IWM position was up 9.11%. Over the same general period, SPY stock was up 8.58% and the Leveraged Anchor SPY position was up 5.35%. In other words, an undiversified Leveraged Anchor position was up 5.35% while the Diversified Leveraged Anchor position was up 10.85% -- more than double the performance. Overall, each of the new Leveraged Anchor instruments has performed as expected, if not better (QQQ has done much better than expected). All three of IWM, EFA, and QQQ required the long hedge to be rolled in the first three months, which is normally a large cost item and operates as a drag on performance. And while such a drag can be seen on EFA and IWM, such drag was minimal and should balance out as the hedge is continually paid for over a full year period. In short, in the limited window of time we have diversified the Leveraged Anchor strategy, we are very pleased with the results and look to continue success over the coming months. Christopher Welsh is a licensed investment advisor in the State of Texas and is the president of an investment firm, Lorintine Capital, LP which is a general partner of three separate private funds. He is also an attorney practicing in Dallas, Texas. Chris has been practicing since 2006 and is a CERTIFIED FINANCIAL PLANNER™. Working with a CFP® professional represents the highest standard of financial planning advice. He offers investment advice to his clients, both in the law practice and outside of it. Chris has a Bachelor of Science in Economics, a Bachelor of Science in Computer Science from Texas A&M University, and a law degree from Southern Methodist University. Chris manages the Anchor Trades portfolio, the Steady Options Fund, and oversees Lorintine Capital's distressed real estate debt fund. Related articles: Anchor Trades Portfolio Launched Defining The Anchor Strategy Leveraged Anchor Is Boosting Performance Leveraged Anchor Update Leveraged Anchor Implementation Leveraged Anchor: A Three Month Review Anchor Maximum Drawdown Analysis A More Diversified Anchor Strategy
  16. cwelsh

    Anchor Trade Performance

    1. We can't recommend a broker. I know members use TD Ameritrade, Tasty Trade, Interactive Brokers, and others, but we don't recommend a particular one. 2. It's hard to predict on absolute numbers like that because with Anchor it depends on how it got there. For instance, in your first scenario, if SPY increased by 25% at a steady rate of 2.5%, the strategy will absolutely crush the return of the index. You'll gain more than 25% from the leverage and probably make well more than needed on paying for the hedge. However, if you go up 15% in a month, resulting in rolling the hedge up immediately, then slowly lose 1-2% per month for six months (thus losing consistently on your shorts), then having a 20% jump in a month to get you to your up 25%, you may end up lagging a bit. You'd still be up on the year, but probably not 25%. Generally in "smooth" up markets, this strategy is going to greatly outperform. In fast down markets its going to greatly outperform. "The worst" situation is choppy performance between +5% to -5%. 3. It's really hard to implement the strategy with less than $50k. That's simply because 3 contracts gets you close to that level. With $100k you can get a pretty good split on the short/long position. (So 7 long contracts and 3 short or whatever the math works out to be at the present moment). Once you get to the $140k or higher level, you can start looking at using the Diversified Leveraged Anchor (so adding in EFA, IWM, and/or QQQ). 4. The good time to invest is when volatility is low; of course it can be hard to predict what "low" is at any moment. Because of that we tend to price things based on cost of the hedge. We do that by taking the cost of the hedge divided by the amount of stock we currently control. Anything below 7.5% is good anything over 10% is "expensive." Yesterday when I entered some positions the cost was around 8.5% or so
  17. Shrike

    "Options on Steroids" (Cordier's last book)

    Do the investors have any kind of protection with the 'Managed accounts'? A setting or something which will prevent a naked short with unlimited risk? Thanks
  18. DubMcDub

    "Options on Steroids" (Cordier's last book)

    There's no question he didn't follow his own advice--he apparently used no risk management whatsoever on the natural gas trade that blew up his fund. Just kept selling more and more calls into the huge rally.
  19. Kim

    "Options on Steroids" (Cordier's last book)

    Not sure if you had a chance to read my article about James Cordier and his fund - here it is: James Cordier: Another Options Selling Firm Goes Bust Cordier mentioned many times that selling options is almost free money. Anyone who was reading his books and articles could see this coming. The writing was on the wall.
  20. OptionBuyers.com

    "Options on Steroids" (Cordier's last book)

    To be honest, reading the first book sort of makes sense to me. I have heard many people say that where he went wrong, is by NOT following his own advice in his own book. Though, to be even more honest, it was co-written with Gross as well. I'm not looking to get into commodities and follow suit.... I swear!
  21. 73anoldguy

    Welcome to Steady Options

    I would like to be added to the wait list on Steady options; I trade options, but only the basic puts and calls and have a small account. It be great to learn how to do things like Iron condors, various spreads, etc.
  22. Kim

    Anchor Trade Performance

    1. Commissions and execution are still important, but Anchor trades are very low commissions strategy, so it's less critical than SO strategy. 2. The following table is copied from Leveraged Anchor Implementation which was in the list I linked to. In live trading, it actually outperformed expectations, but of course there is no guarantee it will continue, so this is just an approximate estimate. 3. The model portfolio is 100k. You can do it with 50-60k, but it will be less gradual in terms of exact leverage. 140k is more appropriate if you want to implement more indexes like QQQ, IWM and EFA. 4. It's obviously better to start when VIX is in the mid teens because options you buy are less expensive. The risk to start now is that you pay more for the hedge, but then IV goes down quickly and you don't get enough premium from the sold puts to pay for the hedge. In this case the strategy will probably underperform if there is a strong rally. But you are still protected. Personally this is a risk I would be willing to take, but everyone is different.
  23. yalgaar

    Anchor Trade Performance

    Thanks @Kim & @cwelsh I am considering to invest in the Anchor Strategy and still have the following questions: 1) Which broker do you recommend for this strategy? 2) Just so I understand the dynamics of this strategy I also would like to understand what kind of ROI is expected for the following scenarios. a) SPY performed 25% annually. b) SPY performed 50% annually. c) SPY performed 5% annually d) SPY performed 10% annually. e) SPY lost 25% annually. f) SPY lost 50% annually. g) SPY lost 5% annually h) SPY lost 10% annually. 3) I have read too much information about this and find myself in information overload mode at this point. I was a bit confused about minimum funds for this strategy. I read somewhere around 50K, but I have also read 100K.....as well as like 140K to be fully diversified. Can you please explain the differences? 4) Is there a good time or not so good time to invest in this strategy? I am concerned if this is the worst time to invest?
  24. cwelsh

    Anchor Trade Performance

    Kim was on this before me -- but the way Regular Anchor was designed, it was ALWAYS going to lag the index -- because it wasn't fully invested. Our SPY position was only between 75%-90% of the portfolio, the rest was a hedge. In other words, if the strategy performed PERFECTLY, we'd still lag 10%-25%, which is why we moved to the leveraged version -- to eliminate that gap.
  25. Earlier
  26. VCTX

    Welcome to Steady Options

    Just to be safe, I'll throw this out there...I'd like to join SO when a slot becomes available. :^)
  27. yalgaar

    Anchor Trade Performance

    Thanks Kim for your super quick reply on the topic. The leveraged anchor implemented since 2019 sure seems to have outperformed SPX performance. It has also done very well in 2020 like you mentioned. I will check out the links you have sent me.
  28. Kim

    Discontinued strategies

    In January 2019, we switched from Anchor to Leveraged Anchor, to boast returns in a bull market while still providing good protection in a bear market. Here are the results of the Anchor strategy: You can see the return of the current version (the leveraged Anchor) on the performance page.
  29. Kim

    Anchor Trade Performance

    Because Anchor provides you protection. In 2020 when SPX was down 30%+ Anchor was flat, actually slightly up at some point. Before we switched to Leveraged Anchor, it was lagging the SPX by 2-3% per year on average due to some structural issues. Most members were still very happy to accept a small lag during strong bull markets, knowing that they are protected during the bear markets. Since we switched to Leveraged Anchor in 2019, the strategy actually outperformed the SPX in one of its best years, and still provided excellent protection during the 2020 bear market. More details and reading: https://steadyoptions.com/search/?tags=anchor trades&sortby=newest&page=1 To avoid further confusion, I'm going to move the historical Anchor performance to Discontinued Strategies.
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