Leaderboard

As I’ve done the past few years, I’ve broken down the Steady Options 2017 trade performance by trade type. Here’s are this year’s stats along with some comments from my perspective. Where applicable, I added totals from prior years for comparison... Pre-Earnings Calendars 2017: 31 Trades – 26 win, 5 loss (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: Again one of our best performing trade types, as it has been for multiple years. Number of trades down a bit from last year, seemed a bit tougher to find good entry prices overall this year. Win rate comparable to prior years, and very high. Pre-Earnings Straddles/Strangles 2017: 77 Trades - 61 win, 16 loss (79% win) – Average Gain +5.02% Breaking down further by hedged and non-hedged: Hedged – 28 win, 6 loss (82% win), average gain +6.01% Non-Hedged – 33 win, 10 loss (77% win), average gain +4.24% 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: Trade count spiked up significantly this year as hedged straddle trades (beginning in 2nd half of year) gave a lot more trade opportunities. Highest percentage of winning trades ever. Very low risk trades as it takes RV levels going much lower than prior cycles for these trades to be significant losers (only 4 of 77 trades has losses over -10%). No reason to limit the number of these trades that you have on at the same time as big market upturns/downturns will help these trades but they can also be winners during normal market times. Initially, there was some fear that the short hedges may hurt overall performance but thankfully this was not the case as the win% and average gain were both higher than the non-hedged trades. Index trades (RUT, SPY, SPX, TLT) 9 Trades – 8 win, 1 loss (89% win) – Average Gain +19.72%. 2016: 27 Trades (67% win) – Average Gain +3.01% Comments: RUT Broken Wing Condor: 3 win, 1 loss, average gain +6.10% TLT Iron Butterflies: 5 win, 0 loss, average gain +30.62%. Great trade idea on this one. Kudos to @SBatch on this idea, I believe. Longer duration trades, typically open for 30-60 days. VIX-based trades 16 trades – 12 win, 4 loss (75% win) – Average Gain +9.25% Breaking down further by trades for contango and those playing for VIX spikes: Contango (VXX/SVXY) – 10 win, 0 loss (100% win), average gain +29.70% VIX spike – 2 win, 4 loss (33% win), average loss -24.83% 2016: 16 trades (56% win) – Average Gain +1.34% Comments: Those trades playing for the continued low volatility were some our best performing trades with 100% wins and average gain near +30%. Those trades playing for VIX spikes were our worst performers – low win% and average loss of near -25%. I view these trades primarily as portfolio hedges, so in that respect the losses are kind of acceptable to me. Other may not view these trades as hedges – but after multiple years of a flat/declining VIX will a small number of upward spikes (and spikes to VIX levels still below 20) saying we are due for a larger VIX spike and opening trades for it sounds foolish to me. I’m sure such a spike will happen at some point in time, but many people have lost a lot of money over the past few years playing for such a large and prolonged spike. Other Trades A few post-earnings Iron Condors on FB were both successful at around +30% gains. These trades played for stock price to stay relatively stable after earnings. I’d like to see more of these trades in the future as there appear to be quite a few stocks that have a tendency to stay calm after earnings. The one caveat being that we can’t go overboard and have too many of these open at the same time because large overall market moves can really hurt these trades (unlike straddle trades where such overall market moves will help).

I just wanted to say thank you and Happy New Year to @Kim and all the mentors and other SO members who have given so much of their time answering my questions and guiding me. It really is appreciated and i look forward to an even greater 2018 with Steady Options!

Thank you @Kim, @SBatch , @Yowster and all others members. I started trading in January and used mulitiple services. Happy I was able to find this service as I enjoy this style of trading a lot.

Happy New year to all members! Thank you so much for being part of our community and making it what it is!

Thanks all for sharing your thoughts. I'm most interested in selling options on commodities, as I believe it gives you more room to be wrong than straight futures - we all know the dismal record of retail commodity investors! It also provides diversification away from US equities, which is very appealing. I was particularly influenced by the book The Complete Guide To Option Selling. The authors write at length about the virtues of selling options on commodities as opposed to equities: Diversification Lower margin requirements (obviously, this is to be treated with extreme care) The ability to sell much farther OTM options for an equivalent amount of premium compared with equities I found their case to be pretty compelling. I've done a number of these trades and have read a ton of materials but am doing it in a vacuum - the ability to discuss and exchange ideas with talented traders (who actually trade, rather than just talk) is just so important and something that can't really be replaced through research.

i will offer my 2 cents on the commodities topic. i welcome comments from @RapperT and @cuegis two members with experience in futures. After a year of trading grain futures, i thought i understood the grains. Five years later, i realized i still had a lot to learn. 40 years later- the grains still surprise me at times. there are too many factors effecting price for me to go into detail. i have no intention to open any dialogue with members- i just say do not invest anything you cannot afford to lose.

I have extended the 50% coupon for those of you that are still interested.

We are close to launching a service that fits this bill. We approach our futures trading from a trend/momentum perspective and have a few mean reversion strategies as well.

I'm asked many times how I choose between Straddle, strangle or RIC for my pre-earnings plays. It's always a balance between risk/reward. As we know, those trades are supposed to be sold before earnings. They benefit from IV jump and/or price movement. The biggest (and basically the only) enemy is the negative theta. When buying a strangle, we are buying calls and puts with different strikes. The strangle will have the largest negative theta (as percentage of the trade value, not absolute dollars). Further you go OTM, the bigger the negative theta. If the stock moves, the strangle will benefit the most. If it doesn't it will lose the most. I found that if I have enough time before expiration, deltas in the 25-30 range for both puts and calls provide a reasonable compromise. For lower priced stocks, I would prefer a ATM (At The Money) straddle (buying the same strikes). For example, strangle on a $20 stock might be very commissions consuming, plus the negative theta might be too big. Please note that when I'm talking about the theta being larger or smaller, I'm always referring to percentages, not dollar amounts. In absolute dollars, the theta is always be the largest for ATM options. However, since those options are also more expensive in dollar terms, percentage wise the theta will be the smallest. For higher priced stocks (over $100) I will usually do RIC. Since you sell a further OTM strangle against the purchased strangle, this reduces the theta of the overall position. It might be the least risky position and still benefit from IV jump like AMZN trade. I prefer to have spreads of $5 for RIC. Since I don't know what will happen with the stock I play, I prefer to have a mix of all three. In case of a big move, strangles will provide the best returns. When IV is low, RIC will provide some protection against the theta while still having nice gains from time to time. Remember: those are not homerun trades. You might have a series of breakevens or small losers, but one down day can compensate for the whole month. This is why I want to be prepared when it happens. In August I had 4 doubles in two days (but I played mostly strangles). Generally speaking, RIC is the most conservative trade due to lower negative theta (the sold strikes reduce the negative theta). But if the stock moves sharply, strangle will produce the highest gains. It also might lose the most if the stock doesn't move and IV increase is not enough to offset the theta. Let me know if you have any questions. This post has been promoted to an article