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  1. Here are just a few of the shattered risk-related records, a sample of 3 each for the Dow and S&P: Dow: Dow Industrials intraday volatility, lowest on record (95% of days in 2017 had less than a 1% Dow intraday move) Dow Industrials greatest number of days in history without a 1% move (72) Dow Industrials closed at new all-time highs a record 71 times in 2017 S&P 500: S&P 500 annualized volatility of 3.9%, lowest on record S&P 500 Total Return Index gained in every month of 2017, and ended the year at a record 14 consecutive up months S&P 500 ended the year with a record 289 consecutive days without a 3% pullback VIX: Lowest intraday level in history (8.84 on 7/26/17), Lowest daily close (9.19 on 10/5/17), Lowest weekly close (9.36 on 7/17/17), and Lowest monthly close (9.51 on 9/29/17). 2017 also serves as a reminder that future is unknown. Nobody was predicting this to be the least volatile year in modern history. They were predicting just the opposite, in fact, even after the year had already begun… Additionally, US equities have now posted positive returns for nine straight years, tying the record from 1991-1999. I could go on and on, but you get the idea. Some years from now, we'll look back and agree that 2017 was the "exception that proves the rule," and that risk indeed still exists, and must be dynamically managed for long-term success. In my firm, all of our strategies include dynamic risk management, either in the form of option hedging with our Anchor strategy or with trend following rules that react to weakness in equity prices by partially or entirely exiting positions to protect capital. After all, do we demand that the fire department be disbanded as a waste of time and money when a neighborhood experiences a year with no fires? Jesse Blom is a licensed investment advisor and Vice President of Lorintine Capital. He provides investment advice to clients all over the United States and around the world. Jesse has been in financial services since 2008 and is a CERTIFIED FINANCIAL PLANNER™. Working with a CFP® professional represents the highest standard of financial planning advice. Jesse has a Bachelor of Science in Finance from Oral Roberts University. Jesse is managing the LC Diversified portfolio and forum, the LC Diversified Fund, as well as contributes to the Steady Condors newsletter.
  2. Keep in Mind, Stocks Rose 1,100-fold During This Period From Morgan’s article: The S&P 500 rose 1,100-fold over the last 70 years, including dividends. But look what happened during that period: May 1946 to May 1947. Stocks decline 28.4%. A surge of soldiers return from World War II, and factories across America return to normal operations after years of building war supplies. This disrupts the economy as the entire world figures out what to do next. Real GDP declines 13% as wartime spending tapers off. A general fear that the economy will fall back into the Great Depression worries economists and investors. June 1948 to June 1949. Stocks decline 20.6%. A world still trying to figure out what a post-war economy looks like causes a second U.S. recession with more demobilization. Inflation surges as the economy adjusts. The Korean conflict heats up. June 1950 to July 1950. Stocks fall 14%.North Korean troops attack points along South Korean border. The U.N Security Council calls the invasion “a breach of peace.” U.S. involvement in the Korean War begins. July 1957 to October 1957. Stocks fall 20.7%. There’s the Suez Canal crisis and Soviet launch of Sputnik, plus the U.S. slips into recession. January 1962 to June 1962. Stocks fall 26.4%. Stocks plunge after a decade of solid economic growth and market boom, the first “bubble” environment since 1929. In a classic 1962 interview, Warren Buffett says, “For some time, stocks have been rising at rather rapid rates, but corporate earnings have not been rising, dividends have not been increasing, and it’s not to be unexpected that a correction of some of those factors on the upside might occur on the downside.” February 1966 to October 1966. Stocks fall 22.2%. The Vietnam War and Great Society social programs push government spending up 45% in five years. Inflation gathers steam. The Federal Reserve responds by tightening interest rates. No recession occurred. November 1968 to May 1970. Stocks fall 36.1%. Inflation really starts to pick up, hitting 6.2% in 1969 up from an average of 1.6% over the previous eight years. Vietnam War escalates. Interest rates surge; 10-year Treasury rates rise from 4.7% to nearly 8%. April 1973 to October 1974. Stocks fall 48%.Inflation breaks double-digits for the first time in three decades. There’s the start of a deep recession; unemployment hits 9%. September 1976 to March 1978. Stocks fall 19.4%. The economy stagnates as high inflation meets dismal earnings growth. Adjusted for inflation, corporate profits haven’t grown for eight years. February 1980 to March 1980. Stocks fall 17.1%. Interest rates approach 20%, the highest in modern history. The economy grinds to a halt; unemployment tops 10%. There’s the Iran hostage crisis. November 1980 to August 1982. Stocks fall 27.1%. Inflation has risen 42% in the previous three years. Consumer confidence plunges, unemployment surges, and we see the largest budget deficits since World War II. Corporate profits are 25% below where they were a decade prior. August 1987 to December 1987. Stocks fall 33.5%. The crash of 87 pushes stocks down 23% in one day. No notable news that day; historians still argue about the cause. A likely contributor was a growing fad of “portfolio insurance” that automatically sold stocks on declines, causing selling to beget more selling — the precursor to the fragility of a technology-driven marketplace. July 1990 to October 1990. Stocks fall 19.9%. The Gulf War causes an oil price spike. Short recession. The unemployment rate jumps to 7.8%. July 1998 to August 1998. Stocks fall 19.3%. Russia defaults on its debt, emerging market currencies collapse, and the world’s largest hedge fund goes bankrupt, nearly taking Wall Street banks down with it. Strangely, this occurs during a period most people remember as one of the most prosperous periods to invest in history. March 2000 to October 2002. Stocks fall 49.1%. The dot-com bubble bursts, and 9/11 sends the world economy into recession. November 2002 to March 2003. Stocks fall 14.7%. The S. economy puts itself back together after its first recession in a decade. The military preps for the Iraq war. Oil prices spike. October 2007 to March 2009. Stocks fall 56.8%. The global housing bubble bursts, sending the world’s largest banks to the brink of collapse. The worst financial crisis since the Great Depression. April 2010 to July 2010. Stocks fall 16%. Europe hits a debt crisis while the U.S. economy weakens. Double-dip recession fears. April 2011 to October 2011. Stocks fall 19.4%. The U.S. government experiences a debt ceiling showdown, U.S. credit is downgraded, oil prices surge. June 2015 to August 2015. Stocks fall 11.9%. China’s economy grinds to a halt; the Fed prepares to raise interest rates. ____________________________________________________________ I like Morgan’s article, it reminds us that economic uncertainty has always been a regular part of the past along with frequent corrections (10%+ declines) and deep bear markets (20%+ declines). His intention is to help us have a long term perspective. Many times throughout the past seven decades, “this has never happened before”. Yet the US continued to show its strength and resiliency. For some, this is effective. For others, they need something more to help them follow their plan. Dual Momentum In the equities portion of our dual momentum model, we rotate among US Large, US Small, and International stocks based on twelve month relative strength momentum[2]. When all three asset classes have negative absolute momentum[3], we switch into bonds. The idea here is to earn the risk premium in stocks with less exposure to the downside volatility and bear market drawdowns that frequently have occurred in the past and will frequently occur in the future. We emphasize less in an effort to promote proper expectations. Empirical data suggests that dual momentum can be used to earn higher returns with less risk than buy and hold, but it’s not a Holy Grail. Holy Grail strategies tend to fall apart in real time because they were over fit to a limited amount of past data with no economic argument to support why they work. Researchers refer to this as data-mining. With dual momentum, we believe having a proven rules-based method in place to exit equities ahead of the majority of major bear market declines can be all that is needed to help investors have the confidence to stick with their strategy for the long term. And the right strategy for every investor is the one they will stick with. This is key. Since Morgan is using data since 1946, we thought it would be fun to look at showing our dual momentum equities model during this same period (note: international is excluded in this example due to lack of data prior to 1970 although we use it in our actual trading model). Here are a few things to take notice of on both the chart and in the statistics. On the chart, it’s important to notice that our dual momentum approach did NOT outperform an equal weighted buy and hold portfolio in the first thirty years, but slightly lagged or matched buy and hold for most of the period. Thirty years is the investment time horizon for many investors, not seventy. If only relative strength momentum would have been used during this period, outperformance would have occurred. Absolute momentum, or trend following momentum, will take you out of the market at times when doing nothing would have ended up being the better short term outcome. We call these whipsaws, and they are expected as a short term price to pay for risk management that can allow us to sidestep the majority of painful bear market drawdowns. Over the long term, relative strength and absolute momentum tend to contribute fairly equally to excess returns. If the future ends up looking more like this specific period of the past, we still would prefer dual momentum’s slight underperformance as a small cost to pay for the psychological comfort of knowing a plan is in place to protect capital against 50% drawdowns. The total outperformance of dual momentum in the last seven decades comes in the more recent four decades where three separate bear markets of 50%+ losses occurred for buy and hold investors. Two of these occurred in the last fifteen years. This is when absolute momentum does its job of taking us out of equities in the early stages of bear markets. Even during the first thirty year period, dual momentum still produced lower volatility and maximum drawdown[4], and a higher Sharpe Ratio. The period of 1946-1972 produced an annualized return of 12.1% for buy and hold and 11.78% for dual momentum, while over the entire duration dual momentum produced both higher returns and less risk. We make clear to our clients that beating the market isn’t a financial goal, and it would be intellectually dishonest for us to suggest we can guarantee anything about the future. What we can guarantee is that we have vigorously researched a robust investing plan supported by decades of historical data and third party validation. When combined with disciplined execution and realistic expectations, we believe the probabilities are highly in favor of a successful long term investing experience. Investigate carefully Choose wisely Follow faithfully Fama/French (2008): Momentum is “the center stage anomaly of recent years…an anomaly that is above suspicion…the premier market anomaly.” [1] The Credit Suisse Global Investment Return Yearbook shows how both US and World ex-US (in USD) equity risk premiums have far exceeded those of bonds and bills since 1900 forming the portfolio theory basis for focusing on equities in our dual momentum model. [2] Relative strength momentum compares total returns of one asset class to another over an applicable lookback period. The asset class that has risen the most is held for the next month. [3] Absolute momentum is defined as having a total return less than the risk free rate (such as US T-bills) over the applicable lookback period. [4] Maximum drawdown measures total peak to trough loss suffered prior to reaching new equity highs. Maximum drawdown is much more important to most investors than the more frequently mentioned measure of risk known as standard deviation or annualized volatility. Past performance doesn’t guarantee future results. The concepts of dual momentum were pioneered by the research of Gary Antonacci. We recommend using his best-selling book and blog as an additional resource for studying momentum. This is a hypothetical model intended to show the efficacy of dual momentum, and is not intended to represent specific investment advice. Data is gross of any applicable taxes and transaction costs, and investors should always consult with their tax advisor before investing. All investments carry risk, may lose value, and are not FDIC insured. We provide the hyperlink to Morgan Housel’s article as a convenience and do not endorse nor guarantee the accuracy of any information he has presented. Feel free to contact us if you’d like to discuss your specific situation further. We welcome every opportunity to discuss how we could add value to your financial life. Related Articles: Buy The Winners: The Power Of Momentum Momentum – The Premier Market Anomaly
  3. The Lazy Trader

    Why not do it yourself?

    Sorry to disappoint, nothing new to reveal. Let's start with the most criticized villains: hedge funds. According to Barclay (tracking more than 2,000 hedge funds), the average Hedge Fund return in 2015 was +0.04%. Of course, this is before management fees and everything else. More details here. It is a common practice in the industry to use the 2-20 scheme, meaning 2% management fee on your assets, plus 20% of your gains in the year. Needless to say, the average guy lost money. Let's move on to the second most criticized villain: mutual funds For mutual funds I decided to go with a sample of one of the most representative institutions when it comes to wealth management: RBC. I took a look at some of the most popular funds, those with catchy words in the name like "Balanced", "Value", "Global", "Income", "Growth". RBC Balanced Fund: 2015 return: +0.8%. Avg since inception: +6.4% annually. Management Fee: 2.16%. RBC Global Balanced Fund: 2015 return: +4.1% (Hey not too bad!! ) Avg since inception: +4.2% annually. ( Oh, well ) Management Fee: 2.21% RBC Monthly Income Fund: 2015 return: -3.4%. Avg since inception: +6.8% annually. Management Fee: 1.20%. RBC North American Growth Fund: 2015 return: +1.6%. Avg since inception: +7.5% annually. Management Fee: 2.09% RBC North American Value Fund: 2015 return: -0.3%. Avg since inception: +7.3% annually. Management Fee: 2.10% If we average out those 2015 returns, we have +0.56% among these 5 big pools. Never forget the average management fee is around 2% per year. Since inception, they average about 6% annual returns (not too bad), but the 2% management fees turn it into 3% to 4% real returns after fees.....so when you factor in inflation,... yes, you guessed it. Finally the least hated, in fact most times venerated index funds: I just kept it simple with the super popular VTI (Vanguard Total Stock Market ETF) VTI's price at the beginning of the year was 105.94 vs 104.34 at the end of the year. With the addition of distributions it finishes the year slightly positive. According to Morning Star the total return in 2015 was +0.36% for VTI. Not beating the simple strategy of holding SPY is something I won't criticize in this article. I have talked about that before. I myself have under-performed the market in some periods in the past. However, one thing must necessarily be said: If these funds were delivering inferior returns BUT were protecting investors from severe corrections, then we could argue that they have a mission, that they play a vital role: They under-perform in exchange for protecting investors from serious corrections. It's the price to pay in order for our money to be safe. Yet, that's generally very far from being true. Most mutual/hedge funds generally under-perform during market rallies, and over-correct during market sell-offs. In addition, you are not protected against crashes, looking at the history of most mutual funds in 2008, they corrected between 30% and 60%, some even more. And I'm saying "most", not "all" simply because many mutual funds that we have today hadn't been born back then. This naturally leads people to think: "what the hell! I'm going to passively follow an index". It seems to be slightly better than giving your money to a Mutual Fund or Hedge Fund, but not by much. The index will not save you from the corrections and bear markets. And the saddest part of the story is that you are guaranteed to ALWAYS under-perform. It is mathematically impossible to match the index that you follow, whichever it is. Why? Well, to start off the vehicles you invest in in order to follow the index have a management fee. Yes, usually small, but still a management fee. That alone is enough to guarantee under-performance in respect with the index. Then you also have execution slippage, Bid-Ask differential. That, eats up a little more. Finally, you have trading costs, a.k.a commissions you pay your broker for facilitating the actual buying and selling of shares. When all this is included, index followers usually under-perform the index by 1% to 2% in the long run. As of this writing, VTI's average annual performance since inception is +5.88%. As explained earlier, the investor is guaranteed to be getting less than that. Why not do it yourself? Saying that nobody will take care of your money better than yourself is so cliche. But man it is so damn true. Yes, most individuals under-perform, but most individuals do not put the effort to improve their skills, to learn solid trading approaches with better historical risk-adjusted returns. Most people under-perform, but you are not "most people". Imagine what this world would be if every successful person stopped fighting and improving just because "the majority fails". What would Lebron be if at some point he'd stopped to think: "Why bother? Most aspiring basketball players don't make it to the NBA". What if Joe Di Maggio had said: "Screw it. I'm not even going to make the effort. Most baseball players never get to play Major League Baseball". Every successful entrepreneur, every successful musician, every successful writer, surgeon, engineer...Mathematically speaking, they all started with huge odds against them, just based on the results of the general population. Most people are lazy by nature, and prefer to invest their time browsing pictures of hot photo-shopped girls on Instagram. You are not like "most people". Even if you browse for some hotties on the Internet, the single fact that you are reading this site demonstrates you are not like "most people". After all, it takes a special kind of liver to be able to read this annoying site for a prolonged period of time. Why not grow your money yourself, with calculated risks and action plans instead of the constant nervousness produced by the concerns that the markets will always crash tomorrow and I have no idea how the hell my fund manager will react? Why significantly reduce your returns due to paying someone for the privilege of this constant fear? The numbers, the numbers don't lie. This article was originally published here by Henrik aka The Lazy Trader. Henrik trades Iron Condors, Credit Spreads, Dividend Growth investing, Cash Secured Puts, Covered Calls, ETF Rotation, Forex. He likes to share his passion with others, educate and learn something from everybody. You can follow Henrik on Twitter.
  4. "A lot of folks just look at the return side of the equation," says Wasif Latif, vice president of equity investments for USAA Investments in San Antonio. "But how smooth was your ride to get to that return?" The Sharpe ratio puts those two pieces together. When building a portfolio, the objective is to merge your plan with reality. We want all the return with none of the risk, and it's why a fraud like Bernie Madoff fooled investors for decades. We desperately want to believe in fairy tales, often self-sabotaging our own returns by pursuing unproven complexity over proven simplicity. It's the triumph of hope over experience. For perspective, a Sharpe Ratio of 1 over a long period of time (decades) is extremely rare for any investment or investment portfolio. Just go out and try to find them. Be skeptical of anyone suggesting they can achieve, or have achieved, extraordinarily high Sharpe Ratio's. Here's an example of the Sharpe Ratio of the S&P 500 since 1990: Annualized Return: 9.36% Risk Free Rate (T-bills): 2.87% Annualized Volatility: 14.61% Sharpe Ratio: 0.44 And here's a picture of that reality, from www.portfoliovisualizer.com. One simple way to increase your portfolio's Sharpe Ratio is with diversification. For example, moving half of a portfolio into a bond index fund, and rebalancing annually, has done a nice job of improving your Sharpe Ratio from 0.44 to 0.70 since 1990. Note how much smoother the portfolio growth would have been. Investors would be well served if the finance industry would start showing people a track record instead of simply providing numbers. Just giving investors a bunch of numbers doesn't help them understand the good, the bad, and the ugly of long term investing. At this point, sophisticated investors could get creative and utilize concepts such as synthetic longs with option combos and momentum filters to further maximize risk-adjusted returns, but those are topics for another post and a point to discuss with a competent investment advisor. The point here is to help you think beyond returns to risk-adjusted returns the next time you review your portfolio or a potential investment. The Sharpe Ratio is one proven way to measure how much pain you've historically had to endure in order to achieve a certain gain. Sharpe ratios work best when figured over a period of at least three years, advisers say. Taking our Steady Condors strategy, you might ask yourself: is 17% CAGR (Compounded Annual Growth Rate) a good return? Well, the answer is - it depends. When this return is achieved with only 15% annual volatility - then yes, it's an excellent return. In fact, it is much better than 25% CAGR with 40% annual volatility. Our Performance Page presents Sharpe Ratios for all three our services. We encourage you to check it and compare our Sharpe Ratios to other services (assuming you can even find this info at other services). Related Articles: Are You EMOTIONALLY Ready To Lose? Why Retail Investors Lose Money In The Stock Market Are You Ready For The Learning Curve? Can you double your account every six months? If you are ready to start your journey AND make a long term commitment to be a student of the markets: Start Your Free Trial
  5. Well, every trade should be put in context. Before evaluating a trade (or an options strategy), the following questions should be asked and answered: What is the holding period of the strategy? What is the maximum risk? What is the profit potential? What is the average return? What is the winning ratio? Why holding period is important? Well, making 5% in one week is not the same as making 5% in six months. In the first case we are talking about 250% annualized return. In the second case, 10%. See the difference. Maximum risk is important because it doesn't make sense to aim for 5% gain if your strategy can lose 50-100%. For example, when you are trading a directional strategy, and the stock gaps against you, the losses can be catastrophic. Since the risk is high, you should aim for higher return to compensate for the risk. However, if your maximum risk is limited, you can aim for lower return and still get excellent overall performance. Lets examine our pre-earnings straddles as an example. As a reminder, a long straddle option strategy is vega positive, gamma positive and theta negative trade. It works based on the premise that both call and put options have unlimited profit potential but limited loss. Straddles are a good strategy to pursue if you believe that a stock's price will move significantly, but unsure as to which direction. Another case is if you believe that Implied Volatility of the options will increase - for example, before a significant event like earnings. I explained the latter strategy in my Seeking Alpha article Exploiting Earnings Associated Rising Volatility. IV usually increases sharply a few days before earnings, and the increase should compensate for the negative theta. If the stock moves before earnings, the position can be sold for a profit or rolled to new strikes. This is one of my favorite strategies that we use in our SteadyOptions model portfolio. This is how the P/L chart looks like: How We Trade Straddle Option Strategy provides a full explanation of the strategy. Lets take a look at 2022 statistics for this strategy: Number of trades: 148 Number of winners: 103 Number of losers: 40 Winning ratio: 72.5% Average return per trade: 4.9% Average return per winning trade: 8.7% Average return per losing trade: -10.2% Average holding period: 7.2 days Lets do a quick math. If you can do 10 trades per month, each trade producing 5% gain on average and 10% allocation per trade, your monthly return is 5% on the whole portfolio. That's 60% non compounded annual return, with minimal risk. To answer the original question: for a strategy that has 70%+ winning ratio and loses on average 10% on losing trades, with average holding period of one week, 5% is an EXCELLENT return. In fact, I would consider it as Close to the Holy Grail as You Can Get. Related Articles: How We Trade Straddle Option Strategy Buying Premium Prior to Earnings Can We Profit From Volatility Expansion into Earnings Long Straddle: A Guaranteed Win? Why We Sell Our Straddles Before Earnings
  6. I can guess that many people in this industry are getting this question. Today I got an email from Matthew Klein, CEO of Collective2.com, where he provides some excellent and perfectly logical explanation. Here are some major points. “Why would a good trader share his strategy?” That’s the question, then, isn’t it? If you create a good trading strategy, why let other people use it for a modest amount of money, rather than keeping it all to yourself? Actually, there are several reasons. Leverage and risk The same question can be asked of virtually the entire financial industry. Why do top-tier hedge funds accept investor money? If the guys at Two Sigma are so smart (and they are), why don’t they just trade their own money from an unmarked building in Soho? Why go through the hassle of raising capital from investors? Or more broadly, why have mutual funds? Why run a bond fund? If Bill Gross is such a genius (and he is), why does he bother accepting investor money, and suffering the indignity of annoying questions, or unfortunate P.R.? Why not trade his own private capital from his house in Laguna Beach, and when people ask him what he does for a living, he can just say, “I’m a beach bum. I don’t do anything.” The answer is: leverage (people want more of it) and risk (people want less of it). Even Masters of the Universe don’t have infinite cash sitting around. After all, many Hedge Fund Titans live in New York City: there are co-ops to buy, kids to private-school, restaurants to patronize. If you are a managing director at a top-tier hedge fund, and you have a million dollars in the bank, ready to invest, which would you prefer: to earn 20% on your money? Or 30%? Letting other people invest alongside you, and making money on their money, is a form of leverage. (For those not fluent in finance: leverage means using borrowed money to make more money.) Leverage isn’t always a good thing, of course (you can lose more, too) — but if you have high confidence in your trading ability, using leverage can be a wise decision. If you are a competent trader, and you have $100,000 sitting in your brokerage account, ready to trade, which would you prefer: to earn 20% on your money? Or 30%? Imagine you are a good trader, and you think that you can earn 20% each year on your $200,000 trading nest egg. Now imagine that selling your strategy on lets you earn an extra $5,000 each month in subscription fees from your followers. That’s the equivalent of another 30% on your capital. Sure, there’s no guarantee you will earn that, but if you build a good track record on, you can earn that much, and more. So, just like a Hedge Fund Titan — or just like a mutual fund manager — you can gain “leverage” on your own dollars by opening your strategy to the public. Reducing Risk Allowing outside investors to trade alongside you, and pay you a fee, also reduces your risk. Let’s be honest about that. A typical hedge fund charges “2-and-20” — which means they charge an investor a fee of 2% of the money invested with them, plus 20% of the investor’s profits. That 2% is charged no matter what — whether the fund wins or loses. It’s called a “management fee,” and in theory it’s meant to cover fixed expenses that happen every month at a hedge fund, no matter what: you know, rent, administrative assistants, legal and accounting, blow. But money is fungible, and what you pay with one set of dollars is something you don’t have to pay with another set of dollars. One way to think of that 2% management fee is as a risk-reduction cushion. If trading doesn’t work so well in one month, you still get your 2%. When you’re managing a billion dollars, that’s a nice chunk of change. Now, listen, if you stink up the place six months in a row, most investors will flee and take their 2% management fee with them. But you’ll get a bit of leeway — more so if you have a long and distinguished track record behind you. That leeway reduces your risk. That’s what you gain by offering your strategy to other people, instead of just trading it alone. Building your career So far, I’ve discussed the financial reasons why a legitimate, talented trading-strategy creator would sell his system. But there’s another reason, which is not related to money, but, rather, to career development. Finance is a hard industry to break into. We’ve all read about the glamorous life of hedge fund managers, but how exactly does one go about getting a job at a hedge fund? You don’t fill out an application online, and — truthfully — unless you go to a top-five American university, you won’t see the face of a recruiter at your annual career fair. I’ve already written about how stupid hedge-fund hiring practices are. But indignation won’t change the world. The fact is, it’s ridiculously hard to get a job at a hedge fund, and in finance in general, and probably always will be. But there’s one thing “finance people” respect, and that’s money. Prove you can make it for them, and it doesn’t matter one bit whether you went to Harvard or Pomona State. Money talks. Running a public track record, with other people’s money at stake, is a different beast than sitting alone in your room, wanking your own tiny brokerage account. The pressure makes some people crack. On the other hand, some people love performing in public — whether the performance is musical, or written… or financial. Some people share their strategies with the public for reasons other than money: they are building their career, buffing their resume, trying to break into the business. SteadyOptions Not all those reasons are applicable to SteadyOptions, but some are. But even if you don't buy any of those reasons, the only question you have to ask yourself: is the subscription service helpful to you? Does it help you to become a better trader? Does it help you to make money? If the answer to those questions is yes, this is the only thing that should matter to you. Why am I doing this is secondary. Happy trading!
  7. Performance Dissected It is important to mention that those numbers are pre-commissions, so your actual results will be lower. As with every trading system which uses multi leg trades, commissions will have a significant impact on performance, so it is very important to use a cheap broker. We have extensive discussions about brokers and commissions on the Forum (like this one) and help members to select the best broker. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissected topic for more details. We had few rough months in 2016. The main reason is that we started implementing a new strategy that holds trades through earnings. This is a high probability high risk strategy that had very good historical results and probability, but did not work well in 2016. You can read more details here, including the lessons we learned. This strategy was responsible for majority of the losses in Feb-Apr. 2016. Once we realized that the strategy doesn't work well and is higher risk than most members would like, we abandoned it and went back to our time proven strategies. It took us just 5 months to recover, and our model portfolio doubled since April lows. Members who had the discipline and patience to stay the course have been greatly rewarded. To put things in perspective, it was our worst drawdown in 5 years. Despite our best efforts, drawdowns happen in trading, it's part of the game. Despite this drawdown, we still delivered 5 years CAGR of 82.5% (including commissions), while investing only 50-60% of our capital on average. It is important to understand that Drawdowns Are Part Of The Game. All big winners including AAPL, AMZN, GOOG and MSFT had few drawdowns ranging from 65% to 92%. If you sold them, you would not enjoy the gains that followed. Our strategies SteadyOptions uses a mix of non-directional strategies: earnings plays, Iron Condors, Calendar spreads etc. We constantly adding new strategies to our arsenal, based on different market conditions. SO model portfolio is not designed for speculative trades although we might do some in the speculative forum. SO is not a get-rich-quick-without-efforts kind of newsletter. I'm a big fan of the "slow and steady" approach. I aim for many singles instead of few homeruns. My first goal is capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come. We continue expanding the scope of our trades beyond the earnings trades, Iron Condors and calendars. We are trading SPY, TLT, VIX and other ETFs to diversify the portfolio. We will continue refining those strategies to get even better results. This gives members a lot of choice and flexibility. Looking at specific strategies, pre-earnings calendars were our best performing strategy, producing 18.2% average return with over 80% winning ratio. We will continue trading what works the best and adapt to the market conditions. What makes SO different? First, we use a total portfolio approach for performance reporting. This approach reflects the growth of the entire account, not just what was at risk. We balance the portfolio in terms of options Greeks. SteadyOptions provides a complete portfolio solution. We trade a variety of non-directional strategies balancing each other. You can allocate 60-70% of your options account to our strategies and still sleep well at night. Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently. We put our money where our mouth is. Our performance reporting is completely transparent. All trades are listed on the performance page, with the exact entry/exit dates and P/L percentage. It is not a coincidence that SteadyOptions is ranked #1 out of 704 Newsletters on Investimonials, a financial product review site. Read all our reviews here. The reviewers especially mention our honesty and transparency. We place a lot of emphasis on options education. There is a dedicated forum where every trade is discussed before the trade is placed. We discuss different strategies and potential trades. Unlike most other services that just send the trade alerts, our members understand the rationale behind the trades and not just blindly follow the alerts. SO actually helps members to become better traders. Other services In addition to SteadyOptions, we offer the following services: Anchor Trades - Stocks/ETFs hedged with options for conservative long term investors. Steady Condors - Hedged monthly income trades managed by the Greeks. LC Diversified Portfolio - broadly diversified, absolute return, multi-strategy portfolio. The LCD is our most diversified and scalable portfolio, I highly recommend that members check it out. It is offered as an added bonus of all subscription plans. We also offer Managed Accounts for Anchor Trades and LCD. Let me finish with my favorite quote from Michael Covel: "Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between." Subscription is now open to new members for a limited time. If you are not a member and interested to join, you can click here to join our winning team. When you join SteadyOptions, we will share with you all we know about options. We will never try to sell you any additional "proprietary systems", training, webinars etc. All our "secrets" are included in your monthly fee. Happy Trading from SO team!
  8. And while it was easy to pretend trade for years and years as long as the Fed injected trillions into the "market", levitating stocks every higher, lately it has been far more difficult, not only for real trader, but also for "paper traders" too. Case in point, "stock trading whiz kid" Manuel E. Jesus, aka "Manny Backus" - and apparent chess prodigy based on his photo - and his newsletter company Wealthpire Inc. There was just one problem for Manuel Jesus, aka "whiz kid" - he was a fraud, at least according to the SEC, which announced "that a self-proclaimed “stock trading whiz kid” and his stock newsletter company in Los Angeles have agreed to pay nearly $1.5 million to settle charges that they defrauded subscribers through false statements and misrepresentations." “Investors who subscribe to trading alert services are relying on the purported expertise and success of those making the stock recommendations, but Wealthpire and Backus instead circulated repeated lies and falsehoods,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. The SEC complaint against Manny Backus didn't come as a surprise to me. All I needed was five minutes on his website to smell a fraud. But then I came across this article. The author conducted a survey to see how much (or little) marketers in our community conduct compliance reviews of their marketing materials. "Marketers don't like to talk much about compliance issues. It won't deliver thousands of new customers or millions in new sales. It only gets attention when cases like the one above are announced. But everyone is scared they will mistakenly cross a line, get found out, and be the subject of the next $1.5 million settlement and S.E.C. press release." The author also says that "people are too quick to assume someone is a crook - although there are certainly a fair number of them in every online marketing industry. In my (biased) opinion, in the trading newsletter industry, not "a fair number of them" are crooks. Most of them are crooks. Just look at some the claims you see from those promoters: I turned $12,415 Into $4,155,000 trading penny stocks. 2,062% Weekly Option Gain. Turn $3,000 Into $100,000 in 4 months. I made 29,233% in 12 months trading high flying Internet stocks. We averaged 127.16% Per Month trading credit spreads. We guarantee that our options trading strategies will make you profitable every month. 99% of my recent 326 stock picks have been winners. Trading $150,000 into $650,000 in 8 months. How Jack turned $250 into $16,000 in Just One Month. +9,651.04% day trading return since Jan. 4 2016. Of course none of them has ever provided any proof of those returns. As Bloomberg article correctly concluded, their self-promotional strategies have made them richer than trading ever did. Here is the problem: like Manny Backus, most of them are not real traders. They are promoters. They need to lie because they don't have anything real to back their claims. So yes, if you lie, you need to conduct compliance reviews of your marketing materials. You need a lawyer to protect you. If you are a real trader and your "marketing materials" just present your real trading results, you don't really need a lawyer. I know which category SteadyOptions team belongs to. Do you know which category your "guru" belongs? Is he a trader or a promoter? Will he be the subject of the next $1.5 million settlement and S.E.C. press release? Related articles: 10 Signs Of A Fake Guru Can You Really Turn $12,415 Into $4M? Can you double your account every six months? Performance Reporting: The Myths and The Reality SchoolofTrade: Another Guru Busted Want to learn how to trade successfully from real traders? Start Your Free Trial
  9. Check out the Performance page to see the full results. Please note that those results are based on real fills, not hypothetical performance. Performance Dissected It is important to mention that those numbers are pre-commissions, so your actual results will be lower. As with every trading system which uses multi leg trades, commissions will have a significant impact on performance, so it is very important to use a cheap broker. We have extensive discussions about brokers and commissions on the Forum (like this one) and help members to select the best broker. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissected topic for more details. For the first time, I also provided an update on My 2015 Personal Account that produced 80.2% return, after commissions, trading exclusively SteadyOptions and Steady Condors strategies. November was our only losing month in 2015. Our biggest loser was 60%, and only 11 trades have lost more than 20%. Our strategies SteadyOptions uses a mix of non-directional strategies: earnings plays, Iron Condors, Calendar spreads etc. We constantly adding new strategies to our arsenal, based on different market conditions. SO model portfolio is not designed for speculative trades although we might do some in the speculative forum. SO is not a get-rich-quick-without-efforts kind of newsletter. I'm a big fan of the "slow and steady" approach. I aim for many singles instead of few homeruns. My first goal is capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come. We continue expanding the scope of our trades beyond the earnings trades, Iron Condors and calendars. We are trading SPY, GLD, TLT, VIX and other ETFs to diversify the portfolio. We will continue refining those strategies to get even better results. This gives members a lot of choice and flexibility. Looking at specific strategies, VIX trades were our best performing strategy in 2015, producing 28% average return with 90% winning ratio. Pre-earnings calendars were big winners as well, producing 15% average return with over 80% winning ratio. We will continue trading what works the best and adapt to the market conditions. What makes SO different? First, we use a total portfolio approach for performance reporting. This approach reflects the growth of the entire account, not just what was at risk. We balance the portfolio in terms of options Greeks. SteadyOptions provides a complete portfolio solution. We trade a variety of non-directional strategies balancing each other. You can allocate 60-70% of your options account to our strategies and still sleep well at night. Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently. We put our money where our mouth is. Our performance reporting is completely transparent. All trades are listed on the performance page, with the exact entry/exit dates and P/L percentage. It is not a coincidence that SteadyOptions is ranked #1 out of 704 Newsletters on Investimonials, a financial product review site. Read all our reviews here. The reviewers especially mention our honesty and transparency. We place a lot of emphasis on options education. There is a dedicated forum where every trade is discussed before the trade is placed. We discuss different strategies and potential trades. Unlike most other services that just send the trade alerts, our members understand the rationale behind the trades and not just blindly follow the alerts. SO actually helps members to become better traders. Other services In addition to SteadyOptions, we offer the following services: Anchor Trades - Stocks/ETFs hedged with options for conservative long term investors. Steady Condors - Hedged monthly income trades managed by the Greeks. LC Diversified Portfolio - broadly diversified, absolute return, multi-strategy portfolio. The LCD is our most diversified and scalable portfolio, I highly recommend that members check it out. It is offered as an added bonus of all subscription plans. We also offer Managed Accounts for Anchor Trades and LCD. Let me finish with my favorite quote from Michael Covel: "Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between." Subscription is now closed to new members. If you are not a member and interested to join, you can join the waiting list and we will notify you when the subscription re-opens.. When you join SteadyOptions, we will share with you all we know about options. We will never try to sell you any additional "proprietary systems", training, webinars etc. All our "secrets" are included in your monthly fee. Happy Trading from SO! Start Your Free Trial
  10. Pension Partners published an excellent study about relation between big winners and big drawdowns. Big Winners And Big Drawdowns By Charles Bilello of Pension Partners Apple, Amazon, Microsoft and Alphabet… All among the largest and most revered companies in the world. All have returned unfathomable amounts to their shareholders. All have experienced periods of tremendous adversity with large drawdowns. When thinking about big winners in the stock market, adversity and large drawdowns probably aren’t the first words that come to mind. We tend to put the final outcome (big long-term gains) on a pedestal and ignore the grit and moxie required to achieve that outcome. But moxie is the key to long-term investing success, for there is no such thing as a big long-term winner without enduring a big drawdown along the way… Apple has gained 25,217% since its IPO in 1980, an annualized return of 17%. Incredible gains, but these are just numbers, masking the immense pain one would have endured over time. Apple investors from the IPO would experience two separate 82% drawdowns, one from 1991 to 1997 and another from 2000 to 2003. Amazon has gained 38,882% from its IPO in 1997, an annualized return of over 36%. To put that in perspective, a $100,000 investment in 1997 would be worth just under $39 million today. Breathtaking gains, but they were not realized without significant adversity. In December 1999, the initial $100,000 investment would have grown to $5.4 million. By September 2001, less than 2 years later, this $5.4 million would shrink down to $304,000, a 94% drawdown. It took over 8 years, until October 2009, for Amazon to finally recover from this drawdown to move to new highs. Bill Gates is the richest man in the world, having amassed his $80 billion fortune as the founder of Microsoft. Microsoft has returned 25% a year over the past 30 years, a remarkable feat. The path to riches in Microsoft looks deceptively easy on the surface. The calendar year returns from its IPO in 1986 through 1999 were incredibly high and consistent, masking significant underlying volatility. In 1987 Microsoft advanced 123% but would suffer more than 50% decline in October during the stock market crash. It would not recoup those losses for two years, until October 1989. Its largest drawdown in history occurred over a 10 year period, a 70% decline from 1999 through 2009. Alphabet (formerly Google) has been one of the great growth stories in recent history, returning 26% per year since its IPO in 2004. It did not achieve these returns, though, in a straight line. Its largest drawdown: a 65% decline from 2007 through 2008. It should be clear from these four examples that large drawdowns are an inevitable part of achieving high returns. If you haven’t yet experienced such a gut-wrenching decline, then you probably haven’t owned something that has appreciated 10x, 20x or more. Or you simply haven’t been investing for that long. I know what you’re thinking. There has to be a better way. You want that big juicy return but without the big drawdown. Yes indeed, as does everyone else. The problem, of course, is in trying to hedge or time your exposure to big winners, you will likely miss out on a substantial portion of the gains. Or your emotions will cause you to sell at precisely the worst time (after a large drawdown). Your volatility and drawdown profile may be lower, but that tradeoff will come at a price. As I wrote earlier this year the price for hedge fund investors seeking lower volatility/drawdown in equities has not been a small one, with the HFRX Equity Hedge Index (an investable index of Long/Short equity funds) posting a negative return since 2005 while the S&P 500 has more than doubled. Many investors in these funds were seeking the Holy Grail, a high return (often 15-20% in their “mandates”) with little risk (no large drawdowns). They expected their managers to pick the Apples and Amazons of the investment world without incurring the inherent volatility that comes along with it. As we know, that is a complete and utter fantasy. All big winners have big drawdowns. Accepting this fact can go a long way toward controlling your emotions during periods of adversity and becoming a better investor.
  11. 2012 and 2013 were in line with our long term profit target of 2-3% per month, but 2014 was a very difficult year for most condor traders. We know many services that actually blew out their clients accounts, but Steady Condors at least was able to limit the losses to reasonable amount, which allowed us to recover from the drawdown within the next 6 months. 2015 was obviously very good, producing 56.5% compounded yearly return. 2014 is the main reason why we are below the long term average. Statistically this not unexpected considering it is only 4 years of data. But Jesse provided a much better explanation: This has been on the FAQ page for quite a long time: How much can I expect to make with your service? Our objective is to make a living, not a killing. We like the story of the tortoise and the hare. Income trading is NOT an ATM machine, regardless of what other option based services are marketing to you. It’s hard and it takes discipline, experience, and a well thought out written plan on how to manage risk. We believe markets aren't perfectly efficient, but they are a lot harder to beat over the long term than most people realize. Our long term goal is to make an average of 15-25% annually on the whole account after trading costs (commissions and slippage). Options inherently provide leverage and substantial risk of loss when not used properly, and iron condors are no exception. Many people mistakenly confuse the high probability of success (per trade) that iron condors offer with safety. Return data is useless without also analyzing risk. I expect SC to have a long-term Sharpe Ratio up to 1 (depending on future risk-free rate which is currently almost zero). Recognizing that this is a topic most people have never been educated on, let me explain. This will help you understand how to more properly analyze returns of different strategies that have different leverage and therefore different risk. A huge mistake that I see retail investors make over an over is only looking at returns. The Sharpe Ratio isn't perfect either, but it's certainly better than only reviewing returns and can give you a way to throw a giant red challenge flag on anyone claiming extraordinary returns. Sharpe Ratio: Annualized return - risk free rate / annualized volatility All you need is a track record of monthly returns to calculate a strategy's Sharpe Ratio. For your reference, 1 is exceptional, and you'll be hard pressed to find hardly any audited track records of any type that have maintained a Sharpe of 1 over a long period of time (10+ years). Yet people are desperate to believe in fairy tales and hope that they've found magic. If a newsletter is honest with you and tells you to "get real", many retail investors will just move on to the next one who will tell them whatever they want to hear in order to gain subscriptions. We'll tell you to get real here. And if you ever feel like we aren't, throw the challenge flag at us. It's why we have forums in order to have discussions. Steady Condors has had a Sharpe Ratio of about 1.3 since 2012 which is above long-term expectations. This is based on 19.8% CAGR (Compound Annual Growth Rate) and 14.6% annual volatility. With the expectations that Steady Condors will produce annualized volatility of around 20% over the long term, this would also land expected returns around 20%. Beware of anything that suggests a massive Sharpe ratio such as 3+ over a long period of time. That would basically qualify them for market wizard status that virtually nobody has achieved for the long-term. Oftentimes you'll find this in a credit spread newsletter where the big loss just hasn't happened yet (it will), or the entire track record is hypothetical, which likely includes overfitting and/or excludes realistic transaction costs. Short volatility strategies like selling options with no risk management can sometimes go for a few years without being tested. Do yourself a favor next time you're looking at a track record and analyze both risk and return, and using the Sharpe Ratio is a great start and a way to possibly save yourself a lot of money. Thank you Jesse for providing such great explanation! At Steady Options, we are committed to promoting long term success to our members which starts with education on having realistic expectations. We will continue telling people to "get real" and not what they want to hear because this is who we are. On a related note, we are one of the few services that report performance on the whole account, not P/L on margin. For example, if we keep 20% of the account in cash and make $400 on $8,000 margin, we would report it as 4% return on $10,000 account. Most services would report it as 5% return. in the long term, it makes HUGE difference. We also include commissions in our reporting, which reduces the numbers by another ~0.3%/month. Always make sure to check how the service reports returns and compare apples to apples. Let me know if you have any questions. Want to learn more? Start Your Free Trial Related Articles: Why Retail Investors Lose Money In The Stock Market Are You Ready For The Learning Curve? How to Calculate ROI in Options Trading Performance Reporting: The Myths and The Reality Are You EMOTIONALLY Ready To Lose?
  12. Yet it’s well known how difficult it is for a fund manager to beat it over the long term. A big part of the reason why the S&P 500 beats most fund managers is because of its simple discipline. It continues to apply the same set of rules over and over again. The whole concept of “smart beta” shows numerous ways to create indices that would have beat the market cap weighting process of the S&P 500 over long periods of market history. Perhaps the greatest form of alpha is the ability to follow a simple approach with rigid discipline over the long term. Howard Lindzon of StockTwits recently shared his top ten takeways Stocktoberfest conference. Here was #5: 5. Any system of investing is better than NO system of investing. As Jerry Parker from Chesapeake pointed out to me that is why the $SPY beats most. It may be a rudimentary system for investing in stocks, but it is a system. I found this Forbes interview with Jim O’shaughnessy on February 23, 2009 particularly interesting. Keep in mind, February 23, 2009 was within a couple weeks of the market bottom. The Dow was trading around 7,000, more than 50% below its October 2007 high. Predictions for Dow 5,000, 3,000, even 1,000 were being made. With recency bias clouding our better judgement, many investors saw this as all but certain and needed to do something to intervene. The fear in the marketplace was unbelievable and people were in the process of officially devastating their life savings by abandoning their long term plan and selling towards the bottom. This is also a great example, which I wrote about here, on why you can’t rely exclusively on historical data. Given enough time, your maximum drawdown is always ahead of you. Yet read how Jim is telling the exact same story as he always does as a true quant, whether at new highs, or in this case, during a record drawdown. Keep it simple, trust your exhaustive research and data, and follow your plan. It’s simple, but not easy. On the importance of staying simple and using only easy-to-understand ratios, O’Shaughnessy says: “If the math gets higher than algebra, it’s pretty certain you will lose your money. If you look back to the most spectacular blow ups in history, you can always tie them to a couple things: They were extraordinary complicated strategies that maybe even the practitioners themselves didn’t understand and they were overleveraged.” Although his approach is purely quantitative, O’Shaughnessy also does emphasize the importance of having the right mindset when putting money to work in the stock market. In particular, he tells investors to stay focused and disciplined. The problem for many investors, he says, is that they hit down markets like the one we’re in now and, suddenly, they change up their strategies. This is a terrible mistake and one that ends up costing people a lot of money. The smarter way to invest, he says, is to choose a proven method of separating winners from losers and then adhere to it, in good times and bad. “Generally speaking, when things are going against you, as they inevitably will, you have to stick to the underlying strategy,” he says. “Only by doing so will you be around for when it comes rebounding back.” It’s also just as critical, he believes, to try to remain emotion-free. This is obviously easier said than done as 24/7 news broadcasts second by second tumult in the markets. But only those investors that can distance themselves from such emotions and passions can benefit, in the long term. “Fear, greed and hope have destroyed more portfolio value than any recession or depression we have ever been through,” O’Shaughnessy says. “By relying on the statistical information rather than a gut feeling, you allow the data to lead you to be in the right place at the right time. To remain as emotionally free from the hurly burley of the here and now is one of the only ways to succeed.” As Charlie Munger said in his BBC Interview During the Financial Crisis: "If You Can’t Stomach 50% Declines in Your Investment You Will Get the Mediocre Returns You Deserve." Jesse Blom is a licensed investment adviser and Vice President of Lorintine Capital, LP. He provides investment advice to clients all over the United States and around the world. Jesse has been in financial services since 2008 achieving multiple industry achievements including qualifying membership in the Million Dollar Round Table for 5 consecutive years. Membership in this prestigious group represents the top 1% of financial professionals in the world. Jesse has a Bachelor of Science in Finance from Oral Roberts University.Jesse is managing the LC Diversified portfolio. Start Your Free Trial
  13. Please note that those results are based on real fills, not hypothetical performance. Performance dissected It is important to mention that those numbers are pre-commissions, so your actual results will be lower. As with every trading system which uses multi leg trades, commissions will have a significant impact on performance, so it is very important to use a cheap broker. We have extensive discussions about brokers and commissions on the Forum (like this one) and help members to select the best broker. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissected topic for more details. The following is a snapshot of our performance, taken from Pro-Trading-profits.com: According to PTP, our Average Annual Return since inception is a remarkable 107.7%, including commissions. Current Year Annualized Rate of Return is 146.3%. SteadyOptions strategies SteadyOptions uses a mix of non-directional strategies: earnings plays, Iron Condors, Calendar spreads etc. The pre-earnings strategy is based on my Seeking Alpha articles ‘Exploiting Earnings Associated Rising Volatility’ and ‘How To Rent Your Options For Free’. This strategy aims for consistent and steady gains with holding period of 2-7 days. SO model portfolio is not designed for speculative trades although we might do some in the speculative forum. SO is not a get-rich-quick-without-efforts kind of newsletter. I'm a big fan of the "slow and steady" approach. I aim for many singles instead of few homeruns. My first goal is capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come. What makes SO different? First, we use a total portfolio approach for performance reporting. This approach reflects the growth of the entire account, not just what was at risk. We balance the portfolio in terms of options Greeks. SteadyOptions provides a complete portfolio solution. We trade a variety of non-directional strategies balancing each other, including but not limited to straddles, calendars, butterflies etc.. You can allocate 60-70% of your options account to our strategies and still sleep well at night. Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently. We put our money where our mouth is. Our performance reporting is completely transparent. All trades are listed on the performance page, with the exact entry/exit dates and P/L percentage. It is not a coincidence that SteadyOptions is ranked #1 out of 704 Newsletters on Investimonials, a financial product review site. Read all our reviews here. The reviewers especially mention our honesty and transparency. Other services In addition to SteadyOptions, we offer the following services: Anchor Trades - Stocks/ETFs hedged with options for conservative long term investors. The strategy delivered 0.3% return in Q1 2015, basically tracking the S&P 500, while staying completely hedged all the time. Steady Condors - Hedged monthly income trades managed by the Greeks. The strategy delivered 10.8% return in Q1 2015. Including April portfolio which was closed recently, the YTD return is 17%, which brings Steady Condors back to new equity highs. LC Diversified Portfolio - broadly diversified, absolute return, multi-strategy portfolio. The strategy delivered 3.1% return in Q1 2015. The LCD is our most diversified, comprehensive and scalable portfolio. I highly recommend that members check it out. It is offered as an added bonus of all subscription plans. You can also read a comprehensive overview of the strategy here. We also offer Managed Accounts for Anchor Trades and LCD. Subscription is now open to new members for a limited time. We invite you to join one of the most successful options newsletters.When you join SteadyOptions, we will share with you all we know about options. We will never try to sell you any additional "proprietary systems", training, webinars etc. All our "secrets" are included in your monthly fee. Happy Trading from SO! Related articles: SteadyOptions 2014 - Year In Review Steady Condors: The Comeback SteadyOptions 2014 Half Year Report: 95.3% ROI Steady Options 2013 - Year In Review How to Calculate ROI in Options Trading Start Your Free Trial
  14. That feels logical, as two years can seem like an eternity for clients that tend to check their account balances almost every day. On a separate side note, I believe this behavior is rooted in an investors tendency to not completely trust their advisor which is legitimate in a field chock-full of conflicts of interest and bad advice which can largely be eliminated by a fiduciary standard. But historical and statistical evidence suggests that even the most efficient strategies and portfolios are almost guaranteed to have a period of losses or no growth that last at least a couple years during any investor’s lifetime. Nobody can predict when that will happen. Does the fact that Warren Buffett underperformed the S&P 500 by almost 100% and the Nasdaq 100 by more than 350% for almost a two year period matter, or does this matter? Source: http://awealthofcommonsense.com/buffetts-performance-by-decade/ Obviously the long term performance is what matters, yet investor’s actions regularly tell a different story and unfortunately this will never change. Are you mentally prepared to experience significant periods of underperformance? It’s inevitable. In fact, just about everything has underperformed the last few years relative to US stocks. Living through a track record is a LOT different than reviewing one on paper when you know how the story ends. In our firm we believe pretty good is better than constantly pursuing perfection, and maximum risk-adjusted returns come from proper portfolio construction instead of concentrated bets. Every strategy, including Warren Buffett’s, has periods that appear where it’s broken. For us mere mortals with a plethora of emotional baggage and behavioral biases that come attached to our money, I contend the best, perhaps even the only way towards a successful investment experience, is through diversification. “The most powerful tool an investor has working for him or her is diversification. True diversification allows you to build portfolios with higher returns for the same risk. Most investors…are far less diversified than they should be. They are way over-committed to stocks.” -Jack Meyer “Thus timing, and in particular the selection of the beginning point and end point for studying a performance record – plays an incredibly important role in perceptions of success or failure” -Howard Marks “No strategy is so good that it can’t have a bad year or more. You’ve got to guess at worst cases: No model will tell you that. My rule of thumb is double the worst that you have ever seen.” -Cliff Asness, AQR Jesse Blom is a licensed investment adviser and Vice President of Lorintine Capital, LP. He provides investment advice to clients all over the United States and around the world. Jesse has been in financial services since 2008 achieving multiple industry achievements including qualifying membership in the Million Dollar Round Table for 5 consecutive years. Membership in this prestigious group represents the top 1% of financial professionals in the world. Jesse has a Bachelor of Science in Finance from Oral Roberts University.Jesse is managing the LC Diversified portfolio. Start Your Free Trial
  15. If we were as impatient about gardening as we are investing: Sam plants some seeds in his backyard. He checks back four hours later. Nothing. He digs them up and replants them. Four hours. Still nothing. A week later he is dismayed that he has no oak trees in his backyard. He calls oak trees a scam. If we checked our physical health as much as we check our portfolios: Ryan wakes up in the morning and checks his blood pressure. He checks it again before breakfast, during breakfast, after breakfast, and before leaving for work. When he gets to work he checks his cholesterol, again before lunch, and twice before bedtime. During one of the four times he weighs himself during the day the notices he lost a quarter of a pound. He calls his doctor to find out what the hell is going on. Does it apply to people who jump from strategy to strategy, from service to service, in a desperate search for a "holly grail"? Do you have unrealistic expectations regarding your potential returns? Maybe you are just not ready for the learning curve that the service requires? You decide. Humans. Van Tharp says successful trading/investing is 60% psychology...only 60%? Humans desperately want to believe there is a way to make money with no or little risk. That’s why Bernie Madoff existed, and it will never change. Best luck with your investments. Related articles: Can you double your account every six months? How to Calculate ROI in Options Trading Performance Reporting: The Myths and The Reality Why Retail Investors Lose Money In The Stock Market Are You Ready For The Learning Curve? Are You EMOTIONALLY Ready To Lose? Start Your Free Trial
  16. Check out the Performance page to see the full results. Please note that those results are based on real fills, not hypothetical performance, and exclude commissions, so your actual results will be lower. Trading the current market There is no doubt that this is a difficult market to trade. Volatility is at multi year lows, and has been on steady decline in the last few months. The average hedge fund gained only 1.77% in the first half of 2014, according to Hedge Fund Research, lagging the major indexes by significant margin. The key to trade the current markets is to limit the losses, to trade less and to be more selective. Despite difficult market conditions, SO delivered very impressive performance in the first half of 2014, especially in the first quarter. What makes SO different? First, we use a portfolio approach, that may include a variety of non-directional strategies. We balance the portfolio in terms of options Greeks. The earnings trades are vega/gamma positive and theta negative. To balance them we might open calendars, Iron Condors or butterfly trades which are theta positive. We might use a mix of different expirations to balance the gamma. Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently. We provide a full disclosure and list all our trades on the performance page. Unlike some other newsletter services, we will never omit a trade from our track record because some members couldn't open the trade or make the adjustments. This rule applies to all trades, good and bad - you will always get a full picture and will never have to guess how we calculate our numbers. We place a lot of emphasis on options education. There is a dedicated forum where every trade is discussed before the trade is placed. We discuss different strategies and potential trades. Unlike most other services that just send the trade alerts, our members understand the rationale behind the trades and not just blindly follow the alerts. SO actually helps members to become better traders. We invite you to join one of the most successful options trading services. When you join SteadyOptions, we will share with you all we know about options. We will never try to sell you any additional "proprietary systems", training, webinars etc. All our "secrets" are included in your monthly fee. Let me finish with my favorite quote from Michael Covel, which is especially relevant to the current market conditions: "Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between." The earnings season is just around the corner. Now is an excellent time to join our service. Start Your Free Trial
  17. Please note that those results are based on real fills, not hypothetical performance. Performance dissected It is important to mention that those numbers are pre-commissions, so your actual results will be lower. As with every trading system which uses multi leg trades, commissions will have a significant impact on performance, so it is very important to use a cheap broker. We have extensive discussions about brokers and commissions on the Forum (like this one) and help members to select the best broker. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissected topic for more details. August was our only losing month in 2014. Our biggest loser was 50%, and only nine trades have lost more than 20%. Our strategies SteadyOptions uses a mix of non-directional strategies: earnings plays, Iron Condors, Calendar spreads etc. The pre-earnings strategy is based on my Seeking Alpha articles ‘Exploiting Earnings Associated Rising Volatility’ and ‘How To Rent Your Options For Free’. This strategy aims for consistent and steady gains with holding period of 2-7 days. SO model portfolio is not designed for speculative trades although we might do some in the speculative forum. SO is not a get-rich-quick-without-efforts kind of newsletter. I'm a big fan of the "slow and steady" approach. I aim for many singles instead of few homeruns. My first goal is capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come. We continue expanding the scope of our trades beyond the earnings trades, Iron Condors and calendars. We are trading SPY, GLD, TLT, VIX and other ETFs to diversify the portfolio. We also started trading weekly trades to boost the returns. We will continue refining those strategies to get even better results. This gives members a lot of choice and flexibility. Looking at specific strategies, pre-earnings calendars were big winners in 2014, producing 17% average return with over 80% winning ratio. We will continue trading what works the best and adapt to the market conditions. What makes SO different? First, we use a total portfolio approach for performance reporting. This approach reflects the growth of the entire account, not just what was at risk. We balance the portfolio in terms of options Greeks. SteadyOptions provides a complete portfolio solution. We trade a variety of non-directional strategies balancing each other. You can allocate 60-70% of your options account to our strategies and still sleep well at night. Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently. We put our money where our mouth is. Our performance reporting is completely transparent. All trades are listed on the performance page, with the exact entry/exit dates and P/L percentage. It is not a coincidence that SteadyOptions is ranked #1 out of 704 Newsletters on Investimonials, a financial product review site. Read all our reviews here. The reviewers especially mention our honesty and transparency. We place a lot of emphasis on options education. There is a dedicated forum where every trade is discussed before the trade is placed. We discuss different strategies and potential trades. Unlike most other services that just send the trade alerts, our members understand the rationale behind the trades and not just blindly follow the alerts. SO actually helps members to become better traders. Other services In addition to SteadyOptions, we offer the following services: Anchor Trades - Stocks/ETFs hedged with options for conservative long term investors. Steady Condors - Hedged monthly income trades managed by the Greeks. LC Diversified Portfolio - broadly diversified, absolute return, multi-strategy portfolio. The LCD is our most diversified and scalable portfolio, I highly recommend that members check it out. It is offered as an added bonus of all subscription plans. We also offer Managed Accounts for Anchor Trades and LCD. Let me finish with my favorite quote from Michael Covel: "Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between." Subscription is now open to new members for a limited time. We invite you to join one of the most successful options newsletters. When you join SteadyOptions, we will share with you all we know about options. We will never try to sell you any additional "proprietary systems", training, webinars etc. All our "secrets" are included in your monthly fee. Happy Trading from SO! Start Your Free Trial
  18. Performance dissected It is important to mention that those numbers are pre-commissions, so actual results will be lower. As with every trading system which uses multi leg trades, commissions will have a significant impact on performance, so it is very important to use a cheap broker. We have extensive discussions about brokers and commissions on the Forum (like this one) and help members to select the best broker. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissected topic for more details. Depending on your commissions and allocation, the return on the total account including commissions would be in the 50-60% range in 2013. eptember-October was our worst losing streak since inception. We let few trades to get out of control and the losses were higher than we would like. We expect to have a better risk management going forward. Our strategies SteadyOptions uses a mix of non-directional strategies: earnings plays, Iron Condors, Calendar spreads etc. The pre-earnings strategy is based on my Seeking Alpha articles ‘Exploiting Earnings Associated Rising Volatility’ and ‘How To Rent Your Options For Free’. This strategy aims for consistent and steady gains with holding period of 2-7 days. SO model portfolio is not designed for speculative trades although we might do some in the speculative forum. SO is not a get-rich-quick-without-efforts kind of newsletter. I'm a big fan of the "slow and steady" approach. I aim for many singles instead of few homeruns. My first goal is capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come. We continue expanding the scope of our trades beyond the earnings trades, Iron Condors and calendars. We started trading SPY, GLD and VIX and added the double calendar as an additional earnings strategy. We also started trading weekly trades to boost the returns. We will continue refining those strategies to get even better results. This gives members a lot of choice and flexibility. Looking at specific strategies, VIX calendars and pre-earnings calendars were big winners in 2013. VIX put calendars produced 7 out of 7 winners with average return of 35%. Pre-earnings calendars produced 20% average return with 88% winning ratio. Due to low IV environment, the earnings straddles did not perform as well, but still produced overall positive returns. We will continue trading what works the best and adapt to the market conditions. What makes SO different? First, we use a portfolio approach, that may include a variety of non-directional strategies. We balance the portfolio in terms of options Greeks. The earnings trades are vega/gamma positive and theta negative. To balance them we might open calendars, Iron Condors or butterfly trades which are theta positive. We might use a mix of different expirations to balance the gamma. Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently. Our performance reporting is completely transparent. All trades are listed on the performance page, with the exact entry/exit dates and P/L percentage. We place a lot of emphasis on options education. There is a dedicated forum where every trade is discussed before the trade is placed. We discuss different strategies and potential trades. Unlike most other services that just send the trade alerts, our members understand the rationale behind the trades and not just blindly follow the alerts. SO actually helps members to become better traders. New services In 2013 we launched two new services: Anchor Trades - Stocks/ETFs hedged with options for conservative long term investors. Steady Condors - Hedged monthly income trades managed by the Greeks. We will have separate posts discussing those services. We intend to start auto-trading the Steady Condors soon, and we also offer Managed Accounts for those two services. You can read about all the different options here. Let me finish with my favorite quote from Michael Covel: "Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between." Subscription is now open to new members for a limited time. Happy Trading from SO! Start Your Free Trial
  19. Non directional income trading wasn't designed for relentless trends like 2013 provided and many of our competing services set record drawdowns. Our worst drawdown in 2013 was less than 3%, and our year end performance was 29.4%. We report performance net of commissions, on the whole account, and non-compounded. If you would have begun with a $40,000 account you would have ended with $51,760. Please be sure to read the final comments of the Steady Condors introduction to understand our transparency in reporting performance compared to other services. Many traders and investors are continually in hot pursuit of the next “holy grail” strategy looking at nothing other than past returns and often forgetting about what is equally important at the end of the day…that nasty four letter word we all have to deal with in the financial markets…RISK. The primary focus of Steady Condors is risk management, whereas we find many of our competing services make attempts to predict the market with their credit spread and condor trades. Nobody knows where the market is going, so stop caring about what it will do next. Focus on executing your plan (that means you have to have one!), and ignore all the noise. Most months in 2013 we were required to make several adjustments to keep our deltas under control as the markets continued to march higher, but this risk management is what allowed us to still produce a nice profit for the year with minimal stress while many other condor traders relying on "technical resistance levels" were wondering/hoping that "it can't go any higher, can it?" Make no mistake, iron condors can be brutal on the upside as well as the downside as many learned in 2013. When comparing Steady Condors to other services or strategies, don’t forget to consider both historical performance AND historical drawdowns in both up and down markets. The plan for 2014 It’s pretty simple, but requires discipline…Follow our trade plan one day and one month at a time. That will never change; the best traders are normally fanatics about this. Some years will be better than others but if you stop focusing on the result of each individual trade and define success on an annual (or longer) basis we are confident you will be very satisfied with our service. “Keep your rules rigid, and your expectations flexible.” We are NOT saying replace all your other investments and load the boat with Steady Condors, but instead consider how adding a risk managed and market neutral income generating strategy like Steady Condors could benefit a portion of your portfolio. We are very excited to see what 2014 brings, best wishes and good trading to all! Start Your Free Trial
  20. After booking 146% ROI in 2014, we closed 8 trades in January, producing an incredible 88% winning ratio and 16% average return per trade. Our success continues in February. Here is the list of ALL trades we closed so far in 2015: LNKD calendar: +30.0% EXPE straddle: +0.7% GMCR calendar: +6.8% VIX calendar: +10.0% RL straddle: +13.8% GOOG calendar: +33.3% FB calendar: +15.0% BABA calendar: +26.3% MSFT straddle: -2.0% SPY/TLT combo: +15.0% NFLX calendar: +10.2% RUT Iron Condor: +19.3% INTC straddle: +6.8% 13 trades. 12 winners. Overall 2015 YTD ROI: 30.9%, or 18.5% return on the whole account (based on 10% allocation per trade). That means that if you allocated 10% of your portfolio to each trade, your account would be up 18.5% just in the last 5 weeks. I know this sounds too good to be true. I know that people are tired of investment services that manipulate their numbers (you can find some examples here). However, those numbers are real. They are based on actual trades. All trades come with screenshots of broker fills. Each and every trade is archived on the forum and can be verified. In fact, many of our members did even better than the official performance. Some members books 50% gain in SNDK, 30%+ gain in INTC, 30%+ gain on YELP, 25%+ gain on AMZN, 15%+ gain on YUM etc, in addition to our official picks. At SteadyOptions, full transparency is the name of the game. No "hypothetical performance reporting", "profit potential" or other tricks. We execute all trades in our personal accounts. ALL trades are listed on the performance page. We won't ask you to email us to get the track record. We won't ask you to sign up first to get the track record from the members area. Can other newsletters show the same level of transparency? Finally, we would like to share with you the latest testimonial from one of our members: "I would definitely recommend SteadyOptions for the trader who is tired of the "double your money in a month" type of philosophy and just wants to steadily and confidently increase his account by credible and attainable figures. Kim is a great trader while also being a patient and thoughtful teacher and his forum is an invaluable source of wisdom for the serious trader that wants to learn to fish his own fish. It is refreshing to learn from a real trader, with real numbers, trading his own money as opposed to the other "traders" that "teach" for a living." It is not a coincidence that SteadyOptions is a top ranked newsletter on Investimonials. You can read all our reviews here. Why not to try us free for 10 days? You have nothing to lose - cancel before the end of the free trial and you are not billed. Start Your Free Trial
  21. Please note that those results are based on real fills, not hypothetical performance. Performance dissected It is important to mention that those numbers are pre-commissions, so your actual results will be lower. As with every trading system which uses multi leg trades, commissions will have a significant impact on performance, so it is very important to use a cheap broker. We have extensive discussions about brokers and commissions on the Forum (like this one) and help members to select the best broker. Commissions reduce the monthly returns by approximately 2-3% per month, depending on the broker. Please refer to Performance Dissected topic for more details. According to Pro-Trading-Profits.com, our Average Annual Return since inception is a remarkable 124.6%, including commissions. Current Year Annualized Rate of Return is 284.9%. SteadyOptions strategies SteadyOptions uses a mix of non-directional strategies: earnings plays, Iron Condors, Calendar spreads etc. The pre-earnings strategy is based on my Seeking Alpha articles ‘Exploiting Earnings Associated Rising Volatility’ and ‘How To Rent Your Options For Free’. This strategy aims for consistent and steady gains with holding period of 2-7 days. SO model portfolio is not designed for speculative trades although we might do some in the speculative forum. SO is not a get-rich-quick-without-efforts kind of newsletter. I'm a big fan of the "slow and steady" approach. I aim for many singles instead of few homeruns. My first goal is capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come. What makes SO different? First, we use a total portfolio approach for performance reporting. This approach reflects the growth of the entire account, not just what was at risk. We balance the portfolio in terms of options Greeks. SteadyOptions provides a complete portfolio solution. We trade a variety of non-directional strategies balancing each other. You can allocate 60-70% of your options account to our strategies and still sleep well at night. Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently. We put our money where our mouth is. Our performance reporting is completely transparent. All trades are listed on the performance page, with the exact entry/exit dates and P/L percentage. It is not a coincidence that SteadyOptions is ranked #1 out of 704 Newsletters on Investimonials, a financial product review site. Read all our reviews here. The reviewers especially mention our honesty and transparency. Other services In addition to SteadyOptions, we offer the following services: Anchor Trades - Stocks/ETFs hedged with options for conservative long term investors. Steady Condors - Hedged monthly income trades managed by the Greeks. LC Diversified Portfolio - broadly diversified, absolute return, multi-strategy portfolio. The LCD is our most diversified, comprehensive and scalable portfolio. I highly recommend that members check it out. It is offered as an added bonus of all subscription plans. You can also read a comprehensive overview of the strategy here. We also offer Managed Accounts for Anchor Trades and LCD. Subscription will reopen to new members on July 9 for a limited time. We invite you to join one of the most successful options newsletters.When you join SteadyOptions, we will share with you all we know about options. We will never try to sell you any additional "proprietary systems", training, webinars etc. All our "secrets" are included in your monthly fee. Happy Trading from SO! Related articles: SteadyOptions 2014 - Year In Review Steady Condors: The Comeback SteadyOptions 2014 Half Year Report: 95.3% ROI Steady Options 2013 - Year In Review How to Calculate ROI in Options Trading Start Your Free Trial
  22. The problem is that VIX calendar is not a "standard" calendar where the only capital requirement is the debit paid. Your risk is not similar to regular calendar spread. You may lose more than the debit you pay for. The reason is that VIX options are priced based on VIX futures, not VIX cash index. Regular long calendar spreads don’t require margin. Your cost is the debit you pay. However, VIX calendar spreads requires margins. How to calculate margin requirement for VIX calendar spreads? Margin requirement varies between brokers. I'm using IB (Interactive Brokers), and I believe they offer the most reasonable margin requirements: $150 per spread. Same requirement for put and call calendars and all strikes. So what was the gain in our case? We paid $0.25, but the capital requirement was $175 ($25+150). $55 gain equals to 31.4% gain, and this is what we will be reporting in our performance. This was our seventh VIX winner this year. Previous winners included 65.5%, 38.9%, 22.2% gains, among others. All gains have been calculated using margin requirements. The subscription is now open for limited time. We already booked 125.4% ROI in 2015. We invite you to join us and learn how to trade VIX and other strategies. Start Your Free Trial
  23. We closed CMG and AMZN trades for 20% gain, GOOG for 37% gain, TSLA for 34% gain, MSFT for 13% gain, among others. We also booked 22% gain in VIX calendar, 13% in RUT calendar and 17% in SPY/TLT combo. We closed 15 trades in April, 13 winners and only 2 losers, for an overall ROI of 30.0%! Our ROI in 2015 is an amazing 85.5%, in just 4 months. You can see the full track record here. The earnings season is not over yet. We still have CSCO, NKE, FDX, ORCL among others. We also trade SPY, VIX and RUT on regular basis. Our favorite names (TSLA, LNKD, NFLX and GOOG) continued to deliver excellent results. Here are our results from trading those stocks in the recent cycles: TSLA: +34, 28%, +31%, +37%, +26%, +26%, +23% LNKD: +9, +30%, +5%, +40%, +33% NFLX: +30, +10%, +20%, +30%, +16%, +30%, +32%, +18% GOOG: +37, +33%, +33%, +50%, -7%, +26% You read this right: 25 winners, only one small loser. This cycle was no exception: all four trades were winners, with average gain of 27.5%. So what's our secret? First, a lot of hard work. There are no shortcuts in trading. Our first concern is how not to lose, not how to win. Our big edge is trading similar setups cycle after cycle. When you do something time after time, you become very good at it. At SteadyOptions we spend hundreds of hours of backtesting to find the best parameters for our trades: Which strategy is suitable for which stocks? When is the optimal time to enter? How to manage the position? When to take profits? The results speak for themselves. We booked 147% ROI in 2014 and 85% ROI so far in 2015 (ex-commissions). All results are based on real trades, not some kind of hypothetical or backtested random study. A full track record is presented on the performance page. If you want to learn more how to use our profitable strategies and increase your odds, we invite you to join SteadyOptions before it closes to new members next month. Start Your Free Trial
  24. The following article described few stocks that we use over and over again, cycle after cycle. We said "$TSLA, $LNKD, $NFLX, $GOOG: Thank You, See You Next Cycle". Well, the Next Cycle is already here. NFLX is one of those stocks. Here are our results from NFLX in the recent cycles: +10%, +20%, +30%, +16%, +30%, +32%, +18% Another earnings cycle has arrived, and NFLX delivered another nice winner for us. We opened a pre-earnings calendar at average price of $3.50 and exited at average price of $4.55, booking a 30% gain in the process. That marks eighth consecutive NFLX winner in the last few cycles. But some of our members did even better. Here is a screenshot from the forum: This member booked 47% gain! Here is another one: And one more: Those are real fills from real members. Not hypothetical returns. REAL RETURNS FROM REAL TRADERS. Those returns are even more remarkable when you consider the fact that the stock moved 15%+ in the last few days. We played it non-directionally, so we didn't really care which direction it will move, but booking 30-50% gains on a non-directional strategy after such a move is truly amazing. Earnings season is just starting. We are planning to play GOOG, FFIV, CMG, FB, AMZN, MSFT, BABA, LNKD, TSLA and more. Each stock has its own "character", the best time to enter and its unique setup. We already booked 57.6% ROI since the beginning of 2015. We can help you. If you want to learn those profitable options strategies: Start Your Free Trial
  25. As you noticed, we closed our December trades two weeks before expiration, to reduce the negative gamma risk. We recommend reading the Why You Should Not Ignore Negative Gamma article to understand the gamma risk. This is another thing we do differently from many other services. We open our trades early and close them early. We would typically open the trades 6-8 weeks before expiration and close them 2-3 weeks before expiration. Here is the P/L chart for 2008-2015 (live trading began in late 2012 as shown on the performance page): The chart presents non-compounded P/L on 20k account, including commissions. Total P/L since Jan. 2008 is $38,502 or 192.5%. Anyone who has traded more than a handful of non-directional iron condors knows they can be extremely challenging in a trending market potentially causing a lot of stress, large drawdowns, and significant losses. They aren't the Holy Grail (no single strategy is). It’s normally relatively easy to make money with high probability condors 9 or 10 months per year when the markets are range bound…But many condor traders give back most or all of their profits during the usual 2 or 3 losing months each year when the markets do make large moves because they lack a detailed plan for risk management. “I would have had a great year if it wasn’t for one or two months”. If you trade condors without a detailed risk management plan you will eventually experience large losses. Since our trading strategies naturally have a high expected monthly win rate our risk management objective is to avoid giving back much more than one month’s average earnings during our losing months. This is why we introduced the Steady Condors. We tweaked the traditional Iron Condor strategy to address the issues and make the P/L curve much smoother. As we always say, you can't control returns, only manage risk. I really dislike when people make trading sound like if you are really good at it you somehow have control over your returns. The only thing you can do is build a winning strategy (better yet, multiple winning strategies with low correlation) and then manage your risk and position size so that you stay in the game long enough to let your edge work out over the long term. What risk management does is lower your win rate in order to maintain positive expectancy. It often sounds counter intuitive to new traders to learn they need to win less in order to make more money (or make any money at all) over the long term. We urge you to be very cautious about any service that only promotes a high win rate. Win rate alone tells you absolutely nothing. How many times do you get emails about a "options strategy with 99% winners" and "make $xxxx dollars per month". Unfortunately, humans desperately want to believe there is a way to make money with virtually no risk. That’s why Bernie Madoff existed, and it will never change. It is also important to remember that Steady Condors reports returns on the whole portfolio including commissions. Our 20k unit will have two trades each month (the RUT MIC and the SPX MIC). With 20% cash, we will allocate ~$8,000 per trade. If both trade made 10%, that means $800 per trade or $1,600 total for the two trades. In our track record, you will see 1,600/20,000=8%. Other services will report it as 10% (average of the two trades). In addition, our returns will always include commissions. If you see 5% return in the track record, that means that $100,000 account grew to $105,000. Plain and simple. If we were to report returns on margin as most other services do, our returns would be about 50-60% higher. For example, 2015 return would be 80.8%% and not 46.7%. Another point worth mentioning is rolling. If you look at some services, you might see few last months of data missing. That would usually mean that the trades were losing money and have been rolled for few months, to hide losses. In some cases, the unrealized losses can reach 25-50%. Rolling might work for some time - till it doesn't, and unrealized losses become realized. By then it's usually too late. It is very important to know how returns are reported, in order to make a real comparison. Always make sure to compare apples to apples. As a reminder, Steady Condors is a strategy that maximizes returns in a sideways market and can therefore add diversification to more traditional portfolios. Selling options and iron condors can add value to your portfolio. They aren't the holy grail. Just like everything else. Both our Anchor and 15M strategies (available on the LC Diversified forum as part of any membership) have had negative correlation of monthly returns to Steady Condors and therefore have blended together nicely for a diversified and relatively low maintenance portfolio. Click here to read how Steady Condors is different from "traditional" Iron Condors. Related Articles: Why Iron Condors are NOT an ATM machine How to Calculate ROI in Options Trading Why You Should Not Ignore Negative Gamma Can you double your account every six months? Can you really make 10% per month with Iron Condors? Want to join our winning team? Start Your Free Trial