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For instance, if there were five long straddles on, it is fairly likely that there might also be a short volatility trade on as well. This would act as a hedge in the event that volatility dropped significantly, ameliorating some of the losses that would have come from the long straddles. Because of the way the trades are designed to interact, the below information and summaries should not be taken as the gospel. But it is our hope that the information can be used to improve trade weighting and structure overall. In 2018, Steady Options had 161 different trades, broken down as follows: 59 Hedged Straddles; 40 Calendar Spreads; 34 Butterflies or Iron Condors; 14 Volatility Trades (VXX and SVXY); 12 Straddles; and 2 others With the basic information of each type of trade, we find the following: Trade Type No. Trades Avg. Return Std. Deviation Max Gain Max Loss % Win Hedged Straddle 59 4.66% 7.00% 16.20% -15.70% 83.05% Calendar 40 9.62% 30.65% 47.50% -97.40% 77.50% Fly/Condor 34 16.72% 30.23% 81.40% -80.40% 85.29% Volatility 14 -13.68% 43.77% 40.90% -100.00% 28.57% Straddle 12 8.33% 11.46% 31.30% -11.60% 83.33% Other 2 3.20% 15.27% 14.00% -7.60% 50.00% A quick look shows us, not surprisingly, that Steady Options core trade of hedged straddles is easily the most reliable and lowest risk but also contains the lowest average return. Also, it has the smallest maximum loss for any of the regular trades which only goes to prove that, even in options, there’s no such thing as a free lunch. Higher returns come with higher risk. The highest returns came with Steady Options’ butterfly and iron condor trades. Members who has been trading these for a while, particularly the TLT butterfly or SPX butterfly, probably count such trades as key pieces of their strategies. The trades regularly generate returns of more than twenty percent. However, unlike the hedged straddles, if things move adversely against you, close to complete losses are possible. The TLT butterfly’s largest loss last year was over eight percent and the SPX butterfly’s largest loss was over sixty-five percent. Which is why Steady Options emphasizes position sizing. One of the most difficult things to do in active trading, and in particular options trading, is sticking to a plan and not creating larger positions than dictated by one’s trading plan. Steady Options uses a maximum position size of ten percent. Even that must be done cautiously if similar positions are on at the same time. For instance, if a member had on a full RUT condor and SPX butterfly, and the markets move significantly, it is likely that they both will be damaged. Since the butterfly/condor trades have a higher chance of higher losses, exposure is closer to twenty percent than ten percent. I personally avoid having both similar RUT and SPX positions on at the same time. TLT has a lower correlation than RUT and SPX, which makes having it on, at the same time as the SPX and RUT, less of an issue. One interesting factor to note, we should likely prefer a butterfly/condor trade to a calendar trade. They come with very similar risk profiles, standard deviations and max loss and win percentages, but the butterfly/condor trades have almost double the average return. Similarly, if a member was trying to decide between an unhedged straddle and a calendar position, the unhedged straddle is likely the better candidate, as it has a similar return profile (8.33% vs 9.62%), but lower risk with lower maximum drawdowns. Pulling up the rear are the volatility trades, which are easily the worst performing portion of the Steady Options library of trades. In fact, it is likely that I will not trade any of these moving forward as stand-alone trades. However, one of the great values of a volatility trade is using it to hedge straddle, butterfly and condor positions. I would still use it for this purpose. Given the Steady Options trades are typically examined by how they work together, viewing volatility trades on their own is a bit unfair. For example, if I had on five hedged straddles, I would be fairly inclined to put on a volatility trade if it setup correctly. In looking at this data and in trying to construct how to select what trades to do when, it appears that Steady Options does a pretty good job of blending the trades. The Hedged Straddles should be the most heavily weighted (they are). Moving forward, we may want to slightly increase the number of butterfly/condor trades and slightly reduce the number of calendar trades. Doing so should increase risk adjusted returns by a small bit. Sometimes potential trades exist which could be setup as either a calendar or unhedged straddle. These numbers tell us, everything else being equal, the unhedged straddle is likely the better trade from a risk adjusted standpoint. However, don’t take this as an absolute rule. For example, all of the AAPL calendars were successful trades, while the NFLX calendars were more volatile. Always dive further into the data and how individual instruments perform. Data like this can be dangerous if it is taken in isolation. Always keep in mind how trades interplay with each other, look further into how individual stocks play in different types of trades, and consider this data. This is merely another tool to use in creating a better risk adjusted trading plan. Our contributor @Yowster does performance analysis by trade type every year. Here are the highlights from his 2018 analysis: Pre-Earnings Calendars Average gain% down from prior years, largely because of 2 really big losers caused by large stock price movement away from calendar strike. Not really surprising given the bigger market swings this year. Without those big losers the average gain was right in line with prior years (we avoided big losers in prior years). Win rate comparable to prior years,. and very high. Pre-Earnings Straddles/Strangles Highest average gain percentage ever. Highest percentage of winning trades ever. Very low risk trades as it takes RV levels going much lower than prior cycles for these trades to be significant losers (only 4 of 72 trades had losses over -10%). Trade count down slightly from last year due to periods of elevated market volatility. These are riskier trades to open when IV is very high, as the risk for significant straddle price decline due to falling IV can really hurt trades. Index trades (RUT, SPX, TLT) Typically longer duration trades, can be open for 30+ days. Gain percentage down slightly from last year, due to 2 large losses. As with the calendars, this is not surprising given some of the bigger market swings. VIX-based trades Typical trade was for VIX to decline after spikes, but with larger and more sustained spikes this year there were many losing trades. Two 100% losses really hurt the overall average. Reverse Iron Condor (RIC) trades Started using the RIC trade later in the year during times when VIX was high (20+). Trades were designed to take advantage of larger price swings for stocks that was somewhat common during these elevated VIX times. When the stock prices moved, we saw some great gains. Going forward into January/February earnings cycles, will look to use RICs as alternative to straddles if VIX is still high – because although RICs hurt to IV decline, they are hurt by a lesser degree than straddles. However, downside of RICs compared to hedged straddles is that you need the stock price to move to make a profit. Summary 2018 was unlike prior years for significant chunks of time. Prior years had low volatility and any VIX spike above 20 quickly reverted back down. 2018 had VIX near 20 for about 5 months of the year (7 months were much like prior years). Despite the increase in volatility, 78% of all SO trades were winners with an average gain of 7.07%. The biggest take away from this year is that certain trade types are better for certain market volatility conditions – hedged straddles and calendars are great to put on when volatility is low but they are riskier when volatility is elevated. When volatility is elevated, other trades like RICs and butterfly are less risky to put on during these times. SO is a great community, where members share ideas that benefit all of us and we all continue to learn more and more. Looking forward to continued success in 2019. Christopher B. Welsh is a SteadyOptions contributor. He is a licensed investment advisor in the State of Texas and is the president of a small investment firm, Lorintine Capital, LP which is a general partner of two separate private funds. He offers investment advice to his clients, both in the law practice and outside of it. Chris is an active litigator and assists his clients with all aspects of their business, from start-up through closing. Chris is managing the Anchor Trades portfolio.

I received this very upsetting note yesterday. Dear Mark, I read in your book about volatility as one of the important factors of the price of an option I have a few question about, what you wrote. Implied Volatility vs. Future Volatility 1) In your book you say that volatility is unknown and different traders can get different values… but I have account with 3 brokers and they show the same (or very similar price) for the volatility… Future volatility is unknown. However, the market makers must make some volatility estimate or else they would be unable to establish bid and ask quotes. Your brokers are showing the IMPLIED VOLATILITY (IV) OF THE OPTIONS. They do not make estimates for the future volatility. They use the implied volatility because that is the best current estimate for future volatility. And that estimate changes, depending on many factors, including order flow (supply and demand). IV is often the best value we can use – unless you want to make your own estimate – and I doubt you want to try that. By definition IV is the volatility estimate that makes the fair value of any option equal to whatever price it is trading at in the marketplace. I was writing about people who make their own volatility estimates. They are the ones who cannot agree on what the volatility estimate should be and they are the traders who have different opinions on the value of an option. Those are the traders who could believe an option to be over- or under-valued in the marketplace. Not the brokers. They do not have an opinion. You will probably never make an estimate, but others can and do. You and I usually trade based on the assumption that the current IV and the current option prices represent fair value. But we can decide to go longer short vega, based on the current ‘fair value’ if we believe it is too high or too low. You can trade volatility if you so desire. Selling Leveraged ETFs Options 2) Since a lot of volatility, means that I can sell “expensive” options, doesn’t it make sense to sell options on Leveraged ETFs, such as FAS or FAZ, that have a lot of volatility? NO. If the underlying asset is VOLATILE then the underlying asset will undergo big price changes. If you sell options on stocks that make BIG MOVES, there is a good chance that the options will move ITM and that you will lose money. To compensate for the risk of selling options on volatile stocks (or ETFs), the options are priced higher. In other words, you get a higher premium, but that premium is justified. Your question frightens me. The pricing of options is a very basic concept. It may not be easy for us to know whether an option’s price is fair, but we have to accept the fact that the option premium that we see is the premium we can trade. If we choose to sell that premium, we do so believing that we have an edge. Volatile stocks have options with a high premium. Non-volatile stocks have options that carry much smaller premium. Surely you know that is true. When the stocks are volatile, option buyers are willing to pay higher prices because there is a decent chance the stock will undergo a significant price change that favors the option buyer (assuming he correctly bought puts or calls). Low-volatile stocks trade with much smaller premium because they are not likely to move far. People do not pay much for options when there is a high probability that the stock price will not vary too much during the lifetime of the option.. You must understand this. There is no way you can survive if this concept is not understood. Selling high-priced options because they are high-priced is foolish. The options carry a higher premium for a reason. What we want to do – and it is quite difficult – is to sell options when the implied volatility is higher than the future volatility of the stock will be. In other words, option buyers are paying for future volatility of the underlying. If that underlying asset is less volatile than expected, then we collected more premium than our risk deserved. Thus, we stand to profit over the longer term. But we do not know the future and we do not KNOW which options are priced too high. The bottom line is: It is wrong to believe that you can earn more money by selling options on volatile stocks or a leveraged ETF. You cannot trade options if you do not understand this principle. and last question Should I Use Portfolio Margin? 3) Do you think that a “portfolio margin” account, with more leverage, is a good idea? I would use all the leverage to sell options with 95% or more chance to expire worthless (and with the 5% I either get assigned, or roll out). Is this plan too risky? Portfolio margin allows traders to take a lot more risk. Reg T margin is far more limiting. I prefer Reg T margin because it removes the temptation for a trader to get in over his head. Yes, a lot more risk. If you are positive that you can handle the risk; if you are certain that you will NEVER, EVER allow yourself to have too much exposure to a big loss; if you are already a consistently profitable trader; if you are disciplined and will not use all available margin (above, you suggest that you would use all available leverage), or anywhere near all of it; then maybe you can use portfolio margin. But not now. Not if you do not understand the most elementary concept mentioned above. Let’s examine your question. You want to sell 5-delta options and expect to win 95% of the time. You plan to roll out or accept assignment on the 5% of the trades that end up with your short option being in the money. If that is true, then the plan is to hold all shorts until they expire worthless. All by itself that adds to risk. Some of those short options will be worth covering before they expire – just to minimize risk. You also must understand that you will not win 95% of the time unless your plan is to hold through expiration and not apply any risk management. But if you plan to roll out some trades that are not working, that already tells you that the 95% success expectation is just too high. Many times you will get too frightened to hold the trade and be forced to cover because even rolling out will leave you with a dangerous position. Consider this: You will not like the size of any loss. When you sell an option at a low price, it becomes very difficult for the undisciplined trader to pay 10 times as much to cover the short. Rolling out will not help. If your plan is to roll to a new 5-delta option, that will be a costly roll. If you plan to roll out for even money, then the short option will have a delta much higher than 5, and you will be taking more risk than your plan calls for. Please consider all aspects of your plan before taking action. So will you do it? Will you have the discipline to cover your shorts and lock in a good-sized loss? If the answer is not ‘ABSOLUTELY, YES’ then you cannot afford to use portfolio margin. Nor can you expect to make money by selling 5-delta options. That strategy is viable only for the disciplined (and experienced) trader. In my opinion, selling those low-delta options is not a good plan. There will be a day when those 5-delta options KILL you. It will not occur too often, and it will not necessarily come soon, but that day will arrive. There will be a big gap opening with a huge IV increase. There will be a day when those options you sold for 40 cents or one dollar will be trading at $20. At that point, the option’s delta easily could be between 35 and 60. Your account will be in deficit and you will be forced to buy back all of those options and your account will be worthless and you will owe your broker hundreds of thousands of dollars. If that sounds bad, the reality is even worse. The bid ask spreads would get very wide and your broker will buy those options by entering market orders. They will not ask your permission. You would be blocked from trading and your positions would be closed. Thus, you would not only pay that exorbitant implied volatility, but you would pay the ask price on a wide market. See for yourself. Lower the underlying price by 20%, double IV and see how much those options are worth And doubling IV may not be enough. IV is so are low right now that tripling of IV is a reasonable possibility. DO NOT DO THIS. No portfolio margin, and more importantly, if you do sell 5-delta options, you MUST watch position size. That is most important. I know that you do not want to believe that these warnings apply to you. But they do. I wish you well. But you scare me. Mark Mark Wolfinger has been in the options business since 1977, when he began his career as a floor trader at the Chicago Board Options Exchange (CBOE). Since leaving the Exchange, Mark has been giving trading seminars as well as providing individual mentoring via telephone, email and his premium Options For Rookies blog. Mark has published four books about options. His Options For Rookies book is a classic primer and a must read for every options trader. Mark holds a BS from Brooklyn College and a PhD in chemistry from Northwestern University.

Trading Drawdowns Peter Brandt explains: "There is a statistical concept known as the “underwater curve.” The underwater curve plots the time periods when new all-time high NAV levels are being registered (represented by “0” on an underwater curve) and the time periods in which drawdowns are either underway or in recovery back toward new all-time NAV levels. Most successful long-term traders are underwater the majority of time. Welcome to trading!" You are in a drawdown state 80% of the time and of that, you are in a severe drawdown state (greater than -20%) 67% of the time Did you know that Warren Buffett has had multiple 30-50% drawdowns in his career? Yet he is considered one of the greatest investors of all times. False claims by wolves in sheep’s clothing Peter continues: "Successful market speculation is one of the most challenging endeavors one can pursue. Yet, promoters of get-rich- quick-and-easy schemes run rampant in the email and internet worlds. If they are not registered with the SEC, FINRA or the CFTC/NFA or are not personally managing assets of investors they are free to make exaggerated claims. Their advertising is extremely appealing and enticing. Many of these training and trade signaling services claim to have REAL trading track records. But, as far as I am able to determine, none are willing to provide an attestation or audit letter from a national or regional auditing firm that has reconciled their IRS tax payments for trading profits, brokerage statements and bank deposits with their public claims." This is so true. Here are some of the claims I have seen 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. Some of those guys claim they live in mansions worth tens of millions, trade tens of millions in their personal account, but at the same time sell trading advisories for $50-100/month. Does it make sense to you? Many times they specifically mention (in fine print) that their performance based on "HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS". Does it mean anything when they don't actually trade? Red flags to Watch in Alert Services Moneyshow listed 10 Red Flags to Watch in an Options Alert Service. Here are some of them: The service doesn’t have any losing trades. The service won’t show you their closed trades. The trades have huge risk. The service inflates their ROI numbers. No detailed track record is posted. The performance is not based on real trades. Here is another HUGE red flag: If the promoter keeps bragging that he lives in a multi million mansion, drives a Lamborghini and has a private jet, run away. Really successful traders are modest and humble. They don't need all this BS. There are also a lot of ways to inflate your track record numbers, as I described in my article Performance Reporting: The Myths And The Reality. Some of them include: Basing performance on "Maximum profit potential". Calculating gains based on cash and not on margin Presenting "Cumulative return". Holding losing positions indefinitely. Resetting past returns after a large drawdown. And more. Those who want to find out more details about some of those scammers, I highly recommend reading real and objective reviews by Emmett Moore from tradingschools.org. Emmett also describes how some of them game the system and make their profits look real. Fascinating read, highly recommended. SteadyOptions lists all its trades on our performance page, winners and losers. The details of all trades are available on the forum with screenshots of our fills and can be verified with historical prices. 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? Trading Drawdowns by Peter Brandt Winning Trades and Losing Trades by Peter Brandt Want to learn how to trade successfully while reducing the risk? Start Your Free Trial

So I decided to check out one of the services reporting those remarkable returns. "Cumulative return"? Really? This service makes one trade per week, using weekly options expiring the same day. The way they present their results is "cumulative performance". They simply add the results of the individual trades together. While technically this is correct, does it mean anything? Would you be comfortable placing your whole portfolio into one weekly trade? When a newsletter claims a 1,000% return for the year, wouldn't you assume that if you started the year with $10,000 and invested in all the recommendations given on the site, they would now have $100,000? But this is not the case. A lot of services calculate their yearly return by adding together all the individual returns on each trade recommended for the year. And you can understand why a service would do that – it’s not only simple but, most importantly, it shows off their performance in the best possible light. Hey, if you could do just four trades per month and make 100% a month, why wouldn't you subscribe? Because you haven’t actually made 100%, that’s why. Not in the way that most people would think about trading or investment returns. In case of the described service, since those weekly trades are very risky, there is a significant amount of 100% losers. So realistically, you should not allocate more than 2% per trade with this strategy, and even this is a stretch. Are those returns live? To add insult to injury, it turns out that the website went public only in January 2015, but they present track record going back to October 2012. They assume (rightfully) that nobody in his right mind would pay over $1k/year for a service that exists only 3 months, but 2.5 years looks better, doesn't it? Of course the track record cannot be verified because the service did not even exist in 2012-2014, but how many people would be checking this? 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. You should always check if the reported results are live or backtested, by asking the services provider and/or checking the website creation date. The correct way to report returns SteadyOptions will always report our returns based on the whole account. The performance of the model portfolio reflects the growth of the entire account including the cash balance. Some services consider a $1,000 gain on a $1,000 investment to be a 100% return when the whole account is worth $10,000. SO considers this to be a 10% return — and that is the honest way of doing the calculations. There are a lot of other dirty tricks that some services use to push up their numbers. It might include reporting based on "maximum profit potential", calculating gains based on cash and not on margin etc. You can read my article Performance Reporting - The Myths And The Reality for full details. Still skeptical? Why not to take the SteadyOptions free trial and see by yourself how we are different from other services. Please refer to Frequently Asked Questions for more details about us. Related articles Can you double your account every six months? How to Calculate ROI in Options Trading Performance Reporting: The Myths and The Reality

Background An Anchor trade's goal is to prevent loss of capital while still generating a positive return in most market conditions. This strategy began with the premise that it must be possible to hedge against market losses without sacrificing all upside potential. The Anchor strategy's primary objective is to produce positive returns on an annual basis. How? Step 1 - Purchase ETF's highly correlated to the S&P 500 Step 2 - Fully hedge with S&P 500 put options Step 3 - Earn back the cost of the hedge over the course of a year You can read the full description here. Performance Since the strategy went live in 2012, Anchor has produced an 11.5% CAGR (Compound Annual Growth Rate) with 9.1% volatility, resulting in a 1.27 Sharpe Ratio. You can see the full performance here. In the same period of time, the S&P 500 index (including dividends) produced a 14.5% CAGR, with 10.7% volatility, resulting in a 1.36 Sharpe Ratio. Anchor has met its performance goal of lagging the S&P 500 by up to three percent in positive markets. Anchor performance includes commissions and fees. Since you cannot buy the S&P 500 directly, real life performance of your investment in S&P 500 will be reduced by commissions and fees, so the real life difference will be probably closer to two percent. Observations The S&P 500 has substantially outperformed it's long term average CAGR and Sharpe Ratio since 2012. It historically has a Sharpe Ratio of about 0.3 going back to 1926, yet has a Sharpe Ratio in excess of 1.3 since 2012. One universal principle in markets is reversion to the mean, which will eventually catch up to the S&P 500. The Anchor strategy could have potentially preserved capital during crisis periods such as 2008. In real trading, you can get a feel for how the option hedge can protect your portfolio by looking at August 2015 and January 2016, where the S&P 500 was down 5-6% while Anchor avoided losses. The goal of the Anchor strategy is to provide protection from bear markets and unpredictable surprise events. The S&P 500 has experienced four years of negative performance since 2000, for a cumulative loss of more than 80%, and multi standard deviation downside price shocks occur much more frequently than probability distributions predict. The day following "Brexit", the S&P 500 moved 4.7 standard deviations which is expected to occur less than once a century based on probability distributions, yet there has been close to 50 one day losses of 4 standard deviations or more since 1950. Markets can't be contained to probability distributions or academic theories, just ask Long Term Capital Management. The strategy is continuously being improved. For example, we switched from 2 week short options to 3 weeks. That has materially improved results, and would also have improved backtested results. Conclusion The impact of minimizing or potentially even avoiding losses in down markets should not be overlooked both mathematically and psychologically. Consider the following table, which displays the gain required to recover a prior loss. The key to the success of the strategy is combining exposure to market gains while permanently hedging against downside risk. The strategy is designed to participate in most of the market's upside while avoiding most of the market's downside. Easier said than done, but we are certainly pleased with the results to date on both a relative and absolute basis. Is the Anchor Strategy the Holy Grail? The answer is NO - in fact, no single strategy is. But we continue to improve the strategy designed to give investors the courage they need to invest confidently in the stock market for the long term. Start Your Free Trial

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.

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.

"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

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!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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