A free Trading System that guarantees at least 180% p.a.

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Shay said:
your Sunday is my Monday...
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LOL. It's sunday bro'.
Are you living on another planet ?
Yeah ... And we are the Speculator Elite.
And we will all make 180% Risk free.
Pigs begin to take off. OoOoOoh.
Sure, day trading has changed.

Kiddin'
 
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K-Pia said:
Lol. It's sunday bro'.
Are you living on another planet ?
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if i live in New Zealand, then i could be in a different day than yours, no ?
but no, it's Sunday here, but my week starts on Sunday, vacation is on Saturday.
 
Ok, here is the said system:

Code: 
Rules of the options selling system with simple hedging:

  1) The system consist of 2 parts:
       1.1) sell a call option of European Style, and
       1.2) go long the stock

  2) The option position is kept till expiration

  3) Simple hedging (not delta-hedging):
       3.1) if stockprice drops below the initial price then close the stock position immediately
       3.2) if the stockprice crosses from below the initial price then re-open the stock position immediately


Example: assuming InitialStockPrice=100, HistoricalStockVolatility=40%, Expiration=1 month(=21 business days)
  Selling 1 Call:
    Spot=100.00 Strike=100.00 ExpDays=21 HoldDays=21 EarningsYield=0.00% DividendYield=0.00% VolaPct=40.00% --> Call=4.60 Put=4.60

  Going long 100 shares of the stock:
    Spot=$100.00 --> CapitalNeeded=$10,000

  Since it's an option of European Style, an early assignment cannot happen, which is good in this case.
  At expiration date:
    Regardless what the CurrentStockPrice or the CurrentVola is: we will keep the credit fully.
    We will not make any profit from the stock position; all profit of the stock, if any, goes to the counterparty.

  Profit:
    We used the usual 2:1 overnight margin of the broker. So we have a leverage factor of 2.
    Meaning: of the $10,000 only half of it is our own investment (this is the basis for the PnL calcs).
    CreditReceived = $4.60 * 100 = $460
    MonthlyPnL = 460 / (10,000 / LeverageFactor) * 100 = 9.2%
    AnnualPnL  = ((1 + 9.2/100)^12 - 1) * 100          = 187.52%
    From these numbers the commissions paid has to be subtracted.


Remarks:
  It's up to you to apply this system in the market.
  To get the hedging correct, one would need to monitor and if necessary trade the stock nearly 24/7 by using multiple exchanges around the globe.
  Ie. by this, one has to eliminate any overnight gaps in the stock price.
  If applied correctly then the given guarantee holds, ie. at least 180% p.a.
  Using more volatile stocks and/or a shorter timeframe than the above used 1 month will give even more profit.
  Regarding margin: you have to do the math to get the 2:1 margin. Ie. in this case you would initially keep only $5000 in your account. The broker grants you 2:1 overnight margin (or 4:1 intraday margin).

Author: botpro at www.elitetrader.com


Enjoy!
 
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botpro said:
I really don't understand your reasoning: I'm giving away a system with certain properties, free of any cost, and you still want some guarantee.
Why don't you just test it yourself on paper by doing the maths, or an inhouse simulation using GBM+BSM?
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You offered the guarantee so I am taking you up on it. Are you now rescinding the guarantee? Was your original post fraudulent?
 
newwurldmn said:
You offered the guarantee so I am taking you up on it. Are you now rescinding the guarantee? Was your original post fraudulent?
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Then you'll ask for the guarantee's guarantee.

Backtest it for yourself.
(Even if the system ain't complete).
Or give it a try with pennies...

I just don't need any guarantee,
Since he assumes zero risk.
I assume it's BS.
Waist of time.
 
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