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

[OddTrader]

OP: There are many flaws in your strategy. Not only do you incur gap risk, which was already identified, but you incur the potential for death by a thousand cuts selling 100% of the underlying stock every tick < entry price, buying it back every tick over. Throw in you will be giving up the bid/ask spread each time and paying commissions and its probably a break even strategy at best. No different than delta hedging imo.

" No different than delta hedging imo. " It's a big difference due to lack of delta hedging by the strategy! imo

Say, if 50% of all trades end up closing at around 0.60 delta ITM on average at expiration, the under-hedge loss of 0.40 delta per trade with the 100 stocks would produce a gross loss for the year.

A similar problem would exist also when using initially 100 stocks for 2 options due to nonlinear issue for a loss of 0.20 delta (0.60deltax2 or 1.20 delta with options - 1.00 delta with stocks) per trade with the 2 options, considering as a static hedge scenario. Just 2 cents!

 

[botpro]

What liquid Euro-style are 40% IV? Most stay in the 10-15% range for extended periods. SPX, DJX, NDX, don't see 40% much the last few years.

Yes, a good question indeed as the US has mostly only the indices as European Style.
I'll study whether that condition in the system is really necessary or not.

 

[botpro]

you incur the potential for death by a thousand cuts selling 100% of the underlying stock every tick < entry price, buying it back every tick over.

I'm not sure what you exactly mean, can you please give some more info on what you mean?
What do you mean by "by a thousand cuts"? Do you mean the impact of thousands of traders
trying to do the same because all are using the same strategy/system? That interessting aspect I haven't researched yet.

 

[botpro]

" No different than delta hedging imo. " It's a big difference due to lack of delta hedging by the strategy! imo

Say, if 50% of all trades end up closing at around 0.60 delta ITM on average at expiration, the under-hedge loss of 0.40 delta per trade with the 100 stocks would produce a gross loss for the year.

A similar problem would exist also when using initially 100 stocks for 2 options due to nonlinear issue for a loss of 0.20 delta (0.60deltax2 or 1.20 delta with options - 1.00 delta with stocks) per trade with the 2 options, considering as a static hedge scenario. Just 2 cents!

Do you mean this kind of hedging as used in the system is worser than (static or dynamic) zero-delta-hedging?

 

[botpro]

Good news from my peliminary research on improving this system:
by using short Call and short Put on the same stock at the same time, it is possible to double the profit! IMO very cool!
Ie. instead of the 9.2% per month then it would be 18.4% per month, and that would mean 658.96% p.a. with just the basic system!

 

[botpro]

I think with this system a new era has begun...
Also for hedging...

 

[userque]

Good news from my peliminary research on improving this system:
by using short Call and short Put on the same stock at the same time, it is possible to double the profit! IMO very cool!
Ie. instead of the 9.2% per month then it would be 18.4% per month, and that would mean 658.96% p.a. with just the basic system!

Nice!

You've done it again!

 

[Shay]

Good news from my peliminary research on improving this system:
by using short Call and short Put on the same stock at the same time, it is possible to double the profit! IMO very cool!
Ie. instead of the 9.2% per month then it would be 18.4% per month, and that would mean 658.96% p.a. with just the basic system!

so you buy the stock
sell a call and a put
if the stock go up, you sell the stock, because you need to hedge for the put
if the stock go down, you sell the stock, because you need to hedge for the call

 

[botpro]

so you buy the stock
sell a call and a put
if the stock go up, you sell the stock, because you need to hedge for the put
if the stock go down, you sell the stock, because you need to hedge for the call

As said: it was just a preliminary result, but yes, I understand your point: I'll have to recheck...

Update:
It seems that what I wrote is indeed correct, because of this: "there can be only one (active)"... (indeed very tricky to understand this mechanism!).
Ie. it results in: either long stock or short stock, but not both at the same time. It's a speciality of the hedging mechanism used in this system.
That's also the subtitle of that improved combo-system as was announced yesterday:

- And there will be a combo-system with Call and Put for the same stock. It will have this funny name: "Hedged options selling system sys15 - There can be only one"

Update-2:
The hedging mechanism as used in this system is IMO better (ie. more effective) than delta-hedging.

 

[samuel11]

The hedging mechanism as used in this system is IMO better (ie. more effective) than delta-hedging.