he/she just does not get it, at all...
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Option income strategies
- Thread starter akivak
- Start date
he/she just does not get it, at all...
DITTOQuote from lindq:
It is best as a trader to do you own work and not trust your health and wealth to a signal service. If these folks were turning those kind of numbers for themselves, and sticking with their own program, I can assure you that they wouldn't be trolling the internet for customers, and putting up with that hassle.
If their numbers were truly worthwhile and worthy of inspection, they'd have institutions throwing hundreds of millions at them.
Quote from lindq:
A Sharpe Ratio of 1.9 with their self-reported profits of only one losing trade over 7 years indicates some periods of very severe drawdown.
Which is why they don't report drawdown. Because if they did, it would scare the hell out of someone.
There is a very good reason why any of these sites are loaded up with warnings and disclaimers. You should read them and appreciate why they are there.
You CANNOT have reward without comparable risk. There is no free ride.
It is best as a trader to do you own work and not trust your health and wealth to a signal service. If these folks were turning those kind of numbers for themselves, and sticking with their own program, I can assure you that they wouldn't be trolling the internet for customers, and putting up with that hassle.
If their numbers were truly worthwhile and worthy of inspection, they'd have institutions throwing hundreds of millions at them.
(Note: Regarding the reliability of Sharpe Ratios, Long Term Capital Management (LTCM) had a sharpe ratio of 4.3 before they blew up and wiped out billions in equity.)
Sharpe ratio of 1.9 refers to the whole period since inception (2000). They had only one losing month in 5 years, not 7.
Here are Wicked profits full monthly results (including commission) as reported by Pro-Trading-Profits:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2000 11.6% 13.0% 15.8% 15.8% 12.6% 11.9% 15.1% 11.9% 12.6%
2001 14.8% 14.7% 7.5% 16.9% 3.4% 15.8% -0.3% -18.0% -15.2% 0.0% 6.8% -6.0%
2002 15.5% -5.5% 13.9% 12.7% 7.2% 3.7% 6.5% 14.4% 7.0% 0.5% 6.8% -0.9%
2003 11.0% -8.6% 0.0% -6.3% 14.2% 8.1% 0.0% -7.4% 10.2% 9.2% 3.3% -16.8%
2004 5.3% 5.3% 5.8% 4.7% 5.5% 5.3% 4.5% 5.0% 4.5% -21.6% 4.5% -11.5%
2005 5.5% 4.5% 4.5% 4.5% 4.5% 4.5% 0.5% 4.5% 1.3% 1.7% 3.3% 4.5%
2006 3.8% 4.5% 3.8% 2.8% 6.6% 4.5% 4.5% 3.3% 5.0% 3.3% 4.5%
2007 6.6% 3.8% -1.3% 2.8% 4.5% 5.9% 2.3% 2.3% 5.5% 2.8% 3.3%
2008 2.3% 6.1% 1.1% 2.8% 4.5% 3.3% 2.3% 2.3% 2.3% 2.3%
2009 2.3% 2.3% 2.3% 2.3% 2.8% 4.3% 2.8% 1.7% 2.5%
I also ask myself why someone would sell his system if itâs so good. However, their subscription fees are not small money. Even if you have starting capital of 100k and can make 50%, thatâs 50k per year. If you have 1000 subscribers and charge only $20 per month (like Terry Tips does), thatâs 240k per year. Option Pundit charges $150 per month. I assume he has at least 100 subscribers (probably more) â thatâs 180k per year. Itâs like boosting your return by additional 100% per year. Definitely not peanuts.
Institutions cannot trade those strategies â they are too big. Imagine one of those services issues a signal to buy a spread and institution puts an order to buy 10,000 spreads. Wouldnât they move the market?
At least during the periods that I was a subscriber of those services, I can testify that the numbers are real. I left them because at some point, I want to be able to trade on my owm, to manage my own risk etc.
You are correct that reward is related to risk, but itâs also related to the amount of work/time/effort one is ready to invest. I agree that something doesnât sound right when you see such returns, but I invite you to see those sites and tell me what do you think wrong with them. Not in âgeneral wordsâ but specifically.
People also talk a lot about market efficiency, but nobody can explain why stock like Citigroup was worth $9 a year ago, less than $1 8 months ago, $5 5 months ago, and $3 today. The business did not change that much in just one year. If the market was that efficient, people wouldnât make money on it.
While it makes sense that companies with buy back programs might be less volatile, many companies announce buyback programs but do not follow through and buy all of the stock. That could be a problem for this new brain storm by Goldman , pushing clients to sell naked puts.Quote from vhehn:
here is an interesting twist on selling premium. sell puts on stocks with big buyback programs in place that you wouldnt mind owning. the buyback program puts a floor under the price benifiting a put selling stradegy.
http://online.barrons.com/article/SB126091970802092803.html#articleTabs=article
Goldman Sachs, which recently studied this issue, is telling clients to start thinking of buyback programs as a persistent bid supporting stocks that can be exploited by selling puts.
I have a bigger problem with the muddled logic of the Barrons article in the link. It suggests that stock-buyback programs may create options trading opportunities by providing a persistent bid supporting stocks (that can be exploited by selling puts) which will reduce the implied volatility of put options. Is that the correct focus for naked put selling? Or is it getting the direction right? Look at what their recommended stocks id last year. Would anyone who received reduced put premiums been happy in that 38% down market environment?
Pehaps the study by Carpet, Conigliaro, et al was more more coherent than the Barrons article.
About 10 pages ago I started to wonder if this was a web site promotion or just someone with tunnel blindness.Quote from TraderZones:
Seriously, you are either a shill, or as clueless a newbie trader as we have experienced. There are thousands of these sites, each as useless and deceptive as the next.
Quote from TheoHornsby:
About 10 pages ago I started to wonder if this was a web site promotion or just someone with tunnel blindness.
I am leaning towards someone who buys up a basket of sites, showing unproven track records, and acting like they are interested newbies.
These sites should be completely blocked here, unless they pay $$$ like sponsors do. If I owned ET, these threads would be locked immediately.
We certainly get a regular trainload of shills here on ET.
Quote from TraderZones:
I am leaning towards someone who buys up a basket of sites, showing unproven track records, and acting like they are interested newbies.
These sites should be completely blocked here, unless they pay $$$ like sponsors do. If I owned ET, these threads would be locked immediately.
We certainly get a regular trainload of shills here on ET.
You can certainly believe whatever you want. Just note that I didnât actually mention any websites till someone else mentioned Condoroptions.
I wish this was true and I owned all the nine or ten sites I mentioned in my posts. I would be actually a very rich man by now..
I understand that some people are skeptical. There are a lot of charlatans out there. However, I know personally at least 5 people who subscribed to some of those services and with proper money management were able to make very consistent monthly returns, including during 2008 crisis. I guess that some people prefer making money and others prefer being skeptical and suspicious.
This forum is intended for people who want to exchange trading experience and become better traders. Subscribing to trading service is for many people part of the learning process. If I can share my experience with those sites, I donât see whatâs wrong with this. I am very thankful to people who gave me their comments/warnings/advice, based on their experience. If I can do something for others who are interested in my (limited) experience, including names and reviews of some of those services, I will gladly do it.
akivak,
I appreciate the info you have provided. I have also used some of these sites and found them valuable. Also a lot of them have free info that they share, or you can subscribe for short or trial periods.
I am now mainly doing BPS on SPY. Still concerned about down-side risk, have been trying out just using a combo of VIX calls and QQQQ puts as a protection plan.
I appreciate the info you have provided. I have also used some of these sites and found them valuable. Also a lot of them have free info that they share, or you can subscribe for short or trial periods.
I am now mainly doing BPS on SPY. Still concerned about down-side risk, have been trying out just using a combo of VIX calls and QQQQ puts as a protection plan.
akivak,
consider a wide spread with your ICs. If you treat the long wings as "black swan" protection by buying 2x long FOTM protection, I believe your gains would have been more than two times the return you've been experiencing with the ICs...
Check it out and let me know if you concur...
Walt
consider a wide spread with your ICs. If you treat the long wings as "black swan" protection by buying 2x long FOTM protection, I believe your gains would have been more than two times the return you've been experiencing with the ICs...
Check it out and let me know if you concur...
Walt
Quote from jones247:
akivak,
consider a wide spread with your ICs. If you treat the long wings as "black swan" protection by buying 2x long FOTM protection, I believe your gains would have been more than two times the return you've been experiencing with the ICs...
Check it out and let me know if you concur...
Walt
I'm not sure I follow you.
You mean instead of for example sell 5 550 puts, buy 5 540 puts, you suggest buying 10 540 puts?
I'm afraid the cost of 5 additional puts would be more than the credit I receive for the whole IC. Or you mean going further OTM?