Options Strategy: Up 28.0% Since Inception

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Includes: DIA, EEM, EFA, EWY, EWZ, FXI, GDX, GLD, IBB, IWM, IYR, OIH, QLD, QQQ, RTH, SDS, SMH, SPY, SSO, TBT, TNA, TZA, USO, VXX, XLB, XLE, XLF, XLI, XLU, XLV, XLY
by: Andrew Crowder

A wonderful beginning indeed.

The strategy had another successful trade marking the eighth straight winning trade since the strategy was initiated for a win ratio. The return – 28.2%.

Check out the results (trades, returns, ratios, etc.) at the following link:

High-Probability, Mean-Reversion Strategy

Obviously I am pleased with the win ratio (100%) since I initiated the High-Probability, Mean-Reversion strategy, but I am a realist. I realize there is no holy grail in trading. One thing I do know for certain is that I have a unique, and concrete, options trading strategy that makes the world of sense to me and I trade it to make money over the long term. Furthermore, I realize that the less I trade, the better my strategy will perform over the long run: and the long run is what matters. Hopefully, I can continue my winning ways and extend the gains going forward. Remember, this is a marathon and not a sprint.

I recently received an e-mail from one of my loyal subscribers who stated the following:

I have been using your strategy since the free trial in December and have 7 positive trades with enough income to satisfy my expenses and much more. I am fully on-board with waiting for the trades to present themselves.

I have tried two other trades based on my own thinking and am 0-2. This stark comparison tells me that I should be using the market numbers (High-Probability, Mean-Reversion Indicator) vs. my own thoughts.

The key to my strategy is patience. Waiting for the appropriate scenario to recommend trades with a high probability of success is what makes my strategy a success.

As I have stated numerous times, patience is the key to any effective and long-term trading strategy. Opportunities are made up easier than losses. So if you let a few pass you by don’t dwell on what could have been. There will always be more opportunities around the corner. Again, this a marathon, not a sprint.

I will continue to patiently wait for opportunities to arise and only trade scenarios where the probability is overwhelmingly on my side.

Couple this approach with sound risk management and you can see why I have been able to beat the major benchmarks by a substantial margin.

Short-Term High-Probability, Mean-Reversion Indicator – as of close 3/21/11

Benchmark ETFs

  • S&P 500 (NYSEARCA:SPY) – 54.7 (neutral)
  • Dow Jones (NYSEARCA:DIA) 58.5 (neutral)
  • Russell 2000 (NYSEARCA:IWM) – 66.3 (neutral)
  • NASDAQ 100 (QQQQ) – 49.2 (neutral)

Sector ETFs

  • Biotech (NASDAQ:IBB) – 54.5 (neutral)
  • Consumer Discretionary (NYSEARCA:XLY) – 48.3 (neutral)
  • Health Care (NYSEARCA:XLV) – 49.3 (neutral)
  • Financial (NYSEARCA:XLF) – 52.3 (neutral)
  • Energy (NYSEARCA:XLE) – 65.7 (neutral)
  • Gold Miners (NYSEARCA:GDX) – 59.7 (neutral)
  • Industrial (NYSEARCA:XLI) – 62.4 (neutral)
  • Materials (NYSEARCA:XLB) – 61.4 (neutral)
  • Real Estate (NYSEARCA:IYR) – 61.3 (neutral)
  • Retail (NYSEARCA:RTH) – 53.2 (neutral)
  • Semiconductor (NYSEARCA:SMH) – 50.3 (neutral)
  • United States Oil Fund (NYSEARCA:USO) – 59.4 (neutral)
  • Utilities (NYSEARCA:XLU) – 39.3 (neutral)

International ETFs

  • Brazil (NYSEARCA:EWZ) – 55.8 (neutral)
  • China 25 (NYSEARCA:FXI) – 53.2 (neutral)
  • EAFE (NYSEARCA:EFA) – 60.1 (neutral)
  • South Korea (NYSEARCA:EWY) – 67.0 (neutral)

Commodity ETFs

  • Gold (NYSEARCA:GLD) – 65.1 (neutral)

Ultra Extremes

  • Small Cap Bear 3x (NYSEARCA:TZA) – 32.0 (neutral)
  • Small-Cap Bull 3x (NYSEARCA:TNA) – 65.1 (neutral)
  • UltraLong QQQQ (NYSEARCA:QLD) – 48.7 (neutral)
  • Ultra Long S&P 500 (NYSEARCA:SSO) – 56.4 (neutral)
  • Ultra Short S&P 500 (NYSEARCA:SDS) – 41.2 (neutral)
  • UltraShort 20+ Treasury (NYSEARCA:TBT) – 41.6 (neutral)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.