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Kim Klaiman is a full time options trader and founder of SteadyOptions. He trades mostly non-directional strategies, like pre-earnings strangles and iron condors. Likes to trade strategies with negative correlation. He lives in Toronto, Canada. Visit the forum. SteadyOptions... More
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  • What Is The Best Options Strategy?

    I'm often asked by novice options traders what is the best options strategy. I'm sorry to disappoint you, but there is no such thing "the best options strategy". Each strategy has its pros and cons. Each strategy will work the best under certain market conditions, and no strategy will work under all market conditions.

    One of the first things you need to decide before placing your first trade is: do I want to bet on direction (bullish/bearish) or I want to be able to make money regardless of market direction? In the first case, you have the choice of the following major strategies:

    Bullish strategies:

    • Long call
    • Bull call spread
    • Bull put spread
    • Covered call
    • Naked put

    Bearish strategies:

    • Long put
    • Bear put spread
    • Bear call spread

    If you decide to trade non-directionally, you can select between the following

    Non-directional strategies:

    • Iron condor
    • Long straddle
    • Short straddle
    • Long strangle
    • Short strangle
    • Iron butterfly
    • Calendar spread

    Again, each strategy has its pros and cons. For example, when IV (Implied Volatility) is high, you would prefer to use Iron condor. When IV is low, calendar spread might be preferable.

    Even within the same strategy, you can change the P/L chart by selecting different strikes, expiration etc. For example, Iron condor doesn't have to have lousy risk/reward. You can select strikes closer to the underlying price and improve your risk/reward. By doing that, you also decrease your probability of success. You have to select one of them - you cannot have both, as I showed in my article Risk Reward Or Probability Of Success?

    The following infographics might help you to understand the basics of options trading and few basic options strategies:

    You can read the following articles to understand few basic strategies we use at SteadyOptions:

    If you want to learn more how to use our profitable strategies and increase your odds:

    Start Your Free Trial

    Feb 15 12:02 PM | Link | Comment!
  • $TSLA, $LNKD, $NFLX, $GOOG: Thank You, See You Next Cycle

    Our long term followers know that buying premium into earnings is one of our favorite strategies. I wrote about the strategy in my Seeking Alpha article Exploiting Earnings Associated Rising Volatility. IV (Implied Volatility) usually increases sharply a few days before earnings, and the increase should compensate for the negative theta. We have been using this strategy in our SteadyOptions model portfolio with great success.

    However, not all stocks are suitable for that strategy. Some stocks experience consistent pattern of losses when buying premium before earnings. For those stocks we are using some alternative strategies like calendars.

    In one of my previous articles I described a study done by tastytrade, claiming that buying premium before earnings does not work. Let's leave aside the fact that the study was severely flawed and skewed by buying "future ATM straddle" which simply doesn't make sense (see the article for full details). Today I want to talk about the stocks they used in the study: TSLA, LNKD, NFLX, AAPL, GOOG.

    Those stocks are among the worst candidates for a straddle. In fact, they are so bad that they became our best candidates for a calendar strategy (which is basically the opposite of a straddle strategy). Here are our results from trading those stocks in the recent cycles:

    • TSLA: +28%, +31%, +37%, +26%, +26%, +23%
    • LNKD: +30%, +5%, +40%, +33%
    • NFLX: +10%, +20%, +30%, +16%, +30%, +32%, +18%
    • GOOG: +33%, +33%, +50%, -7%, +26%

    You read this right: 21 winners, only one small loser.

    This cycle was no exception: all four trades were winners, with average gain of 25.2%.

    I'm not sure if tastytrade used those stocks on purpose to reach the conclusion they wanted to reach, but the fact remains. To do a reliable study, it is not enough to take a random list of stocks and reach a conclusion that a strategy doesn't work.

    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 32% ROI so far in 2015. All results are based on real trades, not some kind of hypothetical or backtested random study.

    If you want to learn more how to use our profitable strategies and increase your odds:

    Start Your Free Trial

    Feb 12 2:33 PM | Link | Comment!
  • Name Of The Game: Steady, Consistent, Transparent

    Numbers don't lie. Take a look how the major indexes performed in January, and compare it to SteadyOptions performance:

    S&P 500: -3.1%
    Dow Jones: -3.7%
    Russell 2000: -3.3%
    SteadyOptions: +20.7% ROI

    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

    Feb 07 12:21 AM | Link | Comment!
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