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Kim Klaiman is a full time options trader and founder of SteadyOptions.com. 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 SteadyOptions.com forum.... More
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  • SteadyOptions 2014 Half Year Report: 95.3% ROI 18 comments
    Jul 3, 2014 3:53 PM

    In the first 6 months of 2014, SteadyOptions produced non-compounded ROI of 95.3% (based on fixed $1,000 allocation per trade). The return on the whole account is 57.2% (based on 10% per trade allocation).

    We closed 84 trades. Winning ratio was 65% and average return per trade 7%. The biggest loser was 31.8% and only 5 traders have lost more than 20%. We had 6 consecutive winning months in 2014.

    Check out the Performance page to see the full results. Please note that those results are based on real fills, not hypothetical performance, and exclude commissions, so your actual results will be lower.

    Trading the current market

    There is no doubt that this is a difficult market to trade. Volatility is at multi year lows, and has been on steady decline in the last few months. The average hedge fund gained only 1.77% in the first half of 2014, according to Hedge Fund Research, lagging the major indexes by significant margin. The key to trade the current markets is to limit the losses, to trade less and to be more selective. Despite difficult market conditions, SO delivered very impressive performance in the first half of 2014, especially in the first quarter.

    What makes SO different?

    First, we use a portfolio approach, that may include a variety of non-directional strategies. We balance the portfolio in terms of options Greeks. The earnings trades are vega/gamma positive and theta negative. To balance them we might open calendars, Iron Condors or butterfly trades which are theta positive. We might use a mix of different expirations to balance the gamma.

    Second, our performance is based on real fills. Each trade alert comes with screenshot of my broker fills. Many services base their performance on the "maximum profit potential" which is very misleading. Nobody can sell at the top and do it consistently.

    We provide a full disclosure and list all our trades on the performance page. Unlike some other newsletter services, we will never omit a trade from our track record because some members couldn't open the trade or make the adjustments. This rule applies to all trades, good and bad - you will always get a full picture and will never have to guess how we calculate our numbers.

    We place a lot of emphasis on options education. There is a dedicated forum where every trade is discussed before the trade is placed. We discuss different strategies and potential trades. Unlike most other services that just send the trade alerts, our members understand the rationale behind the trades and not just blindly follow the alerts. SO actually helps members to become better traders.

    We invite you to join one of the most successful options trading services. When you join SteadyOptions, we will share with you all we know about options. We will never try to sell you any additional "proprietary systems", training, webinars etc. All our "secrets" are included in your monthly fee.

    Let me finish with my favorite quote from Michael Covel, which is especially relevant to the current market conditions:

    "Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between."

    The earnings season is just around the corner. Now is an excellent time to join our service.

    Start Your Free Trial

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Comments (18)
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  • ControlledRisk
    , contributor
    Comments (343) | Send Message
     
    Nice job so far. Any plans for auto/managed trading of this strategy?
    3 Jul 2014, 07:35 PM Reply Like
  • SteadyOptions
    , contributor
    Comments (2692) | Send Message
     
    Author’s reply » Thanks.

     

    There are some issues with auto-trading that many people are not aware of. Here is how auto-trading works:

     

    Most newsletters send the broker emails including trade alerts and the broker's trade desk places the orders in the client accounts. In some cases (like auto-trading with Interactive Brokers), this is done through third party providers (Global Auto-Trading). Please read SEC Risk Disclosure on Autotrading.

     

    What are the risks of auto-trading?

     

    1. SEC considers newsletters that engage in auto-trading to be investment advisers. If the newsletter is not an investment adviser, by engaging in auto-trading they are breaking the law and are exposed to lawsuits.

     

    2. Is the newsletter a one man operation? What happens if that man gets hit by a truck or breaks a leg? Does he have a backup to continue trading your money? What if the trade(s) need to be adjusted or closed in a timely matter? Are you at risk of catastrophic losses if this happens?

     

    3. What if the markets starts to move fast? Will his broker get the email with trade instructions fast enough? What if the prices are significantly different by the time the broker tries to place an order?

     

    4. Do you understand the rationale behind the trades or you just trust the newsletter blindly to place the trades in your account?

     

    Those are some of the reasons why I cannot auto-trade SteadyOptions strategies. I'm not a licensed investment adviser, I cannot place the trades in members accounts and I'm just not ready to break the law like most other newsletters do.

     

    We do offer auto-trading for our other strategies. Unlike SteadyOptions, they are managed by licensed investments advisers. That means that the trades are placed directly by Lorintine Capital, LP. By doing that, we are eliminating the middle man (the broker's trade desk or GAT). This creates better and more reliable execution, especially in fast moving markets, and reduce costs. Most other competing services cannot do this because they are not licensed investment advisers. In addition, we have backup, so if for any reason, one of our advisers is unable to place the trades, he is backed up by another adviser who has full access to all accounts. In addition, all trades are placed and discussed on the forum, so you can have a full understanding of the rationale behind the trades.
    3 Jul 2014, 08:25 PM Reply Like
  • ControlledRisk
    , contributor
    Comments (343) | Send Message
     
    Thanks for the reply, and this makes total sense. This is the strategy I like the best, unfortunately I don't have the time manage it. More precisely I don't have the ability to trade at any time, sometimes I will be unavailable.

     

    If you ever did get this with Lorintine as a managed account I would definitely put some of my money there.
    7 Jul 2014, 02:37 PM Reply Like
  • june1234
    , contributor
    Comments (4477) | Send Message
     
    Good job. Why do your other strategies qualify for auto trading and not steady options?
    4 Jul 2014, 05:35 AM Reply Like
  • SteadyOptions
    , contributor
    Comments (2692) | Send Message
     
    Author’s reply » Please read my response:

     

    "Unlike SteadyOptions, they are managed by licensed investments advisers. That means that the trades are placed directly by Lorintine Capital, LP."
    4 Jul 2014, 08:05 AM Reply Like
  • june1234
    , contributor
    Comments (4477) | Send Message
     
    OK Could Lorintine not place steady option trades?
    4 Jul 2014, 08:42 AM Reply Like
  • SteadyOptions
    , contributor
    Comments (2692) | Send Message
     
    Author’s reply » They could, but I still have to send the trades to them. Technically, I'm still doing the trading even if they actually place the trades in members accounts.

     

    Most people simply don't realize how dangerous auto-trading can be in fast moving markets if the trades are not placed directly by the person who is managing the trades. The delays can be critical and cause catastrophic losses.
    4 Jul 2014, 08:56 AM Reply Like
  • june1234
    , contributor
    Comments (4477) | Send Message
     
    Appreciate feedback. Never thought of auto trading that way but your comment makes sense sort of like placing a limit stop on Friday only to wake up on Monday with your position wiped out cause your limit never got hit market moved so fast at the open
    4 Jul 2014, 09:33 AM Reply Like
  • 9coriolis1
    , contributor
    Comments (62) | Send Message
     
    I would subscribe if you included results with commissions as well as without (as you do now). I am unaware of any commission-free options brokers!
    4 Jul 2014, 10:44 PM Reply Like
  • SteadyOptions
    , contributor
    Comments (2692) | Send Message
     
    Author’s reply » Dear 9coriolis,

     

    The performance page includes the full list of all trades. You can always plug it into excel, plug your commissions and see the results. The chart on the main page includes commissions.

     

    As mentioned on the subscription page, commissions would reduce the returns by 2-3% per month. The results would depend on your commissions structure.
    5 Jul 2014, 10:45 AM Reply Like
  • calendaroptions
    , contributor
    Comments (5) | Send Message
     
    7% as average winner is ABSOLUTELY IMMPOSSIBLE to make net real profits when commissions are factured in. In particular on 84trades + the Losers.
    27 Sep 2014, 01:51 PM Reply Like
  • calendaroptions
    , contributor
    Comments (5) | Send Message
     
    Oh, and I forgot: one would probably end up a NET LOSER when you add tricky, merciless market maker on algo-steroids spreads!
    27 Sep 2014, 01:53 PM Reply Like
  • calendaroptions
    , contributor
    Comments (5) | Send Message
     
    Ps: take it from someone who trades similar things, and was on the Chicago floor for several years. No offence meant. One just needs to stop promising the world to people, and stay realistic
    27 Sep 2014, 01:56 PM Reply Like
  • SteadyOptions
    , contributor
    Comments (2692) | Send Message
     
    Author’s reply » Dear calendaroptions,

     

    Please note the disclaimer:
    "Please note that those results are based on real fills, not hypothetical performance, and exclude commissions, so your actual results will be lower."

     

    I don't think that many services (if any) have a similar disclaimer. I'm also trying to set realistic expectations - see my article http://bit.ly/1rlmnjn

     

    7% was the average return, not average winner. It included winners and losers.

     

    Now, lets do a quick math:

     

    The average spread was around $3. To trade it, you need 4 transactions (two to open and two to close). If you trade with IB (which is what we recommend), you will pay around $3 (0.75*4) which is 1% of the trade value. So 7% return becomes 6% return. Add another 1% because some trades require adjustments, you get around 5%.

     

    Allocate 10% per trade, 84 trades = 5%*0.1*84=42%. Still not bad in 6 months.

     

    "Oh, and I forgot: one would probably end up a NET LOSER when you add tricky, merciless market maker on algo-steroids spreads!" - once again, the performance is based on real fills, not mid or theoretical prices.

     

    Skepticism is always good, but you should check the facts (and maybe ask for clarification) before posting baseless accusations. Our members make very good money with the service. In fact, the demand was so strong that I had to close the service to new members. People who don't make money don't stay.
    27 Sep 2014, 03:29 PM Reply Like
  • SteadyOptions
    , contributor
    Comments (2692) | Send Message
     
    Author’s reply » Well, I assume I'm not going to get any response or apology from you. Very easy to throw a bunch of baseless accusation without checking the basic facts and then just disappear.

     

    Which is probably not surprising, considering that you have your own website, and your only purpose was to bash a competitor.
    2 Oct 2014, 10:37 PM Reply Like
  • calendaroptions
    , contributor
    Comments (5) | Send Message
     
    Relax. Bizarre, why do you refer to your disclaimer which "excludes commissions" - that pretty much confirms what I criticise.
    anyway, look, from my real world experience your thing cannot work. If you post here YOUR LIVE ACCOUNT with all commissions, profit/loss, each trade, winning percentage /average winners/average losers, and equity curve, and if all that PROVES that I am wrong: then you may request an apology. I will then even talk to my partner and we'll give you a million bucks to trade and publish the account real-time each day. voila. otherwise, I am not convinced. nothing to do with bashing. Our little website charges nothing and educates people. so, relax.
    5 Oct 2014, 06:52 AM Reply Like
  • SteadyOptions
    , contributor
    Comments (2692) | Send Message
     
    Author’s reply » Facts:

     

    1. You assumed in your post that 7% is an average winner, while in fact this is an average return including losers.

     

    2. You assumed that those are theoretical returns ("when you add tricky, merciless market maker") while in fact those are real fills.

     

    3. I provided you with numbers why "this thing" can and does work. Each trade is posted on the forum in REAL TIME with my screenshots of real fills. Those are not theoretical trades.

     

    4. Yes, commissions reduce the returns SIGNIFICANTLY, by about 2-3% per month. It is clearly stated here - http://bit.ly/UTZ1At. But the returns are still significant even after commissions. I challenge you to find holes in my performance reporting, instead of throwing baseless accusations.

     

    The proof is in the numbers and reviews:
    1. Our service is ranked #1 on members satisfaction, out of 700+ newsletters.
    2. The demand was so strong that I had to close it to new members - http://bit.ly/1C4chFI.
    3. Do you believe if members didn't make money, they would stay?
    But I guess you won't let the facts to confuse you..
    5 Oct 2014, 07:32 AM Reply Like
  • SteadyOptions
    , contributor
    Comments (2692) | Send Message
     
    Author’s reply » Just looked at your website. The way you trade - no wonder you think it is ABSOLUTELY IMMPOSSIBLE to make money with options.

     

    Here are just few of the gems on your website:

     

    1. You claim to be right 55% of the time. What you don't mention is the fact that if you are wrong and the stock moves in the opposite direction, your loss is probably close to 100%.

     

    2. You claim for average risk:reward of 1:1.20, but I don't see how this is possible.

     

    3. With possible losses of 100%, how much can you allocate per trade, without risking ruining your account if 4-5 straight losers happen (and please don't tell me this is not possible)?

     

    4. Speaking of commissions - I find it ironical that you mention impact of commissions on my returns while you trade mostly cheap spreads of 0.50-0.70 (0.29 in case of INTC). For INTC, commissions will eat 10% of the trade value, while in my case, it is only 1% on average.

     

    5. The returns and breakevens on your charts are completely irrelevant because they ignore the post earnings IV changes.

     

    6. You mention that "one can expect to make annual returns of +20-30%", but provide absolutely no explanation how you reached those numbers. What is your average return per trade? How many trades per month? What is the allocation?

     

    My trading is SO different from yours. I don't hold through earnings in 99% of my trades, so my maximum loss is usually limited to 10-15%, and I can allocate 10-12% per trade. I provide all the necessary information, full performance statistics, allocation guidelines etc.
    5 Oct 2014, 10:21 AM Reply Like
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