Comments on: OPNewsletter (Jun’08) : Closed +11.1%

By: OptionPundit

OptionPundit — Mon, 16 Jun 2008 03:56:09 +0000

Dear Nick, there are 3 big differences already.

As far as I know, 1) no newsletter takes member’s fill for tracking. 2) Most newsletter reports returns only on invested capital while OPN reports for the max investment during the investing period and 3) I have also not found newsletter that factors commissions into results reporting.

The similarity is only is that we are calculating returns on the capital used at whatever time during the month. And I think that’s a fair practice.

Coming to your point on unrealism – OPN’s results are realistic. I run several times bigger portfolio (same trades and even more) than that of OPN. Reported returns are very conservative. For instance, part of the June portfolio was VISA miniportfolio and using member’s fills the VISA portfolio reported results were 17% profit, while if I use mine it was over 25% and there are many more examples.

Even if I use your logic of reporting on overall capital, we used 76% of 10K in June. 11.1% on 76% will then be nearly 8.4% on 10K. That’s still not too far. A realist return.

Thanks for the Good discussion. Profitable Trading, OP

By: nick

nick — Mon, 16 Jun 2008 03:21:43 +0000

Thanks for your prompt reply, OP. You cannot and need not report any of your member’s performance, since what they do is upto them (you have rightly said so).

However, the performance of your portfolio (as is claimed on this website) needs to be accurately reported. And this would include all the “insurance” capital set aside in your portfolio (not in other portfolios).

That is the only reliable way to report performance and draw attractive charts. Else, there is no difference between OP and the other option trading “gurus” out there who like to quote unrealistic performance figures in their marketing material.

By: OptionPundit

OptionPundit — Mon, 16 Jun 2008 03:03:29 +0000

Dear Nick Thanks for the comment. How can one account for returns on unused capital if the money was not deposited with the service provider? Member doesn’t have to allocate 10K purely for OPN and they may choose to use that remaining capital for anything else. In fact it has happened many times. I have no way to determine if they really kept free cash as I do in my real account or they invested it. If they did then I include profit or losses for those as well. If they didn’t and told me they are keeping fresh, then I should add-up interest they earn and so on. It will then lead to multiple options, multiple returns and so on.

I would have agreed with your point if I was managing their portfolios. I shall then have full control and should report “X% is the return on your overall capital”. I would then instead report returns on what has been used.

In fact, all the above 3 points lead to lowering OPN’s results vs. skewing it in its favor. You will hardly find any other newsletter doing this. One similarity with other newsletter is that OPN uses “invested capital” for return tracking and not “unused capital”. Extra capital is for “insurance”.

Separately, since you are not an OPN subscriber, you may find it new. There is a one full section on member’s only section on how we track performance.