Contrary to what many newsletters might tell you, designing option trading strategies to invest large amount of capital is not easy. You can’t invest a big portion of your capital, for instance $200K, into a single iron condor (a strategy that is considered low risk, high probability yielding 4-5% month after month) unless it’s a very small percentage in your portfolio.
Since OPNewsletter has been using $10K as a model capital for OPN portfolios, my earlier assumption was that subscribers invest roughly the same range for OPN strategies. However, members have been asking for strategies for large amount of capital. So before I start investing time and effort to design additional strategies, I wanted to assess current capital investment size in OPNewsletter. I, therefore, conducted a small survey asking subscribers to share details of their current capital allocation for OPN strategies and also to share additional capital they are planning to invest for OPN. I am very encouraged to share generic results that tell me a different story vs. my assumption.
Overall 61.54% of OPN subscribers responded to this first ever capital investment survey. According to this survey-
- Average/Subscriber is over US$65K,
- Median investment was larger than US$32K; the future plan to invest is roughly double.
- While 40% invest less than US$25K (but greater than US$10K), 2% of respondents invest over U$500K.
In order to check genuineness of the above information, I then checked actual trading volume in options that OPN suggested. Here are two screenshots of MDY options trading volume and these are taken before and after the alert of creating a MDY Jan’10 Income portfolio.
The first picture is before the OPN alert was sent and next picture is after the close of the day. For additional confirmations, I also took snapshots of ThinkOrSwim’s spread book (I am not sharing that here).
This wide range of investment size confirms that OPNewsletter caters to a wide range of investors. At the same time, this also entrusts more responsibility to carefully design portfolio and focus on risk management.
Wishing you a Merry Christmas, a bright and happy Hanukkah, and the blessing of knowing your blessings. Always, I am grateful for the trust you’ve placed in me.
Profitable trading, OP
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