Aiming to generate twice the SPX returns in 2013.
OPNewsletter is very much on track to deliver my personal aim i.e. 2x the SPX returns by the end of 2013. Jan 2013 was a solid +15.5%, Feb was +2.3% and March was +15.3% on max capital utilization of 36.3% thus effectively yielding +5.58% on the overall portfolio capital. This is 10th consecutive positive month; in the overall 65 months of consistency of solid gains regardless of bear, bull or sideways markets.
For the OP Income Newsletter, Mar 2013 portfolios delivered +15.5% on maximum of 36.3% capital employed based upon OP’s dynamic capital allocation in line with risk/reward. If however, one assumes a 10%/ fixed per trade capital allocation, the results will be double of this. There are several methods on how you can can allocate capital. Some are fixed, while other are dynamic and how you allocate can alter the portfolio performance. There is nothing wrong or right about it, it is your own preference that you might be comfortable with. Let me show you how DIFFERENT CAPITAL levels for the SAME trades, for the SAME RETURNS will alter the final profit & loss-
The table attached has two scenarios- 1) OPN’s DYNAMIC allocation (real trades for the month of Mar 2013) and 2) assuming a FIXED 10% per trade allocation. The same trades will deliver 5.58% for overall portfolio while scenario 2 will consider those gains as 10.3%.
So which one is better? It depends. It depends on your comfort level with regards to the risk you are assuming in that trade.
Another key point to note is the investment level for the same trade.
For example- Say you are opening a RUT Iron Condor, do you assume investment level as =Margin-credit received? or something different. As naive as it may sound, you may find many folks assume no margin as the trade is being done for a credit. (Don’t confuse this margin with typical margins offered by broker e.g. 2x of your capital for trading equities. This margin is backed by the cash in your trading account). It can’t be farther than truth; one needs to invest money to initiate that credit trade.
How about assuming investment for debit spreads? some assumes there is no margin as you’re investment is only what you are paying to purchase a spread. While true in some cases, not in all. It can be deceptive on surface. You may want to read my post on how to calculate margin for VIX calendar spread. Thus, incorrect margin assumption can also alter the performance. Some don’t assume any margin on $VIX calendar spread at all.
Think of it for a minute-
OPN VIX Calendar in March 2013 was opened for $72 debit and was closed for $110 credit. Thus gains were $38. One way to report performance is that gains are +52.8%!!! and another as it is in OPN i.e. +8.33%.
The difference is due to margin assumption. +53% assumes no margin (only debit), while OPN assumes $456 as cost to open that calendar.
So how does OP Income Newsletter calculate its performance?
OP Income newsletter calculates results based on final overall returns (i.e. for all 6 trades) and then divide that with the maximum investment used throughout the month even if that max investment was for 1 day.
It uses median REAL fills, as shared by REAL members, vs theoretical fills to calculate returns/trade.
Margins are calculated based on the maximum investment one has to make to open the trade.
OPN results, does not include P&L from OPNExtra! which also has a solid track record.
Thus, the point is, there is no right and wrong with the assumptions you choose. While individual performance may differ based on the fills they get, what really counts is the $$ value that is delivered to your portfolio.
Be realistic, allocate capital efficiently and manage risk well. In the long run, I believe you will be fine.
We are primarily trading VOLATILITY and NON-DIRECTIONAL income trading strategies. The key objective is to preserve capital while gradually building gains as oppose to trading in hopes-n-dreams and lose capital. Subscription are currently open and there is no wait listing fee. The objective is still the same as it was 65 months ago i.e. 5-7% monthly gains on invested capital. OP Income Newsletter is NOT a GET-RICH-QUICK-NEWSLETTER. As proven time and again, the market neutral and volatility strategies that we trade are scalable and diversified.
Here is a quick feedback from one of the EX-OPN member who has now started his own business , you may kindly read more here.
I would be more than happy to share my thoughts with you about the newsletter service you provide to members.
First off, let me begin by saying that your level of commitment to your subscribers is top shelf quality, and greatly appreciated. I have enrolled in a couple of other “advisory-type” services in the past, and could never duplicate the promised results that were advertised. Not so is the case with your service. Once a recommendation is posted, your timely adjustments certainly reflect what is going on in the market real time, and the attention you pay to detailed risk management is HUGE. It is very apparent you are trading what you are recommending, and the focus is living to trade another day. I can honestly say I did not expect this type of performance when I initially enrolled, but am quite elated and content with the service thus far.
I would highly recommend your service to any option trader at any skill level. The answers you provide to your members are great in that you seem to realize a newbie does not need complex discussions, and the very advanced trader does expect more elaboration than “do this, or do that”. I also believe that your advertised results are accurate and repeatable by any member willing to spend the time required to learn this craft. I could highly recommend this service and would be more than willing to elaborate further if requested.
Thank you for this opportunity to share my experiences, and keep up the great work”
Gilbert, AZ, USA
Trading Experience: Options Trading exclusively since Feb 2007
Just to reinforce, earning trades are covered under OPNExtra! which is FREE for the OPN members and is not available for others.
Should you have any feedback, suggestions, I shall appreciate those in the comments section. Should you have other ideas on how best to calculate performance, you are most welcome to share. Let’s have that dialogue as having a true transparent performance is key to bring trust in this business which is clouded by those who think you can be millionaires, tomorrow, by trading options. It takes time to sharpen the saw and learn the trading business.
If you are still not an OPNewsletter member, this probably will be one of the most interesting years to join. For those who may be interested in following me on Twitter, you can find @OptionPundit at Twitter.com/OptionPundit;
Aiming to generate twice the SPX returns in 2013