OPNewsletter (Jun’08) : Closed +11.1%

An excellent month for OPNewsletter with double digit gains. OPNewsletter’s June 2008 was closed for +11.1%. This is nearly double of my own target of 5-7% per month. These returns excludes the bonus speculative trades on JOYG (+40%), RIG (Multiple Profit Points), GLD and CME (Multiple Profit Points-Shared for free with OP Readers), With this June’s closing OPNewsletter is up nearly 60% in the past 5months, i.e. nearly 9.9% compounded monthly that is nicely above even my own internal target of 5-7%. We usually assume US$10,000 as minimum investment and these can easily be scaled to $50, 000 or above. Considering market actions in the past 5months, this is a good and satisfactory returns.

This month’s strategies included Iron Condor, Debit Spreads, Calendar spreads, Straight calls, Diagonal Spreads and credit spreads.

I have opened two OPN Mini-portfolios for July expiration cycle and shall be opening 2-3more next week. If you want to sign-up for the newsletter, Pls read more about OPNewsletter here. If you would like to read customer testimonials pls read those here (Part-1, Part-2, Part-3, Part-4)

A few more things about the Newsletter-

  1. OPN uses its Member’s fills for tracking (Not the newsletter suggested one)
  2. OPN uses maximum investment for calculating returns for the month, even though it was for 1day (For example- 10K portfolio, we used 6K for the month, but we used 1K more for one day, the whole portfolio returns are calculated using 7k as base)
  3. Starting May’08, OPN now factors commission in it performance tracking.

Next week is going to be interesting week with Goldman Sachs (GS) and Morgan Stanley (MS) reporting earnings and setting tone for the financial sector. I may play these two and share my thoughts with OPNewsletter subscribers.

Profitable trading, OP


5 responses to “OPNewsletter (Jun’08) : Closed +11.1%”

  1. nick Avatar

    About point 2: This performance calculation is new to me. If you have a $10K portfolio, I would expect you to report results for the entire portfolio and not just invested capital – which highly skews numbers to your favour (since you are dividing by a lesser denominator).

  2. OptionPundit Avatar

    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.

  3. nick Avatar

    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.

  4. OptionPundit Avatar

    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

  5. Stan Spencer Avatar
    Stan Spencer

    I signed up a couple of years ago and paid the $50 trial fee, which was some sort of pre-commitment fee you had at the time. I’d like to sign up for real this time but would like to see an example of a past newsletter to see if it will work for me. You may have sent me something originally but I’ve lost access to that email. Can you send me something like this? Thanks,

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