Published on January 1, 2013
Published on January 1, 2013
Wishing everyone a wonderful new year. May the new year bring greater prosperity, good health and more joy to you and your loved ones.
In-spite of all the doom’s day predictions i.e. euro challenges, Mayan end-of-the-world, fiscal cliff and all the blah blah, we are finally cursing in 2013. The 2012 passed in flying colors (from headline numbers’ perspective at least). For a quick market recap of various asset classes, you may want to read this article from Bloomberg.
Key insights from 2012-
Don’t fight the Fed is still largely true. Think of it for a minute. Fed has dumped trillions into the markets and there is no end to it yet. “Whatever it takes”. There will be lot of talks i.e. it will all end bad etc. It will be non-productive to play contrary against such powerful entities, so why not join the party; but don’t get drunk. And hence, one of the true lesson for me as a trader in 2012 was “I will dance to the tunes of music Uncle Ben is playing, but I will dance closer to the door“.
After a bumpy start in 2012 due to relentless market rally, we had a fantastic year for OP Income Newsletter for the rest of the 2012. At no point during the year 2012, I was in favor of holding equities throughout the 2012. Implied volatility was a true money maker (but requires quick action to capitalize). VIX gave multiple opportunities to play with plenty of margin of safety. Friday (Dec 28th, 2012) after market close was one of such opportunities when Jan and Feb 2013 VIX futures turned into backwardation (almost $0.50 credit) which disappeared by Monday (Dec 31) pre-market morning and in fact turned into almost $0.40 to $0.50 debit contango (multiplying factor is $1,000 i.e. $0.50 is $500/contract spread) . In fact, you could open trades during Monday pre-market and still be comfortable in making money as rumors already started to float that a deal has been reached and VIX compression was taking place. Start loving volatility and to learn how to profit from it, not panic.
It was still an excellent year for non-directional income traders like us. My two volatility based indicators gave some crucial heads-up as well as some speculative gains throughout the year.
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 60 months ago i.e. 5-7% monthly gains on invested capital. OP Income Newsletter is NOT a GET-RICH-QUICK-NEWSLETTER. The market neutral and volatility strategies that we trade are scalable and diversified.
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I don’t make any price specific forecast for the year. One thing, however, looks certain. The 2013 will be full of lot of drama and therefore uncertainty is here to stay. Start loving volatility and to learn how to profit from it, not panic.
Happy New Year 2013.
Happy Trading, OP