A few random thoughts…
There is no doubt that 2013 started off on a difficult note. The fiscal cliff led to a sharp decline in implied volatility (as seen through the VIX) and the low IV environment lasted for several more months. However, we were able to adjust and the rest of the year, while having a few expected bumps in the road, ended on a positive note. So much so, that our option trading strategies once again beat the overall market. I’m not sure many other options sellers can say that this year.
As the year progressed I became more and more selective with my trades. Trading in a low IV environment is difficult and hammering out trades just isn’t the right protocol especially if you truly want to make a decent return. Of course, my approach called for less trades which also led to a spike in unsubscribes, but this isn’t anything new. Since I started Crowder Options, roughly 8 years ago I have witnessed just about everything, but the one thing that always amazes me is the impatience of investors. For some reason they want lots of trades regardless if they are made with sound judgement. Furthermore, they enter into a difficult stretch and performance lags so they immediately jump ship not allowing the long-term endeavor and more specifically the probabilities to work there magic. Again, I’m fine with all of it…in my opinion it’s a cultural phenomenon. Everyone wants the latest and greatest. Why do you think so many investors switch to the best performing funds from the prior year only to be extremely disappointed?
If I have to sacrifice losing subscribers because I am doing what I feel is the logical way to invest then so be it. This train of thought is what has allowed me to do this awesome job for 8 years and hopefully I will be doing it for another 8.
All of our positions are once again profitable and with December expiration quickly approaching we are going to take some of the positions off. The goal is to wait until the bitter end of each and every trade. While that might be an acceptable approach on occasion, our job is to create income or theta. If we can continually sell premium and lock in profits when at least 50% of that premium is locked in I’m happy..and you should be too. Remember, this is a long-term endeavor and managing risk is the most important aspect of reaping the rewards of option strategies, particularly those of us who sell options for a living.
So, with that being said, subscribers stay tuned for a few upcoming closing alerts and a few opening alerts. We want to start 2014 off like we finished the last 8-9 months…profitable.
I am truly looking forward to 2014…it is going to be THE YEAR for selling options. You heard it here first.
If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days.