August 17, 2017

Another Successful Day for the Options Strategies – ETF Extremes Strategy Continues to Shine

It was a wonderful day for the ETF Extremes and New Ultra Extremes (Insiders Page only).

The ETF Extremes strategy made 13.7% while the Ultra Extremes made 13.3% (options portfolio) and 4.0% (equity-only).

I am ecstatic about the results today (other than one exception which I will discuss at the end). The ETF Extremes strategy continues to outperform the market by a substantial margin and due to the success over the past three years I am debating starting a fund that employs the basic tenets of the ETF Extremes guidelines and my proprietary indicators.

As discussed in the options blog on the site I have been watching the strong support at $29.25 in QQQQ and was waiting to see a push into a short-term oversold state. The short-term extreme came today and as a result I placed a trade.

The strategy had its last trade in early August when the S&P 500 (SPY) was trading at around $126. Now it is roughly 25% lower. During that time I patiently waited for a signal to occur in the strategy and today that patience paid. The trade made 13.7%.

The strategy has an average return per trade of 8.3% and a win ratio of approximately 86% over the last 30 months (18/21 winning trades). Some subscribers have reported gains of over 290% since the portfolio was initiated back in April of 2006. Your return obviously depends on your trade allocation which is direct reflection of your personal risk tolerance.

The other important consideration is the max loss. Over the course of the last three years the max loss on a trade is approximately 17%. This is what truly keeps the strategy moving in the right direction. Risk-management is the most important aspect of any strategy. If you look at other services and the strategies they offer I am certain you will find some hefty losses in there so a win ratio of over 80% doesn’t mean much. The max loss of a strategy is important and something you should always take a close look at before delving into a specific options strategy.

Basically, the stagnant period in the ETF Extremes strategy and my determination to be patient has the ETF Extremes strategy up 40% since the last trade was placed back in early August. How many strategies can tout those type of efforts?

As for the New strategy that uses SSO and SDS as the underlying ETFs of choice, well, much like the ETF Extremes I am ecstatic about today’s results. SSO hit an extreme short-term oversold state so I bought some Dec08 25 calls for $4.50 and was able to sell them for a $.60 gain, or 13.3% roughly two hours later. The exact trades, including timestamps, can be found in some of my earlier posts today. I really think this could be a viable strategy, but it is one that I want to watch for several months before truly implementing it into my core strategy list. I will post an article this weekend on the Insiders Page of the website (paid subscribers only) that goes over the trade in detail. Stay tuned!

My one complaint today, and it is a big one is the amount of money I left on the table. This is the one aspect of trading that is the most difficult and often overlooked. However, as sad as I am about the money I left on the table I did not want to risk a quick turn for the worse given the recent spike in volatility. I will discuss this more in the near future.