Another Successful ETF Extremes Trade – Sample Allocation (Important Please Read)

This post will cover quite a few topics including the most recent ETF Extremes trade and a sample allocation of the ETF Extremes strategy and how a $5000 account would have performed since the strategy was initiated over two years ago.

According to the abundance of emails, many of you were able to take advantage of the post-fed reversal that I have mentioned over the past few days. You have no idea how happy this makes me. Enjoy the profits! All I ask is that you keep reading and supporting the service. Thank you again for all of your kind words.

Anyway, I mentioned that a signal was triggered in the ETF Extremes options strategy yesterday. The trade was a result of the various short-term bearish indicators that had pushed into the market.

As a result I purchased QQQQ Oct08 48 Puts (QQQVV) for $2.67. The sell-off near into the closing bell allowed me to sell them for $2.92, which equates to a 9.4% profit on the trade. The cumulative return for the ETF Extremes options strategy has now pushed to an all-time high of 161%. The strategy has been the flagship strategy of my service and one that I am extremely proud of. Over two years of a track record proves that the strategy works. There might be some occasional blips, but that is to be expected.

I have had several questions about allocations for the ETF Extremes strategy among the other strategies I follow. While I am unable to give any personal advice I can give you a few examples of how the ETF Extremes strategy has performed given a $5000 account with a 50% and 100% allocation. Remember, through position-sizing I try to keep the loses to a minimum of $.25 to $.35 per trade or roughly 10%. Of course this can vary from time to time, but the point is that I am not taking huge draw-downs. I allow the percentages to work for me and the performance speaks for itself.

The following chart displays every trade with my subscription fees (since inception) and commissions. Both are important to consider. I often get comments from subscribers who ask why I haven’t traded in a specific strategy for an extended period of time. Eventually, a lack of patience gets the best of themand they cancel. While, this has been a detriment to the strategy it also proves how steadfast I am about the guidelines I have set forth. I know that eventually people will understand the concept and realize that waiting for precise, highly probable set-ups is a very effective way to play the options market. The following charts display that even with lulls in the strategy that the overall percentage returns have been phenomenal compared to the major market benchmarks.

You will need to scroll around on the chart (particularly to the right side to get the overall returns). Unfortunately, the chart will not fit in the area provided by my blog, but this is a minor nuisance given the importance of the information provided. If you have any questions or comments please do not hesitate to email me. I will be more than happy to answer any and all questions that you might have.

Again, as you can see from the chart below, even with the subscription fees and commissions included the overall returns have been wonderful. I have to say that I am very proud of the strategy and hope that after reviewing the charts and doing your due diligence that you will consider joining my service.

I know the chart may mess up the viewing ability of the posts below, but it is worth it to me if you can see just how effective the strategy has been.

Our ETF Extremes strategy proves that patience pays. The strategy has only been exposed to the market for approximately less than 10% of all trading days since its inception back in early 2006. Since then the cumulative gains have reached 161%. The S&P 500 (SPY), the major market benchmark has made roughly a paltry 4.0%.

These are amazing statistics considering most people think that they constantly need to trade or be exposed to the market on a daily basis to be successful. We can’t tell you how many times impatient subscribers have written in to complain about the lack of trading in this strategy. To their credit, we have had extended spells where the strategy did not have any trades and many of our subscribers left during this period. This is why we only charge $39.95 per month, while most other services, who can’t claim such gains, charge far greater on a monthly basis. The ETF Extremes has proven its success.

We have always stated that patience is the key to this strategy, however, in options trading most individuals, sadly enough, are looking for the quick profit. We were not too enthused by the lack of trading ourselves during the down periods, but our diligence and determination to stick with our proprietary indicators proved to be the right and responsible choice.

Overbought/Oversold levels for August 7, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 50.2 (neutral)
* Dow Jones (DIA) – 50.4 (neutral)
* Russell 2000 (IWM) – 50.0 (neutral)
* NASDAQ 100 (QQQQ) – 62.8 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 35.7 (neutral)
* Consumer Discretionary (XLY) – 52.4 (neutral)
* Health Care (XLV) – 64.7 (neutral)
* Financial (XLF) – 42.6 (neutral)
* Energy (XLE) – 40.4 (neutral)
* Industrial (XLI) – 46.9 (neutral)
* Materials (XLB) – 40.3 (neutral)
* Real Estate (IYR) – 47.3 (neutral)
* Retail (RTH) – 50.7 (neutral)
* Utilities (XLU) – 37.3 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!