A Better Way To Trade Options

Enjoy this complimentary copy of the Weekend Update that went out to our Premium and PRO trading services earlier this morning. After Labor Day expect some turbulence in the markets and if not a total debacle, then watch TSLA win a gold in the 100-meter dash: Annual Shareholders Meeting October 7th. Yes, we will be trading the anticipatory run-up. Count on it. 


Premium Service Trades - From October 29. 2018 there have been 178 Trades, 132 of which had a maximum gain at least 25%. In other words, 74%, or just at 3 out of 4 trades have reached +25% or better. The average maximum gain is 458.53%, per trade. Half of that average is 289.27% and one-quarter of that average maximum trade is 114.63%. 

PRO Service Trades - From May 20, 2019 there have been 323 trades, 249 of which have had a maximum gain of at least 25%. In other words, 77%, or just about 3 out of 4 trades have reached +25% or better. The average maximum gain is 369.28%, per trade. Half of that average is 184.64% and one-quarter of that average maximum gain is 92.32%. 

Those numbers may seem too good to be true, but take into account they are averages that were brought up, way way up, by the top performing trades in each service. Those trades were there for the taking, but taking them may have been the hardest part. This new way of limiting losses and capturing gains should result in the confidence needed to take each new trade, which includes the next 10,000% gain, wherever and whenever that may come. 

Trailing Stops

I've been running these numbers and trade simulations for some time and have periodically used them in the service for special situations. Now, with hundreds of real time trades in our data base, the advantages of using a trailing stop on a trade-by-trade basis has become not just apparent, but compelling. 

     (1) Let's start with a hard 50% stop, no one option trade is to be held beyond a 50% loss.

     (2) Once 25% profit is achieved implement a 50% trailing stop. 

There is nothing magical about the actual percent thresholds. For example the minimum profit threshold can be 20% or 30% and the percentage trailing stop can be 40% or 60%. The capturing of unrealized profits is paramount. Not getting it perfect on any one trade has a negligible effect in the long run, there is always a new trade laying in wait (see Top 25 tables below). 

Exit Examples

     (a) Trade goes south immediately and option losses 50% in a matter of days. Exit.   

     (b) Options rise +30% and then start losing it. Up 30% goes to +25%, then to +20%, then to +15%. Exit

     (c) Options rise 30%, then +50%, then +150%, then +400%, then +200%. Exit. 


There will be times when the option takes off to unimagined heights the day after exiting via this trailing stop system. It will happen, but it also will happen that the 50% trailing stop never gets it and that call or put will return 1,000% or more. There will be times when the system cannot be implemented  because of unforeseen opening gaps, or maybe you just weren't paying attention when the stop was hit. It will happen, but, over the course of all of the trades in a year those instances will pale in comparison to the ones where the exit strategy works to grow cumulative returns and minimize losses. 

That's it. Simple, easy on the arithmetic and crafted to leave the trade door open for those huge, four and five figure monster returns that occur numerous times a year. Below are top 25 option wins for each service over the past 18 months. Assume that going forward you able to rake in just 1/4 of the maximum shown, while at the same time never taking more than a 50% loss on a trade ever again. Win-Win-Win. 





(In my opinion)