June Portfolio – A Conservative 1.96%

Posted on 20. Jun, 2010 by Founder in Blog

In the investing world, slow and steady wins the race every time.

During our June trading, we did not close out ANY trades at a lose once again. That’s hard to say for some other sites out there, especially after the recent correction that almost certainly messed with portfolios.

Compared to the May portfolio, we had a total return that was slightly lower comparatively at 1.96% vs. 2.73%. We are a little disappointed that we missed our monthly goal of 2-3% per month. However, we feel that in building the portfolio for June, we had a lot of reasons to stay far from the market and ultra-conservative.

Believe me when I say that next month’s profit will be incredible given the VIX spike we had a couple weeks ago!

To re-cap this month’s income, let’s look at what we made vs. our required investments (in margin). Here are the positions we had with corresponding PROFIT/INVESTMENT and RETURN:

SPY 130 CALL – $18/$909 = 1.98% Return

DIA 118 CALL – $18/$1,417 = 1.27% Return

IWM 60 PUT - $20/$630 = 3.17% Return

QQQQ 40 PUT – $10/$400 = 2.50% Return

With regard to TOTAL INCOME and RETURN, the June portfolio produced $66 of total income after investing just $3,356 in margin. That means we saw a total portfolio return of 1.96% this month. As we usually point out, our calculations assume that you enter just 1 (ONE) contract for each trading alert – i.e. a total of 4 contracts for the month. Those members with a higher capital base should be entering multiple contract positions each week.

If you want honest and straight-forward trading then please keep us in mind. Hey, you might even want to join in on all the fun by signing up for a Membership Right Now!

December Portfolio Return – 5.19%!

Posted on 19. Dec, 2009 by Founder in Blog

The December portfolio return Extremely Profitable and marks the 11th consecutive month without ANY losing trades! Again that’s 11 months without any losing trades people! If you want to start seeing these returns in your own account, you only have UNTIL JANUARY 1st to SIGN UP FOR OUR FREE 30 DAY TRIAL. After that it’s gone FOREVER – WE PROMISE YOU THAT!

Watch this video to recap the December Income Portfolio:

Compared to the November portfolio, we had a return that was much higher comparatively from 4.38% to 5.19%. Clearly we don’t really care if we increase or decrease our monthly returns as long as we hit our 3% profit goal – which we are beating nearly each month. In addition, we showed once again that even in the face of a major market moves and extreme volatility, selling options with out P.O.T.S system still produced great profits.

To re-cap this month’s income, let’s look at what we made vs. our required investments (in margin). Here are the positions we had with corresponding PROFIT/INVESTMENT and RETURN:

QQQQ 30  PUT – $8/$192 = 4.16% Return

IWM 69 CALL – $20/$369 = 5.42% Return

SPY 85 PUT - $27/$499 = 5.41% Return

QQQQ 47 CALL – $22/$425 = 5.17% Return

As we said earlier, we did not have to close out any positions this month at a loss. This just goes to show everyone that by writing options, you are basically forcing the indexes to make dramatic moves in a very short time frame. And since we have positions on BOTH sides of the market (Puts and Calls), you are guaranteed to make money on at least one side of the trade every time – or both sides like we do every month.

With regard to TOTAL INCOME and RETURN, the December portfolio produced $77 of total income after investing just $1,485 in margin. That means we saw a total portfolio return of 5.19% this month. As we usually point out, our calculations assume that you enter just 1 (ONE) contract for each trading alert – i.e. a total of 4 contracts for the month. Those members with a higher capital base should be entering multiple contract positions each week.

***Even if you factor in a 1% comission for the month our return would still produce annualized returns of over 50% per year***

Currently we have a fully invested 2010 January income portfolio and are in the middle of building the 2010 February portfolio. The outlook for both of these portfolios is extremely positive right now as we are still writing options far away from the market’s current price.

New Trading Alert is AVAILABLE NOW for our Members! If you would like to start seeing these same return in your portfolio, SIGN UP FOR A FREE 30 DAY TRAIL here. Remember that this will end January 1st!

Enjoy your profits!

How Today’s Market Felt

Posted on 07. Oct, 2009 by Founder in Blog

Pretty much sums up how we felt about today’s trading session. Just a slow grind a little higher, then a little lower, then a little higher, etc. No real direction came out today so let’s hope for something better tomorrow. Even though the excitement was low, we got to profit from another wonderful day of time decay with our options. Can’t be those little profit days that stack up over and over and…

grinder

Option Expiration Week Is Back

Posted on 13. Jul, 2009 by Founder in Blog

Another option expiration week is upon us once again. Seems like these are coming faster and faster each month. Maybe it’s just the summer? Still, given all the fairly low volume trading over the last month or so, this week should have some moderate swings coming our way. The VIX has spiked up in recent days which helped drive up option premiums for front end trades. While we don’t think that the VIX will get as high as it did back in October and November of 2008, we still see it climbing a bit more here. Be careful out there this week traders!

Our Investment Strategy

Posted on 01. Aug, 2007 by Founder in Blog

The Option Writer focuses on a  market-neutral investment strategy that profits from the time decay of index options.  We collect up front premiums from selling deep OTM options with low probabilities of expiring ITM.  Since we are able to write/sell options on both sides of the market (Puts and Calls), we believe that any major market movement will still produce substantial returns with minimal risk. Moreover, our risk managment strategy related to spread trading reduces capital exposure in extremely volatile market conditions.

Cold, Hard Facts – Right From The Source

According to a breakdown by the Chicago Mercantile Exchange Clearing House, more than 85% of all S&P options sold during the last six years expired out of the money and worthless. *Source: Chicago Mercantile Exchange Clearing House; Analysis of S&P options sold during the period 2002 through 2008. Given the facts, it is easy to understand why, in the long run, the seller of options should have a higher return than the buyer of options every time. Now isn’t that a beautiful statistic working in your favor?

Here’s How We Profit Month After Month

Our strategy is designed so that the individual investors/traders can substantially benefit from the time decay aspect of option premiums. The strategy is framed around the exact same trading strategies used by many of the world’s top money managers and hedge funds. In addition, thousands of other professional option traders have used this strategy to create portfolio income for decades.

Writing options provides the opportunity to receive the premium that the option buyer pays. Option writers benefit when the option expires worthless – which they do 85% of the time according to the COBE - allowing the option writer to retain the entire amount of premium that was received for writing the option, minus any fees or commissions from their broker.

Real Market Neutral Investing

The primary advantage of selling options is that the investor has the ability to profit from the decay of the option’s time value. Selling out of the money options and spreads allows the investor to potentially profit from sideways markets, trending markets, and even markets which move against the seller’s position. Truly a market neutral investment strategy.

Risk Management Is Our Top Priority

To be successful in any investment strategy you must first start with a clear understanding of your risk. At the Option Writer we always perform extensive risk analysis before recommending any trade to our members. In addition, we have several different “exit strategies” for each position should something unexpected come along.

We Do Not Attempt To Forecast Prices

The majority of popular option techniques are based on forecasting the future price of an issue. But determining market direction requires expertise in a number of skills – charting with technical trends and momentum indicators, the use of contrarian systems including sentiment indexes and put/call ratios, and valuation systems such as fundamental analysis. The truth is that most investors are knocked out by hopeful gambling in options rather than using simple strategies. It’s sad but true.

Background On Option Time Decay

Most options decay to the point of no value at expiration – as we know from the statistics above. If these options lose value at expiration, it stands to reason that those who sold them made money – similar to taking a short position in a stock that goes all the way to zero. Make no mistake, this is absolutely correct! Option sellers/writers make money when the options they sold are not exercised by the option buyer on or before the expiration date.

The Option Writer makes money by patiently waiting for the option to lose its value due to time decay. As an trader employing the technique of selling options you will place yourself in the shoes of the option writer and take advantage of this statistical fact. Based on this you may therefore conclude that most of the options you sell will decay and be winners at expiration – allowing the premiums you collected to accrue into profits.