Since 2007 Option Alpha’s performance has consistently out performed the market. We are in the business of generating Alpha (excess returns) with 3 simple option strategies. Below find all the monthly return and income figures as compared to the S&P 500 Total Return (including dividends).
- We only report results for trades that were actually filled – not hypothetical trades in paper accounts. It’s the fair and honest way to conduct business in our opinion. After all, getting filled is what counts when you trade with real money don’t you think.
- We report results based on the suggested ‘limit price’. We do realize that some of you are agile investors and may get filled at a better price than suggested. We choose to report results based on the ‘limit price’ which reflects the worst case scenario for our members. Many other publications base their results on hypothetical or unrealistic prices, such as best possible price or average price, which is typically not filled on a given trade.
- In the member’s section we show EVERY result of EVERY trade. We do not just make a selection of results from the best trades we have ever suggested. We show the good – the bad – and the rare ugly if it ever occurs. We feel this type of openness and honest transparency is what keeps people coming back each month.
- Special note regarding Credit Spreads and Iron Condors. You may have noticed that we do not have performance figures for these strategies before 2011. This is because these strategies where both launched in November of 2010 – and the first month of performance was December 2010. The income report for the Credit Spreads and Iron Condors can be found by following the links. From here on, we will report all 3 strategies as you see above.
First, you have to understand that this is a “model” and you should always make your own decisions regarding portfolio allocation and risk after consulting with a financial advisor. We started using this model at the beginning of 2011 when we added additional strategies to our services.We use a general portfolio value of $10,000 to start each year.
The monthly income figures for each strategy are therefore adjusted based on this value by the monthly return percentage. We assume the following number of positions per strategy each month:
- Credit Spreads – 3 Positions per month (31% per trade, 7% cash reserve)
- Iron Condors – 1 Position per month (90% per trade, 10% cash reserve)
- Naked Puts/Calls – 4 Positions per month (23% per trade, 7% cash reserve)
This of course is a “model” and is simply used to calculate performance. We may of course enter more/less positions on a rolling basis and depending on market conditions. If for example we enter 4 positions for the Credit Spreads (instead of 3) then the allocation would be 23% per trade with the same 7% cash reserve.
Each month our performance is based on individual portfolios of each strategy and we do not combine any of the three strategies. And as always, you are completely free to invest more/less per trade based on your own investing horizon and risk tolerance.
We are one of the very few publications that reports historical performance results in this fashion. Again, we believe reporting honestly and accurately is the best way to measure one’s results – and keep our clients happy for years to come.
The risk is obviously that our calculation method does, however, put us at a disadvantage when someone new tries to compare our performance to other services. Because we are more open with our losing trades (which WILL happen under EVERY investing system) some investors will decide not to subscribe to our service.
We are okay with this, a little sad, but still okay. We have been around this long for a reason and our testimonials section speaks for itself. As always if you have any questions about our performance please contact us.
