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Tuesday, January 3, 2012

BookingAlpha & OptionAlpha. A breath of fresh air.

Update June 1, 2013: The original article was written in January 2012. 18 months later I don't recommend BookingAlpha's service anymore. I still praise them for their transparency but some risk mismanagement has led them to very poor results almost from the very moment this review was initially written.

Today I want to talk about two newsletters that offer alerts and education to trade options in the US markets: BookingAlpha and OptionAlpha. I have been a subscriber of both newsletters for a while now, keeping them both in order to get their insights and learn from them as much as possible.


Services provided
  • BookingAlpha offers two services: a Weekly service where mainly Credit Spreads are sold using weekly options, and a Monthly service where the same strategy is applied but using monthly options (mostly 20 to 30 days to expiration).
  • OptionAlpha offers three services: Naked options (The sell of either Calls or Puts out of the money), Credit Spreads, and Iron Condors.
They both trade the indexes and ETFs such as RUT, SPX, DIA, QQQ, IWM, SPY etc.


Level of Activity
  • BookingAlpha tends to be a little more active, probably 5 - 8 trades a month combining both services.
  • OptionAlpha in the other hand trades less frequently, maybe 2 - 5 trades per month on average.

Education Provided
  • BookingAlpha is essentially focused on the trade alerts and achieving consistent profits. Education is not the center of the service. Although, you can and you will learn tons with Trevor! Every trade is sent along with an explanation, that alone shows you how a professional proven warrior trades. You also get market commentary and insights, plus Trevor is always willing to clarify doubts and sends out email blasts explaining and responding to interesting questions asked by subscribers when he thinks those questions are worth sharing. Lately for example I have learned a lot about deep in the money debit spreads thanks to these emails.
  • OptionAlpha is a little more centered around providing education. Kirk posts articles on his blog about general subjects related to trading with a comments sections at the end where anybody on the internet and not only premium subscribers can contribute, give their opinions etc. Also, interesting market commentary, usually in video format is sent to subscribers via email which is highly instructive. And on top of that his trades also come with an explanation. Definitely the educative value provided by OptionAlpha is simply amazing and superior.

Website
  • BookingAlpha has a simple website, with a basic Members area. I never fill the urge to visit the site. And you don't need to anyways.
  • OptionAlpha has worked more on the design and cleanliness of his website. Very easy to digest and visually appealing. The members area has some nice features. The trading calendar comes to my mind as a nice one. A very slick calendar, animated, reflecting upcoming events and past results of those same events.

Performance

This is always related to the risk you are willing to take. Both services have been easily profitable year after year. One (BookingAlpha) being riskier than the other as it looks for extraordinary returns per year (above 60%). But here are my two cents:
  • BookingAlpha has superior performance, year after year until 2011. The track record of the service on a year clearly reflects the performance year to date all the time. Individual trades often try to get a 10% - 20% return on investment (margin) and this has created higher returns every month, although, this inevitably puts more risk on your trades. BookingAlpha is a true warrior, specially with the weekly options where you need to get closer to In the Money when you are selling time premium and therefore you need an almost perfect timing.
  • With OptionAlpha only the monthly performance is reflected on the current month's report (you can still figure out the year to date performance going month by month but it takes some time and work to do). OptionAlpha enters trades selling options more out of the money which results in lower returns, usually aiming for 1% - 5% return on investment per play. You usually feel safer and less concerned about markets' daily moves as you are always more out of the money, but at the same time some of the trades don't make much sense for small accounts due to the low returns expected. With OptionAlpha, you will probably be profitable, and one of the main points in favor of OptionAlpha is that the equity curve will be smoother/softer with more psychologically manageable draw-downs than those of BookingAlpha.

Subscription costs

I'm not even going to mention specific numbers because in my opinion they are both so low and affordable in respect with the value provided in performance and education, that if you're not willing to spend the subscription cost you simply shouldn't be in this game. The costs in both cases can be covered with a couple MacDonalds and Sodas a month. Very affordable services and great value provided.


Communication and Transparency

1000% of the points for both! I've written to both and received comprehensive replies to my inquiries in an impressively timely manner. There's also feedback, open and honest communication all the time. So much appreciated!


Conclusions


I feel really happy about both services. And really thank both Trevor(BookinAlpha) and Kirk(OptionAlpha) for all I've learned from them which to me is way more valuable than any performance. These guys have inspired me to start demo-trading my own ideas with confidence. With a couple hundred bucks in a few months I have learned more than what you are supposedly taught in any $5000 seminar.

I will remain a loyal follower for a long time!
This article was written on January the 3rd, 2012.

Added note on September 21, 2012.
As of today, BookingAlpha has unfortunately incurred in a significant draw-down that will probably result in a negative year for the first time since inception. As explained in the article, the spectacular returns obtained by BookingAlpha in the past implied an aggressive trading style, and inherently higher risks. I still follow BookingAlpha and trust their approach, trading system, honesty and transparent service.


Update June 1, 2013: I don't recommend BookingAlpha's service anymore. I still praise them for their transparency but unfortunately some risk mismanagement has led them to very poor results almost from the very moment this review was initially written.




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4 comments:

  1. Hey Henrik! Thanks for the great review and honest feedback. I hope 2012 is going to be good for us option traders as well. Thanks again and I'm sure we'll be emailing back and forth soon.

    ReplyDelete
  2. Hi Kirk! Thanks for reading mate!
    Hey I just saw the new videos gallery you recently launched. Amazing! I dont know how you do it (All the work you do I mean).

    Yeah, I have a feeling that 2012 is going to be solid!

    ReplyDelete
  3. Thanks for sharing this Henrik, sounds interesting.
    As for September 2012, the first two Thursdays ECB and then QE3 events had deep impact on my equity curve as well:)

    Good luck with your trades,
    Jirka

    ReplyDelete
  4. Hi Henrik,
    Any chance you could review us at optionsweekly.org?

    ReplyDelete