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BookingAlpha Option Trading Advisory

Wednesday, July 6, 2016

The Chosen One: Trading competition update (Q2)

In December of 2015, a bunch of strangers (now good Internet friends) and I, decided to use 2016 as a friendly trading contest. No prize. Just for the fun of it. I wrote the first article on December 29, while many of you were eating caviar, or killing zebras as part of the Year End celebrations with the family. The original article can be read here.

Over time, I have received some emails asking about the Trading Competition and whether I simply removed it from the site, or abruptly ended it without a follow up. I've learned a lot about the Castros and their dictatorial manners. I use them myself with success from time to time. However, in this case, it's just your lack of proper technique handling your mouse. It is called "scrolling". You grab your mouse, scroll down a little, and right there on the left hand column, you can find the angelical yellow cat that links to the Trading Competition Results page. It has been there all the time. Never been hidden.

Now, there used to be a link to that page on the top navigation menu of the site. I give you that. But, well, let's say I had to move it from there in order to put the "money makers" back. A blogger's gotta eat.

Without further ado, here at the results at the end of June:

As you can see...........let's just say,........... you can see.

It wasn't overall a good first half, keeping in mind that the S&P500 Index was up 2.69% for the year on June 30. To tell you the truth, that's the main reason why I didn't write a follow up article at the end of Q1. Boy, you can bet, had we been killing it, I would have been writing articles like crazy about the competition. Not once a quarter, but once every week.

We have sucked, no excuse. However, I believe, the second half of the year will be easier to trade. Call me crazy, but I think there is a chance that the upcoming US Elections, and all the uncertainty around that event, will prevent this market from rallying beyond control or totally crashing, at least until after the elections in November. Based on that hypothesis, it should be an easier second half with decent volatility, good for the premiums and without the extreme trends. The last two months of the year can be more challenging, but for now, we may have four good juicy months in front of us to turn it all around.

There is one last challenge to solve though. We had agreed to not rank participants based on returns only, as that promotes reckless and irresponsible trading. So, we came up with a formula to calculate "Points". This formula was based on Returns, of course, but also Draw-downs, Return to Max Draw-down Ratio and Capital Exposure. All the details were published in the Points Calculation guide. However, there was one thing that our cockiness didn't let us think about: the possibility of someone having a negative return. Folks, a negative returns totally screws up the formula and it is useless as it is. So, let's hope we all end up in positive territory by year end and can finally calculate those goddamned "points".

Next update at the end of Q3 (only if we are doing better, otherwise I will feel too ashamed to touch the subject and will pretend this never existed and it was just a bad dream).

Once again, thanks to Dan, Jonathan, Hector and Aram for sticking their necks out. Takes courage, and you've all gained my respect.

For monthly updates you can check out the Trading Competition Results Page, where statistics are refreshed at the beginning of each month.

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