LTOptions at a 33% discount during the Year End Holidays.
Tell me More

BookingAlpha Option Trading Advisory

Tuesday, January 17, 2017

Trading Competition: The End

Along with 4 other traders/bloggers, I joined a friendly trading competition in the year 2016. These are guys who do not camouflage their returns, who share their trades publicly and who do not scam naive investors selling them garbage. There was no monetary prize for the winner. It was all for fun and to do something different.

Well, time for the final update:

Words cannot describe how tempted I was to sort the names by Return to Max Draw-Down ratio, and argue that the risk adjusted returns are the most important aspect of all, lol. That would have made me the indisputable winner :)

Jokes aside. It wasn't my best year Options Trading wise.

Interesting Points:

- I'm glad to report that Aram from, our Wild wild west cowboy trader had the best account return of all. Aram's return the year before (2015) was a solid 24.99%. So, I guess that tells us something.

- If you are interested in my thoughts on my own Options Trading activity in 2016, you can read this article.

- Bellini, you've gotten wise against low vol super rallies and your December return proves that. I'm pretty sure much better years are right ahead. Read his 2016 Trading Review

- Dan, from abandoned us. He jumped to the professional world and it only made sense for him to focus all his energies in his new activities. Read his farewell speech: Where we go from here. I really miss his posts, but, c'est la vie. Dan's numbers here only reflect his trading activity up to June 2016.

- Do not get the wrong impression with Jonathan's negative number in 2016. I've been exchanging ideas with him for a looong time, maybe 4 years by now Jonathan?? and he is a great solid trader and student of the markets. Jonathan publishes trades of another portfolio called The Long-Term Spread fund, which had an outstanding +29% return in 2016. He just happened to choose the wrong fund at the beginning of the competition. Kudos to him for sticking with it without excuses. Also, similarly impressive was his recovery in the final months where he went from -27%, a point at which most would have thrown the towel, to almost flat for the year. He is definitely in the top most-follow traders for me.

I also want to dedicate a special paragraph to a reader that goes by the alias nigapls
Man, you are also a winner in this competition. I've gotta hand it to you since the average return of the competitors was below the return of the SPY ETF in 2016.

2015 was easier to trade. Aram made +24.99% and Jonathan was up +22.96%. In the meantime the S&P500 went nowhere.

2016 on the other hand was tough for active options sellers. This doesn't mean the strategy is not worth anyone's time. The 2010-2012 period was, for example, very easy for options sellers, and 20-30% annual returns were relatively easy to achieve without too much effort and risk. Those were crappy years for the Buy & Hold Investor. In fact the Lost Decade preceeding that period was true misery for the passive Buy/Hold strategy.

Quoting Investopedia:

"By most measures, the period from 2000 to 2009 was a true “lost decade” for most U.S. households, as steep declines in real estate and stock prices resulted in massive wealth erosion. The S&P 500 recorded its worst ever 10-year performance in that decade, with a total return including dividends of -9.1%, which was even worse than its performance during the 1930s depression. "

Just imagine being down 9.1% after 10 years holding SPY.
So, if anything, getting involved, learning different strategies, diversifying your risk should be a plus in anyone's book regardless of whether a particular approach in your arsenal under-performed an arbitrary index on a given year.

We'll see. If the current bull market ever comes to an end, things can get really interesting again in the world of traders. In my case, the 10 year commitment is still there. I'm at the half way point. 5 more years sharing trades are ahead. Hopefully in a variety of market environments.

Thanks for reading  and special thanks to my trading pals Aram, Dan, Bellini and Jonathan. Thank you for sticking your necks out. Doing it publicly takes the kind of courage that very few have. Especially when disclosing specific portfolio gains and losses throughout and entire year and not just the return on investment on a particular play on twitter. A world with less BS and more trader transparency is a better world.

You guys rock,

If you want to check out their sites:
Create Monthly Income Fund

Go to the bottom of this page in order to see the Legal Stuff

No comments:

Post a Comment