The Money Tree

Safely Generating Income in Retirement

Deep OTM NP Strategy – APR Results

Posted by mounddweller on April 15, 2011

Fellow Traders,

WOW!  What a difference a month makes!   The results are in for the month of April and they are sensational. 

As you’ll recall last month volatility was up and so was the number of our trade selections that finished ITM.  As a matter of fact it was the highest ever since I started testing this strategy.  Fully 25% of last months Deep OTM NP trades finished ITM.   

This month was just the opposite.  Our success rate was virtually the highest it has ever been.  Only 2 of 45 (4.44%) of our Deep OTM NP trades finished ITM.   Those two “losers” had total losses of $427.90.  The total income obtained this month had you executed all 45 trades would have been $6,163.50.  Executing all 45 trades would have required $319,350 in capital (assuming these were cash secured puts).  Thus, the ROIC, net of all losses, was 1.80% (22.6% annualized).

Now, as I said last month, I do not think it wise to blindly enter any or all of these trades.  The results this month do not change my position on that subject.   The selection criteria yield a list of opportunities.  It is up to the trader, after doing ample due diligence, to decide which, if any, are at or below his or her risk tolerance level.

I’ll be back with another post later this weekend with the MAY Week 5 (there are 5 weeks between expiration dates this cycle) selections.



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