Description
Wide-ranging options trading service with a large number of contributors.
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TheStreet.com’s OptionsProfits:
Indiscriminate and irresponsible selling of Premium. High probability trades picking up pennies in front of speeding trains.
Example1: (Wed Aug 4th, SPY 112.8)
“”We are selling more weekly puts on the SPY and adjusting our cost basis.
SPDR S&P 500 ETF
Sell to open SPY 1 Aug 109.0 PUT (O:SPY\10T06\109.0) at 0.14″”
Max win $14 – 5% drop in SPY to end this week would lose $184 – good risk/reward?
Example2:
“”I am using the recent sell off in Waddell & Reed to accumulate shares and write puts.
Waddell & Reed Financial Inc.
Buy 500 shares of WDR at 23.84
Sell to open WDR 5 Mar 22.5 PUT (O:WDR\11O19\22.5) at 2.25
Sell to open WDR 5 Mar 30.0 PUT (O:WDR\11O19\30.0) at 7.1
Sell to open WDR 5 Mar 25.0 PUT (O:WDR\11O19\25.0) at 3.5″”
Would be interesting to learn how this ‘structure’ was developed. Random picking of Puts to leverage up.
Also use misleading terms & spin recommendations to look less risky than they are. Example:
“”We are fashioning a buy/write on shares of PSS.
Collective Brands Inc.
Buy 1000 shares of PSS at 15.56
Sell to open PSS 10 Mar 17.5 CALL (O:PSS\11C19\17.5) at 1.55
Sell to open PSS 10 Mar 17.5 PUT (O:PSS\11O19\17.5) at 3.5″”
Only the first 2 parts of this is a buy/write, the put sale just turns this whole thing into the equivalent of selling of 2 puts. I doubt very much they would get many takers with simple “Sell 2 Puts” recommendations.
Percentage of winners to losers is going to look pretty good for this recommendation site but it is down to a complete lack of responsibility and concern for their investors. When one of these high probability low dollar winners turns into an extremely large high dollar loser I very much doubt they will care about the investor that just blew out.
It is shocking that the likes of Peak6 & LiveVolPro (who provide commentators & recommendations) would condone this type of behaviour.
I’m not sure it has to do so much with being irresponsible as it is a lack of creative ideas. As an aside few people follow their recommendations as there is almost no volume on the strikes they recommend.
Advising readers to sell weekly options as a skew trade is incredibly irresponsible and indicates a lack of understanding of risk. A glaring example of this was a rec by Ophir Gottlieb: Buy 1 GS Sep 150p for $6.4, sell 2 GS Aug (weekly) 145p at $1.5, and buy 1 GS Aug (weekly) 140p for 18 cents. This rec was sent on a thursday afternoon, and advertised as a skew trade. In reality its merely a short gamma trade as Mr. Gottlieb found out. GS dropped $2 the following day, causing the position to lose $3 per spread, at which point Mr. Gottlieb advised clients to close the the Aug weekly position and retain the Sept 150p. If Mr. Gottlieb were trading on my desk or at Peak 6, he would have been fired for such a reckless position.
The recs by this service are complete garbage. Here’s an example by “Dr.” Paul Price.
We are selling naked calls on TSLA because it has never made a profit and is expected to continue losing big bucks until at least 2012 or 2013.
Tesla Motors Inc.
Sell to open TSLA 5 Dec 22.5 CALL (O:TSLA\10L18\22.5) at 1.45
Sell to open TSLA 5 Dec 24.0 CALL (O:TSLA\10L18\24.0) at 1.05
Sell to open TSLA 5 Dec 20.0 CALL (O:TSLA\10L18\20.0) at 2.55
Instead of coming up with a creative way to get a short position and limit risk, the “Dr.” is just taking rather large risks for limited gains. This service is inappropriate for individual investors and is only worth purchasing if you want a good laugh at what some “professionals” are thinking.
I’ve been using OptionsProfits.com for almost a year and I’ve made fine profits from following their recommendations.
They give good advice and always let you know when a recommended trade is being closed out.
That Waddell and Reed article that was criticized here turned ou to be a huge winner.
The service is basically a put selling strategy. If that’s what you’re looking for, then you’ve found your letter. If you do follow their advice, I would be careful about the amount of leverage employed.
I have used there Rating system to rank my next investment. They provide a daily list of Q/E for each day- Before Open or after Clse and liquidity.