Weekly options advisory newsletter
The Geiger Index
Editor: Keith Fitgerald
Publisher: Oxford Club
Type: Options both naked and covered
This is the editor’s best newsletter as he is 100% correct. I joined this service as part of a package deal from the $8K Oxford club society back in May. I followed his trades and without fail made some money. I did however needed to have $20K in cash to place naked puts and calls because the discount online broker required it so that was the only catch. Also to cover these trades, you had to put aside the price of the stock as collateral to the broker. Remember that after the trade finishes, you get that collateral back if successful or a margin call may reduce it. With that being said, I will now discuss the picks which is the good news of the newsletter.
The winning streak since the newsletter came out is 17 for 17. I kid you not!!! Out of a $1000 trade in a sell put in MMR, I turned it into a $2540 but set aside $5900 for that trade. Another trade I made money on was a $510 sell put on COW option which turned into $890 but set aside $3900 for that trade in collateral. In order to achieve this success rate, The Geiger Index requires lots of patience and if the stocks run up above your lowball price, you have to have the stomach to miss those trades because it is better to miss a good trade than get stuck in a bad one. That being said, I have paid good prices for stocks under the guidance of his graphs. He also places a naked put trade and also a contingency plan should the Geiger Index fail then you pick up stocks on the cheap to get back your lost money and wait for it to run back up to recover your losses and then some. So far none of these contingencies were required as every naked put was a success. The Geiger Index doesn’t leave you high and dry for failed trades unlike other services I used.
I would highly recommend The Geiger Index once you get a $20K trading account with Scottrade’s OptionsPlus OR TradeMonster.
I just want to add a quick rejoinder to the previous post about The Geiger Index. I was a subscriber too of that service, but in spite of a 12 out of 12 record, I quit. Why? The strategy used is writing far out of the money naked puts. I do like this strategy and use it myself, but be aware that this strategy is notorious for working well almost all of the time, until a “tail event” happens and you lose your shirt. Many respected writers on options (McMillan and Natenberg for instance) recommend against this strategy. I’m not going to go into details here, just google naked puts and risks in case you’re unaware of this.
So given the above, the 17 out of 17 record is nothing special. Indeed, some of the naked put sales were so far out of the money that you’d expect to lose money perhaps once every 10 years and otherwise collect a small premium (an event were your stock drops by 40% in 2 months or so: it happens but rarely).
Beside all this, I was annoyed with the sleazy marketing drivel (he claims to have some fractal model — I’ve read some of the technical papers in this area and I assure you that in spite of his hyperbolic claims there’s nothing special about his model and its aims are mainly marketing related).
Finally, as with all options newsletters, you have the problem of getting into the trade because of insufficient liquidity. Why have that problem of competing with other newsletter subscribers when you can so easily do this strategy on your own. Like I said, 17 out of 17 is nothing special. Indeed, it’s what you’d expect with this strategy, until you lose your shirt. By that time, the only winner will be the newsletter publisher who has been able to charge fat fees for many years, and now all they have to do is close the service and start a new newsletter.
I have mixed feelings about this service. On the one hand, it’s true that he hasn’t had a losing trade yet, but on the other, the wins are relatively small. I recently heard naked put writing as being akin to standing in front of a freight train to pick up pennies. As Peter said above, making these kinds of returns is nothing special, and I also use the strategy on my own. Most of the time I make money with it, but I’ve been hit hard on more than one occasion (not with the Geiger service I should clarify) when my stock price dropped out from under me.
So why does Goldbug make such large returns on a small account? It’s called position sizing, or lack thereof. One must never forget that you can have the stock put to you at any time before expiration, and if you aren’t prepared to buy it at your strike price you have no business selling that many puts.
I always compute how much money I want to put into any one stock position and calculate how many contracts that amounts to. If I won’t spend more than $25,000 on one stock position, and I’m looking at a $25 strike price, then I only sell 10 puts, no matter what the margin requirement is. In my fairly experienced opinion, if you only have a $20K trading account you shouldn’t be in this service.
In summary, even though I’ve been profitable on 12 out of 12 trades, I find that the small gains aren’t enough to keep me in the service once my subscription expires.
Laura, if you have the Oxford Club Lifetime Deal, this would be worth it because it does take a lifetime to make money with this service. It is not worth the money for a limited membership because the returns don’t make up the cost of the service. If I had to pay year by year, I would change my Value for the money rank to 1 but I got this as part of the Oxford club’s lifetime deal so I gave it a 5. What you said was correct about my returns though, I had to pump thousands as collateral for each trade just to make hundreds.
The most valuable year by year service with Keith would be the New China Trader as the gains make up for the cost and then some and it happens to be cheaper than the Geiger. I would exchange Geiger for New China Trader as at least New China ONLY deals with Chinese stocks and not sell puts.
The advertising for this newsletter reaches heretofore unattained levels of hype:
That’s what the string of numbers, letters, and symbols above looks like to most people.
Of course, the entire code fills 7 pages of 8-point type 2,787 characters in all…
But in the right hands, this code can predict the movements of entire markets – or any one stock – 30, 45, 90 days – even two years – in advance. Down to the penny!
I don’t expect you to believe me – at least not yet – but consider this:
When I demonstrated the power of this code to one European bank (a potential client), they smiled politely and then blew through millions of dollars trying to steal it behind my back.
Months later, something even more remarkable happened…
I was sitting at my desk when my hard drive suddenly started squealing like a stuck pig. The sound scared the daylights out of me.
Like a madman, I pulled the wires out of the wall and wrapped the hot CPU in a blanket to snuff out the chance of fire.
A 20-year veteran forensics expert “autopsied” my burnt computer and told me evidence of a highly trained, carefully orchestrated hack consistent with what he’d seen over the years only from hostile foreign governments looking for specific information. They left all the telltale signs.
To say I was “upset” is an understatement. I’ve spent tens of thousands of man hours in computing time… creating this. It was strictly confidential from the start – and still is.
So why did they do it?
Why did a global bank spend more than $10 million to steal my life’s work?
Why did a foreign government commit espionage to hack into one man’s computer?
The reason is terrifyingly simple…they’re scared stiff.”
Yow. The author of this screed ought to be writing airport novels.
Suppose you could actually predict stock prices one month to two years in advance, “down to the penny!” There are lots of ways you could make tons of money. For example, if the stock isn’t going to move much you could sell huge numbers of near the money puts with strike prices 0.50 below the stock’s price on option expiration day, and sell huge numbers of near the money calls with strike prices 0.50 higher. Or if you know the stock is going to move a lot you could *buy* far out of the money calls or puts and clean up. What you wouldn’t do is what this newsletter recommends: Sell far out of the money puts with small premiums. That’s what I do myself to pick up a bit of extra cash now and then, precisely because I have no clue what is going to happen two or three months from now. I’ll find a stock for some sound business that is trading in a range and is near the bottom of its range, and then sell puts a month or two out betting that it won’t drop 20% below the bottom of its trading range. Almost always the options expire worthless. Of course I have to allow for the possibility of a crash so I generally don’t use margin — I make sure I have the cash to buy the stock. That means in practice that I can only sell a few puts at 0.30 to 0.50 so I only get a hundred dollars or so. The alternative is to use margin, promising to buy up to 5 times as many shares as you actually have cash to buy, in which case if the stock starts plunging you will have to buy the puts back at a cost many times what you sold them for, and will suffer a permanent loss. (You can’t simply get put to the stock and hope it eventually goes back up, because when you use margin you don’t have enough cash to do that.) The point is that you don’t need a fancy stock price predictor to play this game, but every now and then while you’re picking up pennies in front of a steam roller you’re going to get flattened.
That is why I am giving The Geiger Index a 3 for performance, despite its current perfect 18 for 18 record. This is actually fairly normal performance for selling far out of the money puts. But I am taking risk into account when I count performance. The key test is to see what happens in the next stock market crash. Especially since the returns touted by this newsletter require that you use margin. One short 0.40 put that suddenly becomes a 5.00 put will wipe out the earnings from a dozen successful trades. If you don’t use margin you are very unlikely to earn enough money to pay for this newsletter.
I tried the Geiger Index for three months. They claimed to have a mathematical formula that predicts stock movements.
During my three month trial in Mid 2009, only naked put shorts were recommended. These type of trades have a 97% success rate if they are 20-30% out of the money in an uptrending market. You have to put up $5000-$10,000 to make $500-$1000 in three months. This method can fail miserably if you are short puts in a down market.
They gave me a pro-rated refund without questions.
I did not find this a workable stock picking letter and came out after a few months without argument or difficulty. Position sizing and risk management is very difficult to impossible. The picks can be good, but beware the usual assumptions of linear performance and also the inference that annualISED performance equates to annual performance. To be honest it felt a bit like a succession of ideas along the lines of “this months good wheeze”. The technical requirements of the trades were not always to my cup of tea.
Recent ads have touted the great performance of picks (20 out of 20 correct!) but completely fail to mention that this is an almost 100% options (NOT stock) service. If you want to play with Put options give it a try, otherwise no thanks.
Joined this service a little more than a year ago, but couldn’t sell puts, so–naively–was always waiting for a straight call. Actually the service seems now to me to be more or less bogus. Because of the “low-ball” price expectations stated, which are then recalled after a few weeks/months, even if one does materialize it wouldn’t cover the cost of the service itself for me.
I subscribed in March 2009 and cancelled a few months later when I realized that a con game was going on.
Some of the small profit gets chewed up by the commissions, in fact, some profits are so small on some of the recommended “winning” trades that, after commissions, there is no profit!!
Nothing but using a name of a German Scientist, Hans Geiger (http://en.wikipedia.org/wiki/Hans_Geiger). The service is nothing more than looking at the Delta of an option, go down to the low end (-.10 or less for put options) and sell a naked put. Of course 90% of the time one can “accurately” predict where the stock price WILL NOT be. However, if one on average makes 3% BEFORE commissions per trade, then one will need only one loss of 21% to wipe out 8 (after commissions) successful trades. To have so much risk to gain 3% is foolish. As I write this, PEP is up 2.1% from yesterday’s closing. So what is so special about this?
A lot of work AND RISK for a potentially small gain each time. The cumulative return they boast is based on a very tight profit margin, which is not realistic. The trades are often complicated, and I have seen them make mistakes in their instructions, only to send you an update – which is costly since by then you have already eneted the trade (and I am pretty certain they don’t factor that into their supposedly stupendous results). The risk/reward ratio is just NOT worth it. Also, they provide something lame like a 45 day money back guarantee, and it may not trade that much, so you really don’t get a lot of time to evaluate it, so it is a lousy guarantee. You either take the chance, or cut and run. Other publicatiosn are much more professional on the “time to try” because they really do want your long term busniness. The Geiger guarantee puts them into the fly-by-night category in my opinion. I recommend you avoid the Geiger altogther.
I have been in this service for four months it is a total waste of every one’s time and money yes he is up to 23 wins the last win gave me $8 yes eight Dollars. Without wasting anymore of your time this is a joke service.
So much for the Geiger Index and Keith Fitzgerald’s wrong Geiger prediction for Toyota stock. He told us to buy PUTS.
Keith Fitzgerald claimed that Toyota would fall based on his conviction that the expected law suits would cause the stock to fall—-Geiger or his ” logical deduction” based on the damaging effect of law suits?
So far that has not happened. What is happening is that the stock will still be up at expiration.
To try and “rectify” the situation, he then tries to “doctor” up the PUT making it complicated and cumbersome for the average investor.
This guy’s Geiger is crap.
As I wrote in my Feb 2010 comments, all one has to do is choose a low delta and sell the put at that expiration. Pretty much all online brokers will have that information LIVE on their systems. For example, take IBM: It is trading at $147.80 as I write this on Jan 10, 2011. Go to the Feb 2011 month (or any month you choose), look up on the PUT side the deltas until you get to 10-15. In IBM case, for Feb 2011 the 135 put strike has a delta of -.12 (negative for puts, positive for calls) and you can seel that put for $0.66 as of writing. Save yourself the money and BS from all this hype.
Trying to get my refund 45day free trial but no one will p/u the fone or respond to my emails. If anyone has a suggestion please sound off. I am not an option trader and didn’t read it close enough to figure out what exactly I was getting into. My screw up but at the same time ANSWER the Frick’n fone. For me using a Trailing Stop or Bracketed Orders is the only way to grow my money. It allows me to provide a Measure of Contol and Safety! Ironworkers First Safety Always!!
I got out after the 45 days and could get my money back.
It was the only thing I got back. The puts on Toyota (see Penny ) were lost.
As there are only stars and not a zero I did’nt gave an appreciation.
6 x 0
Really I brought the100 cts @ around $3.00 July $70 puts around March 2010 when TM was above $80 and put a sell order at $70 just as Keith advised and made $40k-$50k it took about 5-6 months of patience but the reward was worth every penny- ps he had another stock short in the letter for those who did not understand options, after 20 out of 20 wins I becafe a lifetime member-best in trades, Bob
I also joined maybe without reading fully. They were very responsive when I told them I wanted to become a subscriber but now that I don’t understand option trading etc and have asked 4 times for a refund, nobody will return my call. They promised a 45 day trial with full refund if I wasn’t happy with the advice. Once they get your cash, you can forget ever seeing it. Don’t sign up unless you are certain. I give them six zeros. Not to be trusted.