Description
Options trading service based on ETFs
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WaveStrength PowerSignal. Taipan. Options.
Let me begin by saying that I have never posted a review of these services before. My feeling is (usually) that each person needs to evaluate for themselves. However, I have to make an exception in this case, because their marketing piece is so (at the least) completely misleading and at the most, blatantly false (specific examples will be cited below).
This one is a fairly new service (beginning in mid-2010) from the same people who do WaveStrength Options Weekly (WOW). It is edited by the same person – Adam Lass. I will begin by saying ‘Buyer Beware’. Both services are for buying and selling options. Quite frankly, they don’t need two difference services, because they do exactly the same thing, so business must be a little slow over at Taipan and they needed to hustle up some new subscribers. In WOW, they trade options in specific equities and for the overall market by trading on indexes (DIA, SPY, QQQQ, etc.). In PowerStrength, they trade options on sector ETFs. That is the only difference.
Their marketing piece claims they will turn $5,000 into $1 million in one year and they cite 5 transactions that (on paper) would do just that. Unfortunately, the trades they cite are not trades they themselves made in this service. They are only ‘examples’. Plus, of course, the presumption of turning $5000 into a million in 5 moves assumes no losing trades. Their legal defense is that they use the phrase ‘as much as’ as in……….we will turn $5000 into AS MUCH AS $1 million dollars in 12 months. Based on what I have seen so far, they have a better chance of turning $1 million into $5000.
The marketing piece further illustrates and provides many specific examples of options trades that netted 4-digit gains, yet none of these trades was done within this service. They claim that they did beta-testing to achieve such stellar results, yet they will not publish the specific beta-testing they did with the actual results; and further they claim they achieved results of 8527% (not a typo) with their beta-testing.
A look at their actual portfolio going back to January 2010 (interesting in itself since the service supposedly only started in June or July) reveals there are 17 completed transactions. Out of this total, 10 resulted in net losses, while 7 resulted in net gains, none of which produced more than a 100% gain. Unless they can turn straw into gold, there is no way to turn $5000 into one million with results like that. With these 17 transactions, their net cumulative gain is around 60%. Unless my math is a little rusty, I don’t think an actual net result of 60% is very close to their supposed beta-test results of 8527%.
As I type this, there are two open transactions. One is buying puts on a homebuilder ETF and the other is buying puts on a consumer discretionary ETF. They might end up with some decent gains on these two if the market tanks.
One other comment about their marketing piece. One of the huge trades they want their subscribers to watch for is a trade that has already been completed and resulted in a (very average) 75% net gain.
Not every recommendation can be a winner. I don’t think any reasonable subscriber expects that. But, the most disturbing thing to me is their lack of response. When I sent emails asking for specific information about their beta-testing, I received vague, defensive responses that had very little to do with my inquiries and, of course, they offered to refund my money. Emails sent directly to the editor, Adam Lass, have gone unanswered.