Description
Recommends options spread trades, one per month.
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Wicked profits
I’m writing a review about options trading site called “Wicked profits” – http://www.wickedprofits.com.
The site trades options spreads. They are in business since 2000. Very impressive long-term record:
2009 YTD 27.22%
2008 36.58%
2007 48.00%
2006 55.78%
2005 48.03%
2004 26.83%
2003 31.07%
2002 96.56%
2001 55.32%
4/2000 – 12/2000 132.13%
They put one trade per month, only one small monthly loss of 0.21% since December 2004. 36% gain in 2008 – how many services you know that can show positive result for 2008? If they think the market is too volatile, they won’t a trade that month and you get a free month. They didn’t trade in October 2008.
The cost is $90 per month.
Bottom line: it is a very conservative, honest and consistent service. Completely duplicable, highly recommended.
I have been a subscriber for over 6 years. The annual performance figures of the prior review are fact and obtained from actual trades executed by auto-traders, where a subscriber has an account with OptionsXpress and the one recommended index option spread trade per month is automatically executed through that firm. You are able to use there recommended spread trade through any firm, but most subscribers elect to auto-trade through OptionsXpress. All trades are open for no more than 35 days; thus there is no bias leave a losing trade open. The single recommendation each month is well reasoned, and performance has been consistent. But there is always potential for the market going against a trade in a month, resulting in a significant loss for that month.
There are monthly, quarterly and annual subscriptions. The annual cost is $720, as I recall.
You need about $15,000 capital to have a reasonable transaction cost, which will allow a spread trade of 15 index options. Trades are always on a net credit basis, such as selling a one month call and buying a call that is a little further out-of-the-money. Profit per spread recommendation is generally targeted to be about $50, before a fixed $3.50 commission cost per spread option at OptionsXpress. If the editor believes that it is a higher risk market, he will go a litter further out-of-the-money to reduce risk and thereby plan for a trade with as little as $30 profit per spread. The editor tells you the basis and reasoning behind each trade, and follows the technical aspects of the market and the particular open trade with daily emails.
I am very satisfied.
Let me start by saying that I have not subscribed to this service, but I have a good reason, and that reason is MANY RED FLAGS. FIRST RED FLAG – they have no names of who they are listed on their website. SECOND RED FLAG – their address is a Las Vegas mail forwarding service called MailLink. THIRD RED FLAG – they have no phone number published (it’s hidden behind a password). FOURTH RED FLAG – a very limited number of reviews (above) and both give the service 5-stars in every category – could be both fake, as neither reviewer gives a weblink. FIFTH AND MOST IMPORTANT – consistent, “Bernie Madoff” style returns – everybody has a drawdown, and a significant one – their results are “too good” to be believable. Remember, if it sounds too good to be true, it probably is!
(I thank @aiki14 and @IRON100 for their insights here that led me to investigate further and draw these conclusions.)
SnoopyJC,
First of all, let me say that I have no vested interest in this website. I actually cancelled my subscription because for me the risk/reward is too high. I’m implementing the same strategy, but with different risk/reward.
How can you rate a service that you did not even use? All your red flags mean nothing. They don’t list the phone number, but if you email them, you will get a response within 24 hours, usually less.
Regarding the returns – you can subscribe and see exactly how those returns are achieved. Nothing mysterious about this, just credit spreads with very good timing. http://pro-trading-profits.com/ is tracking the service and verifies their results and they match exactly to what the service is reporting. pro-trading-profits also has 16 reviews of this service with average rating of 9.2. The ratings go back more than 2 years. You can say they all are fake, but I don’t believe it.
I really don’t feel that someone who hasn’t joined this service has any right to give a review of it. I have been a member for two months now, and can attest to the fact that last month we returned 3.09% and this month’s trade was also a success, bringing in 3.62%. There is nothing “Bernie Madoff” about this system. Wicked Profits never takes any of your money… your money stays in your optionsXpress account, and if you sign up for autotrade, then the service will automatically invest your money in its net credit spread for the month. The net credit spread is chosen through much due diligence and market analysis. The members area of the website is updated consistently every morning on weekdays, giving a detailed analysis of the previous day’s trading, and where they think the market is heading, and why. If you ever have any questions, you can submit them via email and you will get a detailed response usually within 24 hours. Snoopy- you can continue to stand on the side lines and watch, or you can join like I did and start making an average of 3% a month. But don’t come on here and criticize a service that you never even tried.
Snoopy – you shouldn’t comment on something you don’t have first hand knowledge about. Although, you are correct that they really don’t publish their names which is 1 correct fact.
All,
I did the 60 trial period . Here are my thoughts on the service:
Pro’s
1) I made money 2 months in a row!
2) They do credit spreads in hopes they expire worthless;
3) They have a 61 month winning streak (cannot validate other than the last 2 months I joined). Maybe the are both good and lucky (just my opinion).
4) Nice stream of income as long as they have winnnig trades;
5) This approach does not rely on 1 company with good or bad news that can materially change the stock price, it is an index option
6) They have a good view on technical analysis to make this work.
Con’s
The credit spreads only net you a credit of $.30 to $.50 on a 10 point spread because they buy the spread so far out of the money. For example, if you do a bear spread when the S&P is trading at 1130 and you sell 10 SPX 1160’s and buy to open 10 1170’s, you make a credit of $.50 or $500 as long as everything expires worthless which is their goal and hence you make 5% for the month ($500/10,000 investment). However, to make $500, you have to be willing to risk $9,500 if the market has some huge day. Now they have stops to protect you and obviously time should be on your side since they only put trades on for 30 to 45 days.
However, this week scared the heck out of me since we were approaching their target on the short portion of the option and it almost hit their 3 days this week. At one point, for the $350 I pocketed from the spread, I was out on Wednesday by almost $3,000 because the time decay was not as quick enough and we were less than 1 pt away from the short portion of the call. Plus the S&P went from 1,160 on Wednesday to a high of 1,169. that could have been disasterous if that would have happened and wicked profits didn’t have the right strike price but they did and kudos to them. Plus I tried to buy back my short option today and couldn’t as the last Friday for index option trading is the Thursday before expiration. You could only exercise index options on Friday expiration. So basically, you are at the mercy of the market on the last day if the trade is close to the strike price.
My conclusion, they had another winning trade and demostrated excellent capabilities to know where to set the trade at (ie 1170) this month but I don’t really think that making $350 is worth possible losing $9,650 if the market went on a huge rally or if their technical analysis was off by 10 points. The risk is not worth the reward to me but may be for other traders. Basically, i would have to have 20 winning trades at a net credit of $.50 per trade to make $10K but yet I can lose that on one trade. For those that have been with them for 60 months, you have nothing to lose and have done well and I would encourage you to stay and keep using your money management skills by not reinvesting profits. For new people like me, I am not sure the risk/reward profile is worth it but this is another way to make money if your risk portion of your portfolio allows for such a strategy.
I hope this helps everyone.
PortfolioMan,
I agree with alot of your comments (high risk/very low reward)except you made money on this last trade. Impossible!! I did a 60 day trail as well and just found out my trade settled today for a loss of net $2K plus. Hence, I experienced a 20%+ loss for the month!!!!! Thier note on Thursday said the offical trade is to close the short call if the SPX hits 1,170 and it never did. But they did say it is up to people if they want to close the position at the end of the day. They should have highly recommended it, not leave it up to people. I would not follow these guys as 1 trade can loss all of your profit quickly. Your max gain on a 10 contract credit spread at $.35 is only a gain of $350 while you have $9,650 at risk????
I would check your brokerage account as you had to lose.
For those that don’t understand SPX options, they expire on Friday morning and they apply a calculation to the closing price. So even though the SPX never hit 1170, it is a calculated formula as of Friday morning. You have no control on the final number and are gambling.
I meant to give them all 1 star as I lost 20% in 2 months!! For some reason the stars were improperly coded on my last post.
One of the worst option advisory service out there. High price, low return and exceptionally high risk. Expect 2 or 3 time per year where your trades will get within 1 or 1/2 point of being stop out at a potential loss of from 30 to 40% of your capital on each trade. I’d been with this service for 2 years now and I’d lost 50% of my capital because I chose to close out the losing trades instead of waiting for it to get to within 1 point of being stopped out at an even bigger loss. It is true that the track record contain only one tiny loss for the last 5 years but that didn’t tell the whole story. The fact that for several time per year the trade came within on point or less of being stopped out at a crippling potential loss tell you more about the system than just the track record alone. Anyone who trade this system is basically gambling with their money.
It is interesting that all bad reviews appear when one losing month happens after 61 positive months.
You don’t gain $350 while you have $9,650 at risk. This is why they have stop loss. The maximum loss is usually limited to 20-25%.
However, I’m surprised that they didn’t cover the trade on the last Thursday. It is a well known rule of credit spread sellers – you NEVER take a settlement risk when the index is so close to your short strike.
So if you just started – bad luck. If you followed their advice for the last 5 years, you should still do very well. For me, the risk/reward is still too high, but to call it one of the worst option advisory service is not exactly accurate.
BigTrader,
You are right as I just checked my account and lost about 26.5% net on the February trade alone. I posted this review thinking I was on the side of a winning trade. I apologize to everyone as I was wrong. I called my brokerage and they said the SPX settled at 1,172.96 Friday morning. I had 30 1,170 contracts. Not a good first time experience with this service. One bad trade can ruin many good trades. This services is very high risk for little reward. I am changing my rankings accordingly. It is up to the individual if they still want to use this service as I will not continue with them once my 3 months is up.
Kim,
I did have a stop-loss and it never triggered. Just an FYI, if they would have picked the 1,160 SPX instead, on Tuesday of last week, the SPX went from 1159 to 1169 mid day. I probably would have lost about 60% per contract because it moved so fast. So they got somewhat lucky picking the 1,170 but they said the official trade was to sell at 1,170 and it did’t hit. They should have told everyone to sell at close of business on Thursday to limit the risk and take the loss. Also, while I don’t think this is the worst service, you have to play with money you can afford to lose 50% in one month if a trade goes bad (ie their Feb 2010 trade). Last week was nerve racking as the SPX was trading and hitting the 1,169 level on 3 different days and my account was showing some big losses.
The risk/reward just isn’t there for this service. Case in point, if you traded $100,000 or roughly 100 or so contracts with an index credit spread of 35 cents, your maximum gain on the trade would’ve been $3500 and your potential loss, assuming you had been stopped out earlier, can vary from $15,000 to $30,000 depending on when the stop is hit. Most bull/bear vertical credit spreads are generally conservative and profitable — I think he’s had something like 60 profitable trades, but as his February subscribers can attest, if you get stopped out (or worse, the price settles in the spread at expiration), you can lose some serious cash.
When you subscribe to a newsletter to need to have at least some basic understanding about the strategy that this newsletter implements. There are two basic approaches to credit spreads.
First is using 70% probability trades. They seek bigger credits but accept the fact that more months will be losers. Second is using 90-95% probability trades. They are ready to accept less credit knowing that more months will be profitable.
Wicked profits uses the second approach. Both strategies can work. In both cases the key is limiting your loss in a losing month and NEVER allow the maximum loss to happen.
When someone signs for a newsletter with 5 years winning strike, does he really expect that this strike will go on forever? The fact that someone doesn’t even know on Friday that the trade was a loser proves that he lacks the very basic understanding of the strategy. He changes his rating from 5 stars on Friday to one star on Monday when in fact NOTHING has changed from Friday to Monday, only the fact that he found out that this one trade was a loser. The bad decision not to cover has been done on Thursday, not Friday. It only shows a danger of blindly following a strategy without having a slight understanding how it works.
I personally agree that risk/reward in 90% probability strategy is too high and it’s better to seek higher credits, but it doesn’t change the fact that Wicked profits has one of the best long term tracks. One losing month cannot change this fact. If you are not ready to accept the fact that sometimes you will lose, it’s better not to invest in the stock market.
Kim,
I changed my ranking from Friday because the trade did not clear until Saturday. As a new trader who just lost 26.5% capital in one month, I need almost 8 straight winning trades at a credit spread of $.35 (last 2 months track record) to catch back up without adding no new capital. For me and new people to take that risk and if he has another bad month can drop that capital in half. To much risk for me and not the best use of my capital.
As you for you, it seems like you have a lot of insight into Wicked profits for not being a member anymore. Why all of a sudden is a non-member cheerleading and has the insight as to thier exact logic? Sounds like you work there based on your subtle messages above.
Since they did 61 winning trades, that doesn’t help me much on my last trade. Also, if the market ever gapped up by 1%+ last week when we were nearing the short put strike, that would cause everyone to lose almost the 80 to 90% as the 1180 option still had some value and shrinking due to time decay. But the stop would have stopped us out at market. For example, there were 3 days when the SPX was at 1,168/1169. A 1%+ (or 1,180) move overnight could have caused everyone to experience the maximum loss that next day because the 1180 long strike that we had was losing value due to time decay (2 days left). So it is possible to lose more than the 30% that people mention above.
All,
As I stated to everyone above, your gains are capped and your risk is much greater. Maybe he will go on another 60 trade run but I will not be part of it. If you don’t have a strong stomach for this and have capital to lose, you should play with fire. For those who can, you will probably do fine as long as he maintains long winning streaks. One catashrophic loss like this one can make a huge dent in your portfolio.
Hope this helps.
Portfolio Man,
Like I mentioned, I was a subscriber for two months and cancelled my subscription for exactly the same reasons as you mentioned – the risk/reward was two high for me. I don’t work for Wicked Profits and not affiliated with them – I just like to put things in perspective (of course you are free to believe whatever is convenient for you). Again, if you blindly follow any newsletter without understanding its strategy and overallocate at your first (or second) month, a big loss might happen.
I personally use the 70% probability version of this strategy. In the last 11 months, I had 9 winners and 2 losers, with average gain of 16% per month (including the two losers which had 6-8% loss). I don’t care that my gain is capped – I would take 16% per month for the rest of my life. I also accept the fact that I will have occasional losers. This is why I started small and increased the allocation over time. With every strategy, you might start with few losers right at the beginning. It’s tough luck but it happens. Is it a reason to quit the strategy all alone? If you allocate only 5% of your capital to those trades, you can absorb even few losers at the beginning, but over time, this is a great strategy. In fact, this is the only strategy that made me money consistently and over time.
It was a tough month for most option selling newsletters. 10percentpermonth had a losing month after 16 months winning streak. spreadthetrend had exactly the same loss with 1170/1180 spread. I agree that it was a big mistake to hold this spread overnight and take settlement risk.
Going back to Wicked Profits – with 90-95% probability trades, you are supposed (statistically) to have a losing month approximately every 15 months. This is assuming you just mechanically sell spreads for 30-40 cents premium, without any market or technical analysis. The fact that Wicked Profits had a 61 months winning streak just tells you how good this guy is.
When I asked him about the 30% potential loss, his answer was:
“If we made 30% a year for four years and lost 30% one year, we would still be up 30% X 4 = 120% after 5 years which is still 24% a year. If our good years are +30% and our bad years are breakeven, I think that’s pretty good.”
In fact, his performance is good years is closer to 35-40%, not compounded. I think that ignoring those numbers and basing the ratings on one bad month doesn’t make justice.
Kim,
All good points but I still think you are with Wicked profits for the following reasons:
1) You gave the first review back on November 10 and for some reason you were only in the program for the first 60 days (which is fine) and did not renew afterwards but yet you post to this website in a timely manner if someone post something you don’t like????? I don’t understand, why???
2) I don’t see you reviewing other subscriptions on this website? Hard to tell but I looked at other high rated subscriptions and Kim is pretty generic. Maybe you can point me to some??
3) If you don’t have a personal interest, why do you look at this everyday? Don’t you have better things to do? If I was make 16% per month on my own (per your comment above), I would not be wasting my time giving and/or defending reviews on this site for others (especially ones I don’t belong too).
4) You write like Brandon at Wicked Profits.
If it looks and quacks like a duck, it is a duck.
**Editor’s Note**
I have no idea whether or not Kim is “with” Wicked Profits and have no particular knowledge of that service, but the same person (as far as we can tell) and ip address has reviewed a half dozen other newsletters, both good and bad, and didn’t raise suspicion with our monitoring system.
StockGumshoe
I appreciate your post and respect your control process. It just seemed odd to me the flow of her notes since the beginning of the chain for a person with no vested interest. That is all.
Thank you for clearing up one of the points above and thank you for letting the reviewers post their thoughts openly.
Kim,
I agree with your comments on Wicked Profits. I’ve only been a member for 3 cycles, so this months lost was kick in the gut. Nevertheless to demand that a service never have a loss is unresonable. Their overall record is still stellular and their support is top notch
I must say though I am interested in larger returns so the losses can be made up quicker.
I’m curious if your still using a service to get the >10% returns you mentioned. Any advice on another serivce to look into.
Regards
Randy
Bigtrader,
You are definitely free to believe whatever you like.
Just to put things in perspective, I actually reviewed the following newsletters:
China and Emerging Markets Report
Option Advisor
Stock of the Month
Elliott Wave Financial Forecast
Global Investing
S&A Short Report
WaveStrength Options Weekly
Options Hotline
The Communique
Blue Chip Growth
Why am I doing it? Call me naïve, but I believe that 90% of reviews are real, so you can ask everyone the same question. Those reviews have been created so traders can help each other, and I’m so thankful to Trevor for doing this (btw, you can ask him the same question – why is he putting so much time and effort to this website, doesn’t he have better things to do?) I found few very good services through this site and I’m trying to give something back.
As for the reason why I did not renew – I mentioned it few times, go and read my previous postings. It just makes me mad when people are subscribing to a newsletter without having a slight understanding about the strategy and the risks, and after the very first loss, blame the newsletter and say that it’s one of the worst, ignoring all the 10 years history.
Saying that I write like Brandon is actually a big compliment for me considering the fact that English is not my native language.
Randy,
Email me at ak100467@yahoo.com if you want more details.