Track Record

Track Record Summary & Our Standard of Performance Reporting

Every day, we publish actionable trade ideas that subscribers may consider for their portfolios. Our intention with these ideas is to prompt our readers to think. One should not take our ideas blindly. We intend these ideas to be the first step in our readers’ investment process. At the same time, our followers need to know how we are doing. You have come to the wrong place if you seek a service that never has a losing trade. We bring discipline and diligence to our proprietary investment process. We only pursue those ideas where we believe the odds are in our favor.

Having the odds in our favor does not guarantee the trade will be a winner; On the contrary, there is always a chance a trade will not work out. Over time, however, our method of identifying inexpensive investments with favorable technical setups and sentiment has become the foundation for a value-added contribution to our readers, which should generate superior, risk-adjusted returns. Our results, summarized below, support that proposition.

We present our ideas here at TheOptionsEdge.com, identifying this portfolio as the TOE Trades. In 2016 and 2017, we wrote for Action Alerts Options at TheStreet.com. We identify this portfolio as the AAO Trades. The following table summarizes the performance of all our ideas since we started publishing our thoughts in 2016. We have broken up the analysis into three sub-components: (1) Trades that are still open, (2) Trades closed so far in 2019, (3) Trades closed so far in 2018, and (4) those trades closed in 2017. All trade suggestions for the Action Alerts Options (AAO) Service at TheStreet.com are now closed.)

Method of Computation

The return computation, expressed as a “Percent of the Underlying,” is relatively straightforward. We use the formula:

Return as a Percent of the Underlying = (Return in Dollars) / Stock Price.

To compute the average, we weighted the returns by the stock price. This way, we give greater weight to 100 shares of a $50 stock than to 100 shares of a $20 stock. To compute the annualized return for each trade suggestion, we divide the return by the trade duration. The annualized average is the returns weighted by the stock price and the trade duration.

The return computation, expressed as a “Percent of Capital at Risk,” was more complicated. We use the following formulas:

Spread: Return as a Percent of Capital At Risk = (Returning Dollars) / (Difference between Strikes – Credit Generated)

Bullish Risk Reversal: Return as a Percent of Capital At Risk = (Return in Dollars) / (Put Strike – Credit Generated)

To compute the average, we weighted the returns by the capital at risk and divided them by the trade duration. The annualized average is the returns weighted by the capital at risk and the trade duration.

You probably want to know more about our trades, mainly if you are evaluating our service for the first time. The following links lead to tables that summarize the transactions we discussed. Those tables will include the date of trade initiation, trade structure, and the prices quoted in the marketplace at the time the article is posted (usually the closing price the day before). This leads us to profit on a trade-by-trade basis. The performance of the closed trades is available for everyone to evaluate. The summary of open trades is strictly reserved for our subscribers.