A while back, I wrote a post reviewing an NLS trade I made. In the comments on that post, a couple of the readers requested that I do a full review of the NLS trades I made that expired in 2013. Below is the data from the trades I made that expired in 2013.
(Note, there were trades suggested by NLS that I did not take due to either not having enough interest to buy them, or the trades had a Annualized Percent to Profit of more than 25%. NLS now only shows trades that are 25% or less.)
OPTIONS PURCHASED TO OPEN TRADE
|G0598403: You bought 1 @ABT 130119C00060000 at 0.93||Feb 16th 2011, 09:30||0.93|
|G0598399: You bought 1 @T 130119C00035000 at 0.39||Feb 16th 2011, 09:30||0.39|
|G0598421: You bought 1 @XOM 130119C00110000 at 0.99||Feb 16th 2011, 09:30||0.99|
|G0598414: You bought 1 @JNJ 130119C00080000 at 0.5||Feb 16th 2011, 09:30||0.5|
|G0598419: You bought 1 @IBM 130119C00215000 at 2.44||Feb 16th 2011, 09:30||2.44|
|G0598428: You bought 1 @KO 130119C00085000 at 0.55||Feb 16th 2011, 09:30||0.55|
|G0598408: You bought 1 @LLY 130119C00045000 at 0.55||Feb 16th 2011, 09:30||0.55|
|G0598425: You bought 1 @CAG 130119C00030000 at 0.3||Feb 16th 2011, 09:31||0.3|
|G0598423: You bought 1 @PM 130119C00080000 at 0.89||Feb 16th 2011, 09:31||0.89|
|G0598396: You bought 1 @KMB 130119C00080000 at 0.65||Feb 16th 2011, 09:31||0.65|
|G0598394: You bought 1 @MO 130119C00030000 at 0.36||Feb 16th 2011, 09:40||0.36|
|G0598401: You bought 1 @MCD 130119C00095000 at 1.03||Feb 16th 2011, 09:50||1.03|
|G0639984: You bought 1 @AEP 130119C00045000 at 0.4||Mar 18th 2011, 09:30||0.4|
|G0639992: You bought 1 @MRK 130119C00045000 at 0.47||Mar 18th 2011, 09:30||0.47|
|G0639988: You bought 1 @WM 130119C00050000 at 0.55||Mar 18th 2011, 09:30||0.55|
|G0639973: You bought 1 @SYY 130119C00035000 at 0.7||Mar 18th 2011, 09:32||0.7|
|G0639982: You bought 1 @VZ 130119C00047000 at 0.77||Mar 18th 2011, 09:39||0.77|
|G0681012: You bought 1 @KFT 130119C00045000 at 0.4||Apr 15th 2011, 13:26||0.4|
|G0725504: You bought 1 @JNJ 130119C00085000 at 0.43||May 17th 2011, 09:30||0.43|
|G0725506: You bought 1 @MRK 130119C00050000 at 0.46||May 17th 2011, 09:30||0.46|
|G0725500: You bought 1 @PEP 130119C00090000 at 0.5||May 17th 2011, 09:31||0.5|
|G0725512: You bought 1 @SO 130119C00055000 at 0.1||May 17th 2011, 12:06||0.1|
|G1191914: You bought 1 @GIS 130119C00041000 at 0.27||Jun 28th 2012, 09:50||0.27|
|G0790034: You bought 1 @DUK 130119C00025000 at 0.1||Jul 11th 2011, 09:30||0.1|
OPTIONS SOLD TO CLOSE TRADE
|G0934282: You sold 1 @MCD 130119C00095000 at 7.05||Nov 8th 2011, 12:09||7.05|
|G0975169: You sold 1 @MO 130119C00030000 at 1.74||Dec 21st 2011, 10:01||1.74|
|G1027231: You sold 1 @PM 130119C00080000 at 4.15||Feb 9th 2012, 10:40||4.15|
|G1075107: You sold 1 @ABT 130119C00060000 at 3.25||Mar 19th 2012, 10:21||3.25|
|G1170993: You sold 1 @KMB 130119C00080000 at 3.4||Jun 6th 2012, 13:41||3.4|
|G1177573: You sold 1 @T 130119C00035000 at 1.38||Jun 13th 2012, 11:23||1.38|
|G1218752: You sold 1 @MRK 130119C00045000 at 1.9||Jul 27th 2012, 15:44||1.9|
|G1243612: You sold 1 @LLY 130119C00045000 at 1.43||Aug 24th 2012, 11:24||1.43|
|G1277172: You sold 1 @VZ 130119C00047000 at 1.17||Oct 4th 2012, 14:52||1.17|
|G1286436: You sold 1 @AEP 130119C00045000 at 0.85||Oct 17th 2012, 12:04||0.85|
|G1319424: You sold 1 @GIS 130119C00041000 at 0.41||Dec 3rd 2012, 14:25||0.41|
|G1327232: You sold 1 @CAG 130119C00030000 at 0.75||Dec 12th 2012, 11:36||0.75|
So, I spent $14.73 * 100 = $1473 (not counting commissions), and I got back $27.48 * 100 = $2748 (not counting commissions).
That’s an 86.5% return over the course of February 2011- January 2013…or roughly 40% a year.
BUT I would never do this with money I didn’t expect to lose. In fact, I’m a little skeptical that these results are going to turn out to be an anomally, and that future years are not going to have so many winning trades.
The money I expected to lose was interest earned on my core capital. Over the time that these trades were placed, I’m guessing I was earning about 0.5% interest in CDs on my core capital (pitiful…).
Since I am only trading the interest amount, that means that the real return on the full amount of my core capital was only (2 years * 0.005 earned CD interest * 1.865 NLS return) .01865…or just less than 1% per year.
So for all the winning trades above, and the impressive 40% return, I ended up earning 1% per year on the money tied up by this strategy.
On the flipside, I did not risk any of my core capital, made about twice as much as I would have otherwise, did not spend a single day watching the market or worrying about my portfolio, and slept exceptionally well. That’s definitely a trade I’m willing to keep making.