Options Hotline 2018 Performance Review

by Steven Sarnoff

With 2019 trading just underway, let’s take a moment to review Option Hotline’s 2018 performance record.

2018 was a tough year for many market participants, but not too shabby for Options Hotline readers who followed a complete game plan for trading success.  The S&P 500 was -6.20%, its worst year in a decade.  This included the worst December since 1931!

As you can see from our track record below, Options Hotline recommendations were +36.50% in 2018.  Nearly 7x better than the S&P 500 is commensurate for the high risk options buyers take on.

Many people think options buyers are likely to lose their money, as almost all options expire worthless.  While it is true that options are a wasting asset and buyers have the odds against them, it is a myth that almost all options expire worthless. You can check the data from the OCC (Options Clearing Corp.) and CBOE (Chicago Board Options Exchange). Most options are closed before expiration (around 70%), some are exercised (under 10%), and the rest expire worthless (a little over 20%).

If you are right around half the time and you apply principles of sound money management, you can do quite well.  Don’t overbuy a position and speculate based on what you can lose, not what you can gain.  In fact, options buyers are the only ones who possess the Superleverage power of unlimited profit potential with an always known and strictly limited risk at all times.

Our motto has always been, ” I pick ’em, you play ’em.”  Each individual subscriber has their own tolerance for risk, but I do my best to help you play ’em.  Let’s review how we did.

Scoreboard

In 2018, Options Hotline had 28 triggered recommendations with 27 closed by December 31st.  15 winners, 13 losers. 11 multipliers, 9 expired worthless.  Net percentage gain of +1,022% divided by 28 trades equals +36.50%.

We had some stunningly prescient plays and some bonehead calls.  Some we exited too soon and some we held too long.  It all goes toward building upon a level of judgement based on experience.

Now in our 30th year, I can’t guarantee all my recos will become multipliers, but I do promise to continue to keep a steady hand on the tiller as we navigate challenging market conditions.

I always enjoy hearing from you, even when you tell me me my picks are crazy!  My email never sleeps.

As ever, wishing you good fortune in your trading,

Steve

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