The TVO System signals generated 6 trades in 2014 achieving an 83% win rate (5 out of 6). As a result our options account nearly doubled (73%), and no more than 10% of capital was put at risk at any given time. How did we do it? We’ll be posting an in-depth analysis of each of the trades. The first one was a short (buying puts) from exactly one year ago this week.
1. On Friday 1/10/14 the Oscillator reverses to +6.0 giving us a short signal. On the close Monday (1/13/14) we buy SPY Apr 14 puts at 3.38.
2. SPY proceeds toward new highs, but then quickly retreats to a tight range for the next few days.
3. TVO crosses into negative territory and on 1/24/14 the bottom gives way taking out all support levels, sweeping stops… well you know the story.
4. After a bounce in Feb that leaves the “This is the New Bear Market” folks scratching their heads, we sell our puts on 2/10/14 at 6.34. Thanks to the magic of options volatility, even though we only capture a 1% drop in SPY, the trade returns an 87% profit.
The oscillator at -7.1 gives an exit signal from the short, but it also gives us a long signal. What happens next? You can read all about that in the next post! -MD
Performance results on this website dated prior to September 2014 for TVO (prior to May 2015 for HG), including backtesting and trade history, are simulated. Please read our full disclaimer.