A14 2022
- Thread starter TerryL
- Start date
GaryB
New member
I just went through the A14 subscriber forum, and the last post where people shared their general results was in June.
Going through all the posts, some people have done just fine, and some have had outsized losses. My impression is the people who follow it exactly, have done ok.
Going through all the posts, some people have done just fine, and some have had outsized losses. My impression is the people who follow it exactly, have done ok.
Thanks, I didn’t realize there was a subscriber forum. I don’t have access, even though I purchased the course, so I have opened a support ticket.
I backtested using Options Net Explorer from January 7 to June 24 and only had two losing weeks. I never calendarize, just used calendars per the optional adjustment. I Cant fill a butterfly with calendarization in the complex order book so have to leg out, and I always lose on slippage doing that.
I only started trading live last week, a 2 lot A14 returned $40 vs $140 theoretical on Option Net Explorer. In reality I needed more time to analyze the graph and the market moved against me and I suffered a lot of slippage.
I backtested using Options Net Explorer from January 7 to June 24 and only had two losing weeks. I never calendarize, just used calendars per the optional adjustment. I Cant fill a butterfly with calendarization in the complex order book so have to leg out, and I always lose on slippage doing that.
I only started trading live last week, a 2 lot A14 returned $40 vs $140 theoretical on Option Net Explorer. In reality I needed more time to analyze the graph and the market moved against me and I suffered a lot of slippage.
I had good results with A14 in 2022, starting in January 22 with 10.000.-capital, ending in January 2023 with about 20.000.- so doubled up in about 12 months, for 60 trades, 12 losing trades and 48 winners. I started with 2 BWB, then went slowly up to 10. No correlation with the price action SPX, whether it goes up or down. Dangerous are strong moves in one direction over several days, even with adjustments. The middle duration of one trade was 5 days, the middle return (on max Loss, not on margin) was about 3% per trade. These results are after commissions, they took me about 25% of the profit (IB). Now I am starting the A14 also with the RUT as UL, as the commissions are 1/3 less. I just put the price of the SPX in relation to the RUT to calculate the strikes, its not so easy as there are less strikes and expirations on RUT, so you have to try out to get the right setup, it depends also on the volatility.
My idea for 2023 is to run several A14 complementary, as I found that the day of the week where you start the trade doesn´t matter. I hope that this can reduce the variance, but only if there is enough difference between the ATM strikes of the two BF running simultanously (min about 30 SPX points). So I put on a trade, wait for some price action, and put on the second trade, but not the same day. If SPX goes flat, I close with a win (5% plus the commissions: for a max loss of 10.000.-, I calculate 500.- plus 110.- for the commissions, so I put on a limit sell order for 600.-) and I can open another trade the same day. The limit sell order to take profit is very important, the price action can take you into the profit zone perhaps only for a few minutes. If you wait for more profit, maybe you get nothing. Sometimes I close for less profit, when it is too difficult to get in the 5% profit zone. Sometimes I close with a small Loss, when the price action goes against me and is too stubborn, even if I should stay follwing the rules.
Until now, I don´t have a receipt how to hegde the risk of a black swan, meaning a crash of the SPX of several hundred points in a short time or overnight. This would bring the BWB in the max Loss zone. A stop loss order seems dangerous. How do you manage that?
Henri
My idea for 2023 is to run several A14 complementary, as I found that the day of the week where you start the trade doesn´t matter. I hope that this can reduce the variance, but only if there is enough difference between the ATM strikes of the two BF running simultanously (min about 30 SPX points). So I put on a trade, wait for some price action, and put on the second trade, but not the same day. If SPX goes flat, I close with a win (5% plus the commissions: for a max loss of 10.000.-, I calculate 500.- plus 110.- for the commissions, so I put on a limit sell order for 600.-) and I can open another trade the same day. The limit sell order to take profit is very important, the price action can take you into the profit zone perhaps only for a few minutes. If you wait for more profit, maybe you get nothing. Sometimes I close for less profit, when it is too difficult to get in the 5% profit zone. Sometimes I close with a small Loss, when the price action goes against me and is too stubborn, even if I should stay follwing the rules.
Until now, I don´t have a receipt how to hegde the risk of a black swan, meaning a crash of the SPX of several hundred points in a short time or overnight. This would bring the BWB in the max Loss zone. A stop loss order seems dangerous. How do you manage that?
Henri
DaveN
Member
@Henri thanks so much for sharing your experience so far with this system! And congratulations on your successful year. Well done, and thanks for the clear and well thought-out summary.
I've seen a number of approaches to that downside protection. Most all of them will put a drag on your returns. The challenge is to find the minimum. Long puts, put ratio spreads, etc. all have a cost and decay component. There's active management which is to say you could set an alert for a market drop and enter the futures markets to offset or stop your losses. While that doesn't have a drag on your trade (at least not right away), it does have a drag on your lifestyle and sleep schedule. Most options traders don't want to be tethered so tightly to their trading screens or phone. Also, the times I've looked at a futures short to hedge off a downside move, I've been glad I passed since those sharp down moves are usually followed by a snap back, so it's possible to not only lose on the down move but also on the way back up (i.e. you sold those /ES contracts and went back to sleep...)
I don't have a very good answer here. The best approach I've seen traders use is to build that into your trade somehow and possibly scale into it as your trade progresses and Gamma increases. As a starting point, you might check out John Locke's X4 V14 trade, which is essentially an upside BWB much like the A14 (with ATM between the upper long and center short strikes, as opposed to ATM near the upper long strike) and a downside long Put to flatten out the risk on the downside. You can see these for free on his Winning Trade series on YouTube. The duration is much longer (DTE 77), but the concepts should be transferable to a shorter duration trade.
I've seen a number of approaches to that downside protection. Most all of them will put a drag on your returns. The challenge is to find the minimum. Long puts, put ratio spreads, etc. all have a cost and decay component. There's active management which is to say you could set an alert for a market drop and enter the futures markets to offset or stop your losses. While that doesn't have a drag on your trade (at least not right away), it does have a drag on your lifestyle and sleep schedule. Most options traders don't want to be tethered so tightly to their trading screens or phone. Also, the times I've looked at a futures short to hedge off a downside move, I've been glad I passed since those sharp down moves are usually followed by a snap back, so it's possible to not only lose on the down move but also on the way back up (i.e. you sold those /ES contracts and went back to sleep...)
I don't have a very good answer here. The best approach I've seen traders use is to build that into your trade somehow and possibly scale into it as your trade progresses and Gamma increases. As a starting point, you might check out John Locke's X4 V14 trade, which is essentially an upside BWB much like the A14 (with ATM between the upper long and center short strikes, as opposed to ATM near the upper long strike) and a downside long Put to flatten out the risk on the downside. You can see these for free on his Winning Trade series on YouTube. The duration is much longer (DTE 77), but the concepts should be transferable to a shorter duration trade.
Henri, thanks for sharing experience and congrats on you profit. Impressive.
I do not know what A14 is but what I've quoted above seems to be wrong. If it is not - do change broker immediately.
This thread makes an interesting read (Amy provides a bit of an update and some words of wisdom):
A14 has gone very well for me since last summer. But as others have mentioned, I'd be a bit more content if I could find a hedge for it too...
A14 has gone very well for me since last summer. But as others have mentioned, I'd be a bit more content if I could find a hedge for it too...
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