Anchor Trades

tom

Well-known member
Administrator
Kim at Steady options sent an email referring to the Anchor Trade.

Has anyone seen this trade or know anything about it?
 

Duane Glick

New member
Gold Member
Yes, It's a good system. I believe the leveraged version returned in the +30% range in 2019 and 2020. In a flat or slightly down market it wouldn't be near that good as it could lose depending on the timing of things. Chris Welsh from Lorintine Capital runs the Anchor Strategy and the forums for it are very informative. Here's a link that somewhat describes the trade https://steadyoptions.com/an/
 

tom

Well-known member
Administrator
i saw that page but it doesn’t give an idea of what kind of trade it is. Has anyone seen a risk chart?
 

Mark17

Member
Yes, It's a good system. I believe the leveraged version returned in the +30% range in 2019 and 2020. In a flat or slightly down market it wouldn't be near that good as it could lose depending on the timing of things. Chris Welsh from Lorintine Capital runs the Anchor Strategy and the forums for it are very informative. Here's a link that somewhat describes the trade https://steadyoptions.com/an/

Have you been able to determine guidelines for the short puts? It seems to me this is very discretionary and--depending on the nature of a potential crash, may or may not result in big losses.

If I were playing devil's advocate, I might argue this threatens the viability of the trade as a core holding.
 

Duane Glick

New member
Gold Member
The trade is a yearly long trade that has crash protection with adjustments going on as needed. Primarly you will be rolling the shorts every 2 weeks or when you have made your $. Attached is a screen shot of approx. what your risk graph would look like if you put a trade on today.
 

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Mark17

Member
The trade is a yearly long trade that has crash protection with adjustments going on as needed. Primarly you will be rolling the shorts every 2 weeks or when you have made your $. Attached is a screen shot of approx. what your risk graph would look like if you put a trade on today.

I've [sloppily] annotated your screenshot, Duane. I don't see the highlighted option to be part of this strategy. Where are you getting that from?

Actually, I take it back. I see in a more recent article they do include it. When they first rolled out the trade, it seems, they did not.
 

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Edward

New member
For the price of hedging a portfolio; this portfolio under performs the S&P 500 index. I suppose it better then keeping money in a bank or mattress. I did find a blog on the leverage Version of this trade but there is no info on how it's traded. Normally I would expect if one is taking on more leverage I would expect one would have to leverage their hedge to compensate.

Leverage Trade Blog.
 
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Duane Glick

New member
Gold Member
The leveraged version outperforms the S&P . The purpose of the calendar/diagonal spread throughout the year is to pay for the hedge.
 

KimK

New member
Here are some articles that describe the performance and potential drawdowns:

One Year Of Diversified Leveraged Anchor
Anchor Maximum Drawdown Analysis
The Downside of Anchor

The leveraged Anchor portfolio started on January 1, 2019 at $100,000 and the current value is $210,936. This translates to 110.9% return since inception. During the same period of time the S&P 500 benchmark returned 66.8%.

Anchor largest drawdown was around 10% while S&P 500 largest drawdown during the same period was 34%. Anchor was actually up YTD at some point in March 2020 while the indexes were bleeding 30-40%.

Anchor members more than doubled their money in just 28 months while being protected against a major market crash.
 

KimK

New member
Have you been able to determine guidelines for the short puts? It seems to me this is very discretionary and--depending on the nature of a potential crash, may or may not result in big losses.

If I were playing devil's advocate, I might argue this threatens the viability of the trade as a core holding.
This is not discretionary at all. There are very clear rules how and when to do the adjustments.

To be clear: this is NOT a market timing system. On the contrary, the idea is to be in the market all the time and not to try to guess tops and bottoms, but at the same time, to be protected.
 
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