This is all explained in detail in our PDS Covered Call Strategy Video, Free to all PDS Covered Call subscribers. This video fully reveals the logic of how we pick the trades to enter, what the risks are and how to properly manage those risks for maximum efficiency.
Trading weekly covered calls can be a very high-probability long-term investment strategy, perhaps one of the best out there. Our track record since July 2012 is impressive, but we are certainly not without our losing trades. We are NOT trying to time the market when we enter a covered call position. We EXPECT and prepare for stocks to move against us 50% of the time (coin flip odds). Timing the market is not what produces the high-probability of long-term success with this strategy. What does produce the high-probability of long-term success with this strategy is the ability to efficiently and consistently lower the cost basis of any stock on a weekly basis.
This track record is cumulative of all trades based on the capital required to place each trade. So for example, during July 2012, we may have closed out 8 total trades producing an average return of 5% each, giving us a cumulative monthly total of 40% across all trades.
In July of 2013, you will see we had a losing month. We were only filled on 6 trades that month, and 3 losers and 3 winners.
Add them all up and you get a cumulative net of (0.98%). The winners combined for a net profit of 13.2% in gains, while the losers combined for a net loss of 14.18%, for a net loss of (0.98%). These are closed trades and do not include any open positions that may be held (either winners or losers).
Note – This is not a track record cumulative of total account value. If there are 4 trades in one month of 5% winners each, they may have been spread out across 4 different weeks. If each trade required $1,000, and each trade generated a 5% return ($50), then the total cumulative net return on a maximum account size of $8,000 to take all trades was $200, or 2.5% return that month on total account value. Most of the time we do not use all available capital necessary to take all trades each and every week.
This also does not mean the losses are of the entire account. At the time of the ANR trade, the loss was 7.8%, but that was only of required capital. ANR was trading around $5.00 at the time, which means the actual loss would have been only $39, or 0.48% of an $8,000 account.
There is nothing to guess and no market watching necessary. We provide exact entry and exit signals, and all fills reported are actual fills.
No intraday market watching is necessary. Just place your orders each week, rinse and repeat.
You don't have to take every trade, since each trade has a high probability of long-term success, you can pick and choose 2 ? 3 maximum open positions at any given time and do so with only $1,500 - $2,000 in your account. If you want to take all signals, we suggest having $7,000 - $8,000 available in your account.
We expect to reach our maximum subscriber base in the next 60-90 days. As we get closer to that base, subscription rates will increase. Because the greatest probability of success is based on a long-term commitment to this strategy, we only make available 6-month subscriptions.
Many traders tend to gloss over risk disclaimers, as if they are mere technicalities required in the course of business in this industry. This is a dangerous habit many traders have developed. With all trading strategies, there is "profit potential" and there is "risk potential". All too often, traders interpret "profit potential" as a "promise of profits", while at the same time, if risks are realized, the term "risk potential" is interpreted "I was duped". This is trading. There are risks, and these risks are very real. Risk potential means you could experience losses. Profit potential means you could experience profits. Past performance, whether hypothetical or real, does not diminish the risk potential of any strategy. The problem with simply glossing over risk disclaimers and not taking them seriously is that it causes traders to make decisions they would not otherwise make. Specifically, glossing over a risk disclaimer may lead to deciding to trade a strategy that you would otherwise decide against trading had you taken the risks associated with that strategy seriously. It also causes traders to stop trading strategies long before they should stop trading them because they did not take the risk disclaimer seriously.
Understanding risk is more important to the overall success of trading than you might think. In fact, your understanding of risk (or lack of understanding), affects virtually every trading decision you make from markets to trade, account size to start with, beginning trade size, levels at which you increase or decrease your trade size, and of course, how long to stay committed to a strategy. It is to your detriment to ignore this, and any other risk disclaimer associated with trading. Every strategy associated with Options for Profits carries risk. In all cases, you decide whether the "profit potential" is worth the "risk potential".