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15th May 2022

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Annualizing the pandemic with an agile, options-based approach has shown superior returns while reducing risk. For the past 12 months, generating a consistent monthly income while defining risk, utilizing a minimal amount of capital, and maximizing return on investment has been the core of this options-based strategy. Options allow a smooth and consistent increase in the value of the portfolio without guessing which direction the market will be heading. Options make it possible to achieve a consistent monthly income with a high probability in all market scenarios. In the last 12 months (April 2020 – March 2021) 249 stores were placed and closed. A 98% win rate was achieved with an average ROI per win of 8.0% and total bonus capture of 85% while outperforming the S&P 500. The performance of an options-based portfolio shows the persistence and resilience of trading options to improve portfolio results with much less risk. The options-based approach bypassed the September 2020, October 2020 and January 2021 sell-offs and outperformed the S&P 500 versus the post-pandemic bull run with returns of 55.0% and 53.7%, respectively (Figures 1, 2 and 3). .

Figure 1 – Options-based overall performance versus the S&P 500 from April 2020 to March 2021 via a Trade Notification Service

Figure 2 – General option metrics from May 2020 to April 2, 2021 via a trade notification service
Figure 3 – General option metrics from May 2020 to April 2, 2021 via a trade notification service


Compared to the broader S&P 500 index, the mixed options, long equity and cash portfolios outperformed this index slightly. Even in the most bullish post-pandemic scenarios, where markets cleared all declines through a V-shaped rebound, this approach outperformed the S&P 500’s returns through March 31, 2021 with much less risk (Figures 4 and 5 ).

A total of 249 stores were placed and closed from May 2020 to March 31, 2021. A 98% win rate was achieved with an average ROI per trade of 8.0% and total option premium coverage of 85%, while the broader market was outperformed by the declines of September 2020, October 2020 and January 2021 (Figure 1).

Number of trades
Figure 4 – ROI per trade in the last ~ 250 trades via a trade notification service
Premium capture
Figure 5 – Percentage of premiums per trade over the last ~ 250 trades via a trade notification service

Steady income despite declines in September 2020, October 2020 and January 2021

Declines in September 2020, October 2020 and January 2021 provide an excellent opportunity to demonstrate the consistency and resilience of an options-based portfolio. A positive return of $ 1,251, a positive return of $ 2,585, and a positive return of $ 3,372 for the options portion of the portfolio were achieved in September 2020, October 2020 and January 2021, respectively (Figure 6).

Consistent monthly option earnings

Figure 6 – Generating Consistent Income Despite Negative Returns for the S&P 500 Index in September 2020, October 2020 and January 2021 – Trade Notification Service

The positive option returns were in stark contrast to the negative returns of the overall market in these negative months. The key to options trading is to generate consistent income without guessing which direction the market will head with the likelihood of success in your favor.

10 rules for an agile option strategy

During the twelve months following the pandemic recovery, a disciplined approach to an agile, options-based portfolio was essential to overcoming volatility and avoiding market declines. A number of safeguards should be employed when using options to increase portfolio results. When selling options and managing an options-based portfolio, the following guidelines are important:

    1. Trade a variety of uncorrelated tickers
    2. Maximize industry diversity
    3. Allocate options contracts to different expiration dates
    4. Sell options in environments with high implied volatility
    5. Manage winning trades
    6. Use trades with defined risk
    7. Receives ~ 50% cash level
    8. Maximize the number of trades so that the probabilities match the expected results
    9. Place the probability of success in your favor (delta)
    10. Appropriate position size / trade allocation


Annualizing the pandemic lows with an options-based strategy was key in September 2020, October 2020 and January 2021. This leads to declines and reinforces why proper risk management is imperative. This approach provides a margin of safety to avoid the effects of drastic market movements and contain portfolio volatility. Given the volatility, a constant monthly income was achieved while outperforming the S&P 500 with 50% of the portfolio in cash. An options / cash / long equity hybrid portfolio shows its persistence even when compared to the most bullish post-pandemic conditions.

After this 10 rules Realized positive returns for the options segment of the portfolio over the past 12 months in all market conditions. The positive option returns contrasted sharply with the negative returns for the market as a whole. This negative backdrop shows the persistence and resilience of an options-based portfolio that outperforms in times of market turmoil. To this end, cash-on-hand exposure to long positions through broad-based ETFs and options is an ideal mix to achieve the portfolio agility needed to mitigate uncertainty and the expansion of volatility. Although 50% of the portfolio is held in cash, it has generated superior returns compared to the S&P 500.

Noah Kiedrowski contributor

Disclosure: The author holds shares in AAPL, AMZN, DIA, togetL, JPM, MSFT, QQQ, SPY and USO. However, he can trade options in any of the underlying securities. The author has no business relationship with the companies mentioned in this article. He is not a professional financial advisor or tax advisor. This article reflects its own opinions. This article is not intended as a recommendation to buy or sell any of the stocks or ETFs mentioned. Kiedrowski is an individual investor who analyzes investment strategies and disseminates analysis. Kiedrowski encourages all investors to conduct their own research and due diligence prior to investing. Please feel free to comment and provide feedback, the author appreciates all of the answers. The author is the founder of Where options are a bet on where stocks aren’t going, not where they’re going. Where options with a high likelihood of consistent returns and risk mitigation thrive in both the bull and bear markets. You can find more interesting, short-lived options-based content at stockoptionsdad’s Youtube Channel.

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