August 2013 Core Strategy Pre-trade analysis

Wednesday August 7th 3:33 PM Posted in: Daily Blog

Once a month, Options-Intelligence uses its vast options trading history to generate key statistics for our Core Options Trading Strategy members. These statistics are designed to arm option trades with invaluable information and insight into the the trends and expectations for the upcoming option trading cycle.

Historical Option Performance for August

Historical performance for August is quite positive, however, I caution there are only 55 data points to consider (51 out of 55 trades). Our winning percentage of 93% for August makes this month look like one of our best for the year with an average gain of 121% on the surface, below in the Statistical Expectations I will show why this is.

August lifetime winning history at common returns

Return Winning History
10% 91%
20% 80%
30% 73%
40% 67%
50% 65%
75% 51%
100% 33%

Historically Successful August Option Picks

Stock # of Trades Winning History Average Return
AAPL 4 100% 209%
AMZN* 2 100% 229%
BIDU 3 100% 63%
DIA 6 83% 57%
GS 1 100% 63%
GOOG* 3 100% 195%
IBM* 3 67% 88%
NFLX* 1 100% 151%
QQQ 5 100% 133%
WYNN 4 100% 103%

*There are not enough data points for these plays

Statistical Expectations for August

The strength in the Core Option trading strategy is general, with no clear cut winner.  Earnings are over and the lull of summer is present. For several years and various reasons we did not always trade the Core Strategy in August, however, the market usually dictates that we play every month one way or the other. Please note that Core performance drops from a high of 91% at a 10% gain to 65% success on a 50% gain and 33% success on 100% (see above). Those that trade in August need to be aware of this and adjust their expectations accordingly. June and July were super months for us, I suggest tempering expectations this month and look for the returns in the 25-50% range. Remember, it's not about hitting the home-runs, it’s the base hits that keep us in the game.

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