The
comparisons given below will show just how different we report our results
vs. how other publications report their results. The difference can be
substantial.
Our reporting differs from how other
publications report their returns:
-
We only report
results for suggestions that were actually filled - not hypothetically.
After all, getting filled is what counts and you can't get worse
fills than suggested because our suggestions are based on 'limit price'
and when filled confirmed by autotrade brokers. A lot of other
publications will base their results on hypothetical or unrealistic
prices, such as best possible price.
-
We report
results based on the suggested 'limit price'. We realize that some
of our suggestions may get filled at a better price than suggested but
we choose to report results based on the 'limit price' which reflects
the "worst case scenario". It also ensures that those who
are not on autotrade can also realistically get filled.
-
We include the
"cost of doing business" which happens to be brokerage costs associated
with trading. These costs, i.e. commissions, can make a big
difference to the dollar and percentage returns and therefore your
brokerage account dollar figure.
Comparison #1: Reporting based on suggested limit price vs. actual fill
price
On June 4,
2008 we made a credit-spread suggestion on the NDX for a net price (limit
price) of $1.50. One of the autotrade brokers filled the suggestion @
$1.64.
|
Based on 10 contracts |
Limit price of $1.50 |
Actual fill price of $1.64 |
Difference
from our reporting |
|
Received per contract |
$150 |
$164 |
9.3% |
| %
return |
6% |
6.6% |
10% |
|
Difference between limit price and actual fill price |
$1,500 |
$1,640 |
$140 |
Comparison #2: Reporting including commission costs vs. no commission costs
Let's say
you want to spend $1,000 on one options trade. The number of contracts you
will be able to trade is determined by the price of the option. You get a
suggestion to buy an option on XYZ stock for $0.50 per share. The option
price goes up in 2 days to $0.55 (a 10% increase) and you get a suggestion
to sell it.
|
Based on 20 contracts |
Including commission costs of $1.50 per contract |
No
commission costs |
Difference
from our reporting |
|
Purchase price |
20 x
50 + 30 = $1,030 |
20 x
50 = $1,000 |
$30 |
|
Selling price |
20 x
55 - 30 = $1,070 |
20 x
55 = $1,100 |
$30 |
|
Overall Difference |
$40 |
$100 |
$60 |
|
Reported gain |
4% |
10% |
150% |
