Hey stock and options traders, welcome back to the channel. If this is your first time here, my name is Karl Domm and I’m the original real P&L trader. I’ve been trading stocks and options online since the mid-1990s; and if you’re here to learn about trading or to figure out if a stock or options course on Youtube is worth the money, then make sure to subscribe to the channel.
My goal is to change this industry. I want to change the buying criteria when anyone wants to buy a stock or options course on Youtube. If promises are made by a Youtube instructor when selling a course, then I believe they should prove their credibility. And I see only one way to prove credibility and that is to share P&L. Not only share P&L, but also share the account P&L volatility. Which means how much did the account move up or down.
If your account made 20% return but it was down 6% at one point, then the 20% return is not a good return on risk. Sharing the P&L volatility is important because risk adjusted returns are the truth. This is why I share my P&L and I show my daily moves of my P&L every month. Now, I would not buy a course from a Youtube instructor that makes promises without sharing their P&L and I hope you would not either.
In this video, I’m going to go over my real P&L for the month of April 2022. I’m going to share my real P&L for the month of April 2022 and I’m trading four separate systems in four separate accounts. And before I get to the P&L, I want to briefly go over what the market did in April and this will give an idea of what my trading systems had to contend with over the last month.
Now, my question always is what type of market was April. In my book, I go over the four types of markets for premium selling options traders. The four market types are: #1, the rising bull; #2, two sideways market; #3, the grind down market; and #4, the crash market.
All of the trading systems I trade are proprietary and were created to make money in any market environment. I call them Level 5 Trade Systems. Level 5 is kind of like moving from a college athlete, which would be Level 4, to a pro athlete, Level 5. Except, when it comes to applying these trade systems, you could cut in line and go from grammar school, Level 1, directly to the pros, Level 5, because the trade plans have etched-in-stone rules to follow. Now, Level 1 through 4 trade systems do not profit in all market environments, and this is the only place you can get a Level 5 trade plan from a Youtube instructor.
Now, after taking over 30 online stock and options courses from Youtube instructors, I found that none of them are Level 5 trade systems. They’re all Level 1 through 4 and I have not seen proof that a Level 1, 2, 3, or 4 trade plan is consistently profitable. And I’m still looking, and if you see any instructors that share their P&L, please let me know in the comments below so I can take a look.
So let’s take a look at what the market did in April 2022. Okay, let’s see how the market did in April 2022. This is the $SPX (S&P 500). How did the S&P 500 do? Let’s take a look at the end. Here’s the end time of March, and where we ended up down 8.8%. So being down 8.8%… and what type of market was this? Well, it was a grind down market. The market didn’t crash, but it grinded down. It grinded down really heavily. I mean, being close to 9% down in one month. That’s pretty significant.
Let’s take a look at the volatility, because volatility is always what is used to price options. And when you’re dealing with options, (selling options, buying options) you always want to know what the volatility is doing, what the $VIX is doing. The $VIX follows the S&P 500 as far as the volatility. So here, let’s see, we ended around 20.5 last month and this month we’re up 62% up to 33.5 approximately. So that is a very significant move as far as a grind down move. So up, you know, 62%, so a lot of option premium sellers are…
And then the premium that they sold actually is worth more money so they’re not doing as well. Typically, you’ll find that right now a lot of option premium sellers are hurting pretty bad right now. And maybe some of them are getting margin called. You don’t know whoever you might be paying attention to, they might be getting margin called right now. Okay, so there you have it for the market for April 2022.
Next, I’ll get into my four separate trading systems. The trading systems are: #1, The Safe Wheel; #2, The Earnings Edge Alerts; #3, The 5 Step; and #4, The Premier Level 5.
So first The Safe Wheel Strategy. This is a strategy I give away for free. And every Monday morning at 7:15 a.m. Pacific time I do a live stream, and I trade in the account live. And I answer any and all questions about the system in order to help people learn it. And the easiest way to find the live stream is to subscribe to my channel and hit the notification bell.
Now, here are the results for The Safe Wheel for April 2022. Okay, it wasn’t a lot of volatility, you know, just kind of went up so that’s pretty good. You’re not always going to get that with a Safe Wheel, but we did start last month with $5,466 and we have $5,861. So 58–let me bring this in here. So $5,861 – $5,586 = $275. Let’s divide that by $5,586. 4.9%. So 4.9% return for the month of April on The Safe Wheel. That’s really good; probably higher than normal because this is a relatively conservative strategy, but there you go for April for The Safe Wheel.
Now second, I trade my Earnings Edge Alert System. This system is based on trading certain stocks coming into earnings. The goal is to turn a small account into a large account. This system has some volatility so I would start small with a $5,000 account. Now, what I like about this trade is the long gamma. Which creates asymmetry.
Asymmetry is like hoping for a large move in the stock, either up or down. And the more it moves, the more profitable the trade becomes. Now, I started this account with $5,000 and I look to make one trade a week when earnings trades are available. So far this is the end of April and I’ve missed two weeks. There’s been two weeks when there weren’t any trades available so far this year.
Now, my goal is to make $300 per trade and win three out of every four trades. And the cost of this service is only $259 a month. Here are the results for April 2022 for my Earnings Edge Alerts.
Okay, so first I’m going to talk about the four weeks that occurred in April so that would have been potentially four trades that were made. First trade was JPMorgan. And I know it says $184 because I think we took a loss earlier on JPMorgan in the year. So JPMorgan actually went out for a profit of $416. So that was really good. That was a good trade. That was first week.
Second week, we came in with Procter and Gamble ($PG), right here. I made $340. About half of my students did not make money on this trade, so I don’t really consider this a win; even though it is in the account as a win. I took it as a win, but half my students didn’t win; half did. So that was the second trade.
Now, the third trade was Apple. That was another winner, so $378 I made on that particular trade. So I’m making more than $300 on these trades because I have more than $5,000 in the account. So I’m risking more.
And then the fourth week, which was just this week that ended here. The last week in April did not make a trade at all. There was just nothing there. No good setups. My filters filtered through, there was not, I wouldn’t take any risk. So that was a no trade week. So I had three trades basically two wins, one loss is what I’ll call it for the month of April here.
So let me get into the actual results of the account next. However for the Earnings Edge account we started with $5,780. You can see the volatility. Not a lot of volatility; didn’t really draw down hardly at all. And then we ended with $6,660. So let’s do a little bit of math here.
$6,660 – $5,780 = $880 in profit (closed out trades of course). [$800] / $5,780. That’s over 15%, 15.2%. Very good month. Excellent month. My goal is around 10% a month so we exceeded that. And of course, the volatility in the account. The low was $5,780 so it didn’t even go below what we started with. So we had a really good month and there you have it for the Earnings Edge account for April 2022.
Third, I get into my P&L for The 5 Step options Trading Success Program. This system is proprietary and took me over three years to develop as I kept racking my brain trying to replicate what I was doing in my larger portfolio margin account. I wanted to replicate this system in a regular margin account and I back-tested over 300 different trade plans until I finally come up with a successful system that I could trade in a smaller account that outperformed the S&P 500 with lower P&L volatility. Now, I make these claims based on 10 years of back-tested results along with 27 months of trading it live.
Now, I have to make a disclaimer that since I’ve been trading it live, the system has not outperformed the S&P; and to see my results, refer back to my previous real P&L monthly videos. Now, the worst case scenario when using the system is that you learn the mechanics of how I trade options or how to become a Level 5 trader without being subject to any major volatility or major drawdowns in the account. The 5 Step Options Trading Success Program is not dependent on picking a direction, so an unpredictable market does not have a negative effect on the trading system.
Now, because the system uses regular margin, it’s not as robust as The Premier Level 5, and it will not perform as well, but the trade plan is as close a replication as you can get. And it is the best Level 5 trade plan learning tool for people with smaller accounts, like $6,000 to $8,000. So this is a great learning tool. So here are the results for The 5 Step for the month of April 2022.
Okay, this is the 5 Step for April of 2022. And we had a beginning balance… Well let’s look at the volatility first. You can see there was hardly any volatility. And then we had those two down days, one a couple days ago, and then one today. So pretty much with that first leg down a lot of times you’re going to get that down day; and then if the market goes back up, it kind of recovers. So we ended on a down note. So we ended down at $13,806 at the end of the month.
And let’s do some math here. We started the month at $14,151. $14,151 – $13,806 = -$345. Okay, so we’re down $345. Let’s divide that by what we started with, $14,151, and we’re down about 2.4%. Which is not too bad, but it still is down. So down about 2.4%. You can see our lowest drawdown here was $13,260. So let’s see what our volatility was. $14,151 -$13,260 = $891. That’s pretty high volatility for this account, for this system $14,156. Yeah, I had a 6% volatility; so that’s pretty significant volatility for this. It’s pretty high. That’s a lot higher than normal, but you’ve seen what the market’s been doing lately. So there you have it for The 5 Step for April 2022.
Now, as I stated before, the edge in selling option premium is because implied volatility is higher than actual volatility, about 83% of the time. The 5 Step System is designed to make money in any market environment while mitigating drawdowns, but in the last 27 months, while trading the system, my highest drawdown was -6.2% and this is a great way to learn how to become a level 5 trader with a low amount of capital and very little risk. You can learn exactly how I trade in this account by purchasing the course. And I put a link in the description below.
Now, I’ll go over my main larger account where I trade my Premier Level 5 System. The Premier Level 5 Trade System was put together in order to produce positive results in any and all market environments. If you’re interested in the back-test results for The Premier Level 5 Portfolio, I’ll put a link in the description for the results starting in October 2011.
Now, this account uses span or portfolio margin allowing me to trade with more leverage in order to take advantage of a certain trade structure. Now before I go over the results of The Premier Level 5, I’m going to go over my take on the month of April 2022.
This past month was a pretty big down move for the S&P 500. With interest rates rising, it increases the cost of corporate debt and servicing the debt creates an increased cost to the bottom line. When there’s increased cost for the company, their cash flow lowers and with the lower cash flow, it lowers their P/E ratio. Which in turn, lowers the stock price. Also interest rates rising, typically causes the economy to shrink as consumers pay higher interest rates on their debt. And when consumers spend less, then corporate revenues drop causing lower evaluations and lower stock prices. Also, the rise in interest rates slows home refinancing and home purchases. So when the real estate market slows, it also has a slowing effect on the economy. All the things that I just talked about, which are fundamental analysis, would typically lead to lower stock prices and a falling market.
However, the market could rise to all-time highs again soon out of nowhere. And having seen the market act irrational many many times, basically the market direction is not predictable. Now with this in mind, it’s always good to have a non-directional system with a portfolio. The key is having a Level 5 trade plan which is a proper trade structure and proper trade plan in place that takes advantage of the premium seller’s edge and is proactively hedged at the same time. If a Level 5 trade plan portfolio can be managed in less than 15 to 30 minutes a week, then I believe it’s a good system.
Now, I understand people trade to make money, but what good is the money without the time to go with it. This is why I’m baffled when I see people spending their time learning how to day trade which puts them in front of the computer stressed out all day. Not to mention, day trading is unproven. Would it be more prudent to learn a system that creates both time and money?
This month I made three adjustments that took around 30 minutes to manage The Premier Level 5 Portfolio, the whole portfolio. And this is why I highly recommend learning about Level 5 trade plans and adding another dimension that can create a real edge.
Now, here are the results for my Premier Level 5 Portfolio for April 2022. Okay, looking at my Premiere Level 5 account, you can see that we started at $0.00 and then I added $30,000 to the account. So we started with $30,000 on April 6th. Let me adjust this here. Let’s go to the 6th. That gives you a better look at the volatility. You can see that not much, pretty even, you know, we’re down a little bit, but down as low as $28,293, and we’ll look at that volatility here in a minute, but we can look at what we ended up with.
So let’s do some math on this. So we have $29,865, we had $30,000 to begin with. $30,000 – $29,865 = $135. [$135] / $30,000 = -0.5%. So .50% considering the markets down in April close to 9% that’s vastly outperforming. Let’s take a look at the volatility. That’s always important. So we went as low as $28,293. So let’s go $30,000 – $28,293 = $1,707. So we’re down as much as $1,700 on the low. Now, remember the system does go down with that first leg down, but it does recover quickly. So let’s just see what this ends up being. So it was down about 5%, 5.5%, at one point. So it does go down with that first leg down, but we’ve had a little bit of volatility with this account, but that’s okay. The end result is really good. Basically, down -0.5% compared to the market down close to 9%. So it’s always good when you’re in these grind down markets with this particular system to kind of hold on, you know, try to break even, make a little bit. And then all the other three markets, it’s much easier to profit.
This is the toughest market. This is the one that all the instructors have problems with, with all their option selling techniques, you know, all the Level 4 traders, they’re all having problems here. And they have problems with a crash also, but then when you get to this higher level, those Level 4 traders that are actually a little bit better, you know, a little bit maybe Level 4 and a half. They’re a little bit better traders. This grind down market is where they really have problems and this grind down market is where the Premier Level 5 really shines. And for me, breaking even when the market’s down close to 9%, that’s shining.
Okay, so there you have it for the Premiere Level 5 for April 2022.
So I wanted to give my final tally for the Synthetic Dragon account. So you can see here the account value is $202,707. So I turned $110,000 into $202,000 in 32 months. You know, I started in August of 2019 with this account, and I did this with minimal drawdowns. I’ve replaced my Synthetic Dragon with the Premier Level 5 trade.
The advantage of the Premier Level 5 trade is that it is available to the public unlike the Synthetic Dragon. Now, most of you would benefit from my Premier Level 5 trade alerts. This requires a recommended minimum of $30,000 and uses span margin. Now, if you like the Synthetic Dragon, the Premier Level 5 is as close as you can get without investing in my hedge fund. The Premier Level 5 trade alerts is a culmination of over 28 years of trading experience. I easily looked at over 500 different trade plan ideas and performed over 10,000 back-tests to find this trade.
This trade plan took well over 40 hours just to back-test it. It has similar characteristics to the Synthetic Dragon but it has a different trade structure and a very similar trade plan. This means management will be less than once per week which gives the opportunity to trade less and live more. I will typically be doing adjustments on Monday, or Friday mornings in rare cases. when something urgent requires an adjustment during other times.
I recommend making adjustments as soon as possible when I do but most of the time it is okay to not follow the trade until later that day or even the next day. And this depends on whether you can get a better price or within about 5% of the price I get. The main advantage to this alert program is that the instructor, that’s me, that created the trade structure is guiding you on the most efficient way to extract the edge from the trade.
If you trade this on your own, you run the risk of being margin called, as margin can unexpectedly expand and cause serious losses. The system has a $30,000 minimum recommended investment and uses options on the /ES, or E-minis, which requires span margin and the cost is only $200 a month.
The Premier Level 5 alerts are an educational experience for my subscribers. Watching me trade this in real time and watching how I handle certain situations will bring significant insights to the subscribers. Now, I added a link in the description for the Premier Level 5 trade alerts.
If you have a smaller account, less than $30,000, you can follow my Safe Wheel for free or my Earnings Edge Alert System. If you’re more interested in learning how I trade options and eventually want to graduate to The Premier Level 5 system then, I recommend my 5 Step course. See the link in the description for The Premier Level 5 Alerts, The Earnings Edge Alerts, and The 5 Step course.