Hey, stock and options traders! Welcome back to the channel. If this is your first time here, my name is Karl, Karl with a ‘K’, and I’ve been trading stocks and options online since the mid-1990s. 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.
One of my goals 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 only see one way to prove credibility and that is to share their P&L.
Not only share P&L, but also share the account P&L volatility. Which means how much did the account value move up and down. If your account made 20% but it was down 60% 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, and that is why I share my P&L and show my daily moves of my P&L. Now, I would not buy a course from a Youtube instructor that makes promises without sharing their P&L, and I hope you won’t either. In this video, I’m going to go over my real P&L for the month of February 2022.
I’m going to share my real P&L for the month of January 2022, and I’m trading four separate systems in four separate accounts. Before I get into the P&L, I want to briefly go over what the market did in February. And this will give an idea of what my trading systems had to contend with over the last month.
My question always is: what type of market was February? In my book, I go over the four types of markets for premium selling options traders. And the four market types are: #1, the bull market; #2, the 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 five trade systems.
Now, level five is kind of like moving from a college athlete, level four, to a professional, level five. Except when it comes to applying these trade systems, you can cut in line and go from a grammar school, level one, directly to the pros., level five. And you can do this because the trade plans have etched-in-stone rules to follow. Level one through four trade systems do not profit in all market environments, and the only place to get level five trades that I know of is by using one of my trade plans or from one of Ron Bertino’s trade plans.
Now, after reviewing over 50 online stock and options courses none of them are offering level five trade plans. They are all level one, two, three, or four. And I’ve never seen proof that a level one, two, three, or four 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 so I can take a look.
Next, I’ll get into my four separate trading systems. The trading systems are: #1, The Safe Wheel; #2, The Earnings Edge; #3, my 5 Step; and #4 The Synthetic Dragon.
Now first, TheSsafe Wheel Strategy. This is a strategy I give away for free. Every Monday morning at 7:15 a.m. Pacific time I do a live stream and I trade the account live right in front of you. I also answer any and all questions about the system in order to help people learn it. 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 Strategy for February 2022. Okay, here’s my Safe Wheel account. You can see that we started February1st, or at the end of last month, with around $5,193, and you can see this is interactive, so this is my real P&L. And there were no drawdowns actually. I had a really good month with this. Ended up actually at $5,423. So these numbers are just slightly off, but you can see there’s not a lot of volatility ;had a really good month.
Let’s do some calculations. So we ended at $5,423 and minus $5,193, that was our starting point, made $230; divided by $5,193; made about 4.4%. That’s pretty high. I wouldn’t expect this system to make that kind of return consistently, but it’s like I said it back-tested around 10% a year. This year might be a better year than normal with all the volatility going on, but it’s a great system. Obviously, it keeps the volatility in the account or the drawdowns down significantly. So those are my results for The Safe Wheel.
Okay, double verification on my Wheel Strategy. You can see it’s February 28th. The market is closed and the NetLiq. it’s $5,423.
Now, my second account 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 with a $5,000 account. Now, what I like about this trade plan is that it’s long gamma which creates asymmetry. Now, asymmetry is kind of 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 with $5,000 account and I look to make one trade per week when earnings trades are available. My goal is to make $300 per trade and I want to win three out of every four trades. The cost for this service is $259 per month.
Here are the results for February 2022 for my Earnings Edge Alerts. Okay, here are the results for my Earnings Edge account. Started this with $5,000 in the beginning of the year. And this particular month we started with $4,559 without much volatility in the account. I was able to hit five wins in a row. I think in this month I did four. I don’t expect to do that every time, but you can see that we ended up at $5,374. What I want to point out is you see how this flat lines because the way that I do this is I’ll make a trade, hit the profit target, and then wait till next week, open a new trade (sometimes it draws down), hit the profit target, and then it levels off, and wait till the next week. So I’m in cash quite a bit. I usually get out of this trade on Fridays. I’ll be in cash over the weekend.
Okay, so let’s do a little bit of math. I started, let’s see, ended with $5,374 minus what I started with $4559; made $815; and divided that by $4559; did a 17.8% return. That’s a really good return. I don’t expect to see it that high, but I am not surprised in that return because, you know, this account is going to see some drawdowns. There’s going to be some volatility. You’re turning a small account into a large account. You’re going to see some volatility here, but I’m not surprised by a 17% return. That’s a really good month and there you have it for The Earnings Edge Alerts for February 2022.
Okay, double verification on my Earnings Edge account. You can see it’s February 28th the market is closed. And my NetLiq. is $5,374.
Now third, I’ll get into the P&L for The Five 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. aAnd 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 outperforms the S&P 500 with lower P&L volatility.
Now, I make these claims based on 10 years of back-tested results along with about 25 months of trading it live. Now, I have to make a disclaimer that since I have been trading it live the system has not outperformed the S&P. To see my results, refer back to my previous real P&L monthly videos.
Even though it does not replicate the exact system I use on my larger account, it is as close as you can get. The worst case scenario is when using this system is that you learn the mechanics of how I trade options without being subject to any major volatility in your account. The Five 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. Because the system uses regular margin, it’s not as robust as the Synthetic Dragon and it will not perform as well. But this trade plan is as you close as you can get to the Synthetic Dragon in a small account. And the best level five trade plan learning tool that I have.
Okay looking at my Five Step account. I started the account at the end of the month: $14,013, and you can see the drawdown: $13,996 so just over a hundred dollar drawdown during the month. So very low volatility and kind of worked up a little bit very; low volatility trade; very good learning tool on how to do a level five trade. And you see I ended the month at: $14,163.97.
So let’s go ahead and do some math. $14,200 – $14,113 = $87. $87 / $14,113 so up about a half percent this month with very little volatility. So there you have it for The Five Step for the month of February 2022. Okay, double verification on my Five Step account. You can see it’s February 28th; markets closed; NetLiq. $4,200.
As I stated before, the edge to selling option premium is because implied volatility is higher than actual volatility about 83% of the time. And this system is designed to make money in any market environment while mitigating drawdowns. In the last 25 months while trading this system live, my highest drawdown was -5.24%. So this system is a great way to learn how to trade options properly without creating a lot of risk. You can learn exactly how I trade this account by purchasing the course and I put a link in the description below.
Now, I will go over my main larger account where I trade my Synthetic Dragon System. I got the name from Chris Cole’s Dragon Portfolio. The Dragon Portfolio was put together in order to produce positive returns in any and all market environments. The Synthetic Dragon uses options in a synthetic manner and has been back-tested and forward-tested and has at least 10 times more occurrences versus Chris Cole’s Dragon Portfolio. And this system has created excellent results in a live account in all four market environments. If you’re interested in the back-test results for The Synthetic Dragon Portfolio, I’ll put a link in the description for the results starting in 2008.
This account has portfolio margin allowing me to trade with more leverage in order to take advantage of a certain trade structure. Now before I get into the results, I’m going to go over my take on the month of February 2022; and I only trade theS&P 500 or the $SPX.
This past month started out choppy and sideways and ended in a grind-down market. The grind-down market is very rare and has only occurred in January 2016, Q4 of 2018, and now in January-February of 2022. And this is only three times since 2013, or three times in the last nine years or so.
A lot of option premium sellers are down huge over these last couple months because they sold premium on high flying growth stocks. And those traders that have done well since the 2020 COVID crash are now learning that the market does not just go up all the time. And that they need a better plan in place to deal with down markets.
The key is having a level five trade plan which is using a proper trade structure and trade plan that takes advantage of the premium seller’s edge and is proactively hedged at the same time. If that same portfolio can be managed in less than 15 to 30 minutes a week, then I believe you got a really good system.
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 a computer stressed out all day; and not to mention, day-trading is unproven.
Wouldn’t it be more prudent to learn a system that creates both time and money? For example, in my Synthetic Dragon Portfolio this month, I made two adjustments that took a total of around 15 to 30 minutes. And the system is proven and creates both time and money. And this is why I highly recommend learning about level five trade plans and adding another dimension that can create a real edge.
And here are the results for my Synthetic Dragon Portfolio for February 2022. Okay, looking at the Synthetic Dragon, we ended the month that’s $194,994 and we started the month at $188,000. Yeah, that was the end. We had $188,078 and our lowest drawdown was $186,707.
So let’s do a little bit of math here. You can see, here’s interactive so it’s, you know, you can see every single day what my P&L was for that month. So let’s do some calculations. We ended $194,994 and started $188,078. So we made $6,916 for this system. And what’s the percent return there? Divide that by $188,078 = 3.6%-3.7% return for the month. And what was our-what were the drawdowns? We started at $188,078 and we got down as low as $186,707. So we drew down $1,371. Let’s see $1,371and we started with $188,078 so we had about a half, just over a half percent drawdown. But we made 3.7% return so the risk to reward ratio is really good here. Low volatility, very good return, for the month. So there’s a Synthetic Dragon for the month of February 2022.
Okay, double verification on my Synthetic Dragon account. February 28th markets closed. NetLiq. $194,994.
If you want insight on how I trade the Synthetic Dragon portfolio, you can purchase my book A Portfolio for all Markets. Or you can check out the course that I took that brought my options trading to another level, and it’s from Ron Bertino, and it’s called Trading Dominion and it’s the PMTT Course. And if you decide to take the course and use my affiliate link when you complete the course, you will be given the opportunity to join The Mastermind Group.
If you join, just direct message me within the group and I will send you an archived trade plan almost identical to the Synthetic Dragon. Now, I’ve left a link in the description for my book, for my review of Ron Bertino’s course, and an affiliate link to Ron Betino’s course.
Now, if you have a smaller account, you can follow my Safe Wheel for free or you can follow my alerts on my Earnings Edge Alert System. And if you’re more interested in learning how I trade options and eventually want to graduate to the Synthetic Dragon type system, then I recommend my 5 Step Course. See the link in the description for The Earnings Edge and The 5 Step Course.