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, make sure to subscribe to the channel. One of my goals is to change the 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.
Now I see only one way to prove credibility and that is to share P&L. Not only to 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 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 real truth. And this is why I share my P&L and I show my daily moves of my P&L. Now I would not buy a course from a Youtuber 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 June 2021. I’m going to share my real P&L for the month of June 2021 in my two separate accounts; and before I get to the P&L, I want to briefly go over what the market did in June; 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 June? In my book, I go over the four market types for premium selling options traders and that is what I do in my two separate systems. They’re set up to take advantage of the difference between implied volatility and actual volatility by selling option premium. Now the four market types are: #1, the rising bull; #2, the sideways market; #3, the grind down market; and #4, the crash market.
Okay, so for the month of June, this is the mark of the S&P 500. Let’s start with the first right here. That’s where we open or we can go to the close of last month. And we can see that we went down pretty sharply and then back up again we made all-time highs actually today at the end of the month. And overall we’re up 2.25% so I would call this a bull market. This particular little time period here for June. But now I’m going to check to see what volatility did. Remember, volatility is a key element when assessing an options portfolio, because volatility has a direct impact on the price of options.
And the way I like to look at volatility is by looking at the VIX. Let’s take a look at that. So we started; we ended last month right here. You can see we had a good little spike up to about 22 up around 30%, but we ended down just a little bit. So the key thing to look at here is, you know, this spike right here a lot of option premium sellers might have got hurt there, they might have gotten scared, and taken losses there. And we’ll see how the two accounts did in terms of this little bit of spike in volatility to see how the two systems that I trade how they handled that. But there you have it for June as far as the market. It was a bull market for June of 2021.
Next I’ll get into my P&L. And first in my smaller account where I trade the five step options trading success program, this is a proprietary system and it 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 came up with a successful system that I could trade in a smaller account that would outperform the P&P with lower P&L volatility.
Now I make these claims based on the last 10 years of back-tested results, along with about 14 months of trading it live. Now even though it does not replicate the exact system I’m using in my larger account, it is as close as you can get. My small account portfolio, using the five-step options training success program, is not dependent on picking a direction. So an unpredictable market does not have a negative effect on the trading system. So here are those results.
Okay, you can see the results from my five step options trading success program. This is the smaller account. We started the account out with $15,077 and ended it with $14,877. And you can see the volatility within the account really not a lot. We had that spike in volatility. You can see where it kind of pushed it down just a little bit, down to $14,700. So what is that–three hundred dollars. You know you got a $15,000 account and you’re seeing a $300 drop that’s not a significant move in terms of P&L volatility, so the equity curve is actually really really smooth.
Let’s do a little math, see how this system did this month. Okay so we started with $15,077 we ended with $14,877, so down $200, divide that by $15,077 and down about 1.32% and, you know, it just kind of depends on the tick of the day, to be honest with you. I mean it could be up or down, it’s for basically a break even month, but you know, we’ll take the hard numbers and mark it down as minus 1.3%.
And here is the date and time stamp in ThinkorSwim for the five step program. You can see that the real net liquidation: $14,877. You can see that it’s June 30th. Here’s the time stamp time moving just to double show that, you know, I’m showing my real P&L.
As I have stated before, the edge to selling option premium is because implied volatility is higher than actual volatility (about 83% of the time). My system is designed to make money in any market environment while mitigating drawdowns. In the last 14 months while trading the system live, my highest drawdown was only 2.27%. This is almost like a super high yielding savings account. Now this system is scalable if you want to make more money and you can just take on more risk. This means you can double these numbers. For example, if I had a higher risk tolerance over the last 10 years, I could have had an average return of over 25% with a maximum monthly drawdown of about 4.5%. Now this would be allocating $4,000 per tranche and I would not increase the risk using this system with anything less than $4,000 per tranche. And I currently just upped my risk by 50% to $6,000 per tranche. And this means based on the back tests, I could see a 6% – 7% max drawdown for around a 19% return.
Again, 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’m going to go over my larger Synthetic Dragon Portfolio results. As you know, I was in the process of moving this account from Interactive Brokers to ThinkorSwim. And so you’re going to see the results in ThinkorSwim today.
Now if you’re interested in the back-tested and forward-tested results of the Synthetic Dragon Portfolio, I put a link in the description for the results starting in 2008, and this account has portfolio margin allowing me to trade with more leverage in order to take advantage of a certain trade structure.
Now if you have noticed, my monthly market view is very short. My market view for the whole month is just a few sentences. And you can watch all the talking heads and they can talk for an hour on their market view of just one day. So why is my market view so short? Well because it doesn’t matter. My market view does not matter and neither does anyone else’s if you trade the way I do. My portfolios are not dependent on a market view which leads to picking a direction. The market can go in any direction and I have proven, so far, that I can come out on top.
Market views are mainly for directional traders without an edge, in my opinion. But I like to throw my two cents in every month. So I’ll briefly go over my market view and the market went up this month. On June 21st when the market dropped a bit, the volatility spiked a little the VIX went up to around 22, but overall this month was a slow and boring month not much happened. It’s tough to find an edge in a slow up grind market and this is why I highly recommend learning about options and adding another dimension that can create a real edge.
And here are the results for my Synthetic Dragon Portfolio for June 2021. Okay, looking at the Synthetic Dragon, remember, I was moving the account from Interactive Brokers over to ThinkorSwim, and I put $159,000 into the account. Remember, last month the ending balance was $157,299. So over the first few days of the month the system made some money in Interactive Brokers, and then I put that in here. You can see we ended at $161,497, and the volatility you can see, again, we had that little volatility spike. You see, it took it down to $157,700 but remember we started $157,300. So in actuality, there was no drawdowns at all this month. But you can see that, you know, when there’s some type of spike in volatility you might see a couple thousand dollar moves, but you know, it comes back very quickly. The system is very resilient and we slowly kind of moved up here.
So let’s do some numbers here. So looking at this, you know again, hardly any volatility in the account and we started well. We ended with $161,497 and we started with $157,299 had a profit of $4,198; divide that by $157,299 and we did about a 2.66% return for the Synthetic Dragon. I’ll take that all the time. That’s a great return especially with such a low volatility. You know the account might have been down a couple thousand but it ended up $4,000 so that’s very good. It’s very good volatility when when your P&L goes down by $2,000 but you make $4,000 so you’re risking one to make two. So there you have it for the Synthetic Dragon for June 202.
Also, real quick I like to prove that uh you know this is a balance in the account for ThinkorSwim. You can see the date-time stamped. You can see the time actually moving and you can see the net liq. here, $161 497. If you want insight on how I trade the Synthetic Dragon portfolio, you can purchase my book A Portfolio for all Markets and or you can check out the course that I took that brought my options trading to another level from Ron Bertino and it’s called Trading Dominion. And I left a link in the description below for my book and for my review of Ron’s course and a link to purchase Ron’s course in the description below.
Link 5 Step Proprietary Course https://rkdllc.thrivecart.com/5-step-…
Link to my FREE Proprietary Trading Course https://real-pl.com/landing-page-1/
Link to my Free Beginners Option Course https://real-pl.com/free-basic-option…
Link to my Book https://bit.ly/aPortfolioForAllMarkets
Link to Go Fund Me https://www.gofundme.com/f/help-suppo…
Link To Ron Bertino’s Course REVIEW https://youtu.be/z4JLjZFS04w
Link to Ron Bertino’s Course https://bit.ly/TradingDominion
Link to the Synthetic Dragon Portfolio Video https://youtu.be/YrvGdyNx-2Y