With market conditions softening lately, the explosive returns on the Chaikin Oversold Buy strategy are more muted this week. Still, a dozen winners out of 14 naked long option trades with the market pretty much directionless. I'll take it.
- This forward test, one we've been executing since soon after we unveiled backtest results with a high positive expectancy, involves short term deep-in-the-money call option trades on Very Bullish rated underlyings with Oversold Buy signals.
- In addition to the entry requirements for an OS Buy signal for entry (Bullish Power Gauge, etc), we require positive Money Flow, Strong Industry, Upward Chaikin Long Term Trend, and Relative Strength that out-performs the SPY.
- We exit after holding for 30 days or on a touch of the upper volatility band.
- The strategy works buying and holding stocks, though the % returns are smaller without the leverage of stock options.
- Since we don't trade this strategy through earnings and with market conditions now neutral at best, the pace of our trading has slowed to a trickle.
- Here are the updated results (below).
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