Reckless Risk Management
I tested Avant Options performance for the first 5 months of 2013, autotraded via GAT/IB. I also autotrade a few other similar newsletters and while I can't comment on their performance outside of this period, the losses during the first half of 2013 far exceeded all of the others. I think their are two primary reasons for this:
1) they badly misread the market during what has been a vigorous bull run. Putting over 75% of their positions on bear call spreads caused inevitable losses. The drivers for the current bull run could be debated, but to ignore the effects of QE1 & 2 on market behaviour since 2009 right on the heels of the QE3 announcement has to take quite some justification.
2) Finding themselves the wrong side of the market they two times made (in my opionion) reckless gambles. The first time was in March when positions were rolled up to the next strike with less than $1 of intrinsic. It is to their credit that they subsequently posted a mea-culpa analysis and promised never to take this type of risk again. Nonetheless a month later as positions once again got dangerously close to being rolled they posted their intention to do exactly the same thing again, thankfully the market backed off a tad and prevented the need for a repeat of the same gamble.
However, in May they rolled all of their losing call spread positions out and DOWN. Once again a big gamble which counted on a sharp pull back in market prices to pay off. This was the point when I decided enough was enough and took over unwinding their positions myself.
Over the long haul they may deliver a good return for subscribers, and some may be comfortable with their casino-style approach to reading market direction and adjusting loss-making positions, however I found their approach to risk management to be anything but conservative and not in-line with my risk tolerance.
This review is the subjective opinion of an Investimonials member and not of Investimonials LLC
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