Red Option

Discussion in 'Options' started by addias342, Mar 1, 2008.

  1. Has anyone used Red Option Newsletter autotrading service? I am considering using it, but I would like to hear your experience.
  2. anyone?
  3. Div_Arb


    I have never used it personally, but some of the feedback I have heard is that they do not practice risk management very well. In other words, if a position goes against you/them, they don't typically adjust and simply ride it out. If I recall correctly, this person was using their double diagonal service.
  4. The mini basket via red option works well from my experience. They actively manage the risk by hedging with other positions.
  5. Carl K

    Carl K

    I used their auto trade service for 1 year with a TOS account.
    I set the contract depth to 2 positions on DD and IC.
    At the end of the year my account was down not up.

    Most of the loss could be accounted for by TOS commissions.
    Entry, adjustments, exits add up quickly on 4 leg spreads.

    In conclusion
    1. Have TOS to give you low commission rates.
    2. Trade with more contract depth.
    3. Learn how and why they do their adjustments.
    4. Use the service for learning, not money making.

    Save, read and study their e-mail of adjustments,
    because the positions can get quite convoluted
    if you just look at your trading account.

    There are Yahoo groups that you can learn from
    that cost you nothing, and you can paper trade
    until you understand how and when to
    enter, adjust and exit each trade.

  6. Thank you all for the responses. I was giving a 2 month free trail, so I’ll give it a try. I chose the Index Calendar spread. It’s something that I want to learn, plus it doesn’t require a lot of capital.
  7. Carl K

    Carl K

  8. zxcv1fu


    u can request track record. they will email u.

    do the paper trade first. u do not need to trade with ur $$$ yet until u decides it will have a good chance to manke money.
  9. WolfK


    I have traded with RED Options since their inception and tried almost every strategy. You have to understand one thing first before discussing their track record. Most of the strategies are directional (up, down, or sideways). Their is tremendous risk in that and they state so in the descriptions of the strategies: " is not for the risk averse trader." This has nothing to do with RED Options but is a function of the strategy. IT DOES NOT MATTER WHAT OPTION STRATEGY YOU USE, IF YOU PICK THE WRONG DIRECTION YOU WILL GET CLOBBERED. With options that means 100% OR MORE loss.

    This is also true for double-diagonals. I hate that people call them directionless, because sideways is a direction. If the market swings 10% up or down like right now a sideways straytegy is not going to do too well. You cannot blame the trading service, if YOU pick the wrong direction. If you are convinced that you have the direction correctly for the month, sure, you can trade that strategy with RED Options. Otherwise, papertrade it to learn how they make the moves. For $20 it is cheaper than just about any class.

    The only strategy that is truly hedged the way the professionals trade is the mini-basket. Here you can genuinely blame Scott, because he reacts to market moves to hedge the positions. If he wrong, he's wrong. You have to autotrade or paper trade this one. You cannot realistically trade this one on your own, because you have to react too fast. Even in the time it takes for you to read the e-mail the market can get away from you. It's an excellent learning tool to learn how traders really swing trade options. If you want shorter time frames go with ShadowTrader. That's the corresponding day-trader service, but that is naturally stocks. With day trading options the slippage kills you. The swing trading strategy with stocks is Liquid Swing, but you cannot hedge the way you can with options.

    FWIW, Liquid Swing's record from March to July 2006 was 8 trades, 6 wins, 2 losses with a return of 2% to 6% annualized depending on how you define return. It went negative after that, because Scott could not hedge some catastrophic losses on two stocks. By comparison the Mini-basket record from January to July 2006 was 34 positions, 18 wins, 16 losses with a return of 10.6% to 21.2% annualized. The calculations do not include commissions. On a small account they will wipe out a good part of the gain. These numbers do not sound terribly exciting, but that is how the pros trade. Many small gains and try to avoid the big losses that can come from directional trading. It's boring and tedious, but it works over long periods, if your account is big enough. I have tracked directional traders that shall remain nameless and their records over months were much worse, because they got the direction wrong when the market turned.

    Finally, none of the strategies can trade futures. The only place I have seen HEDGING with futures taught is in the thinkorswim classes. So, even the mini-basket does not give you the true way the pros trade big portfolios, but it comes close. Futures are the ultimate way to hedge large numbers of options positions and they have kept my account in the black in the last few months.
  10. buybig


    well put
    #10     Mar 13, 2008