
Concerned about missing a trading alert? Want to have our
alerts automatically entered into your brokerage account? When
you activate our auto-trading services, brokerages automatically
execute orders based on OptionSmart's recommendations.
The service INCLUDES:
1. Optionsmart sends email alerts to your broker.
2. Optionsmart allows your broker to link their auto-trading
mechanism to your brokerage account.
3. Optionsmart provides you with monthly statements and analysis
from our Control Accounts at e-Option.
The service DOES NOT INCLUDE:
1. Actual execution of our alerts (this is a service provided
by your broker).
2. Any activities within your brokerage account (they are
performed by you and your broker, we have no access to your
account).
3. Any guarantees that the entry and exit prices on your account
statement will be similar to the prices from our Control Accounts.
(The execution of our alerts is done by your broker, we have
no control over it. Even if your account is also with eOption,
the actual execution prices may vary).
You should review the relevant terms and conditions, and
make sure you fully understand all advantages and limitations
offered by particular brokerages before subscribing to our
service. Make sure that your broker can accept orders to buy,
roll (see about rolls below), and sell option spreads.
Please note that brokers often execute same auto-trading
signals differently. It is also quite possible that the same
broker executes the same signal differently for two different
subscribers. Therefore your performance will inadvertently
vary from our official track record and the model portfolio
that we may derive from this track record.
Unlike mutual or hedge funds, auto-trading doesn’t
mean a full transfer of funds under control of a newsletter
publisher. Some control parameters, like allocation, remain
in investor’s hands. Investors configure auto-trading
settings on broker’s site. Even more, newsletter providers
have no information about auto-trading settings with a broker
and any activity on brokerage accounts.
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Key reasons for possible deviation of an individual
portfolio performance (vs. our track records):
1. Investor doesn’t follow timely allocation recommendations
2. Lack of cash on a brokerage account (the investor does
not maintain the recommended cash reserve and has no assets
available for a transaction)
3. Conflict between recommended picks and existing positions
on an account that were opened earlier by an account holder
or other newsletter providers (this can be the case if the
investor is subscribed to other autotrading services)
4. Partial fills for some new positions (because brokers execute
trades on best-effort basis): the broker could not execute
the exact alert (limit order, not market order) for this particular
account. This can have a snowball effect in case of multiple
unexecuted orders and results in a growing discrepancy. This
discrepancy is only known to the account holder as the investment
advisor does not have access to the account.
5. Occasional option assignments for some options. Brokers
inform investors (not newsletter publishers) about such assignments
but some investors ignore this information. OptionSmart provides
recommendations to the subscribers who ask how to deal with
it, but it can only be done on request as the broker does
not release such info directly to the publisher.
ROLLING
OPTION SPREADS
Citing
from the Tradeking
brokerage site:
“Rolling” is a common way options traders adjust
options positions when their forecast on the underlying seems
wrong in the short-term, and they just want to buy a little
more time for the trade to play out.
Rolling can help buy you a little more time and hopefully
dodge assignment in the meantime, but it also has risks. Yes,
you may believe “time will tell” and a little
extra time is all you need for your forecast to play out.
But you have no idea what may happen in that timeframe, good
or bad. If you choose to roll and your position continues
to move against you, rolling can compound your losses. Be
very careful about using rolling to “chase” a
trade gone sour. Sometimes, you have to just let your trade
go, cut your losses, and move on to the next trade.”
Here is an example from the optionsXpress
site:
“As the stock moves higher, you might want to roll the
put up by selling the contracts you own and buying another
one at a higher strike price. This way, you can lock in profit
from the move higher. Too many investors have learned the
hard way that what goes up rapidly can drop with equal momentum.
So, if the stock jumps from $50 to $122, the 45 puts won't
provide much downside protection. That's why it would be advisable
to lock in profits by rolling the puts up to the 115 or 120
strike.”
DISCLAIMER ABOUT OUR PUBLISHED TRACK RECORD
A trade, in relation to spreads, is a total of spreads and related roll over operations. Trade entry date: date when an initial position was opened. Trade exit date: date when all open positions were finally closed. Trade profitability is calculated as ratio of the trade’s total credits over total debits. An up-to-date list of open positions is available to all subscribers on the product pages.
Brokers often execute same auto-trading signals differently. We reserve a right to create a separate trade in our trade record in cases like these. It is also quite possible that the same broker executes the same signal differently for two different subscribers. Therefore your performance will inadvertently vary from Site’s official track record and any model portfolio that may be derived from this track record. Additionally, the performance of your individual trades will vary from site’s official track record in case you set allocations other then recommended by site; if you link site’s autotrading signals to an account that holds other securities; conduct trading activity with the account other than through site’s autotrading signals; or cancel the service before trades are closed.
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