Menu
The strategy is based on rotation between the SPY and TLT ETFs, staying in SP500 stocks (SPY) when the situation favors its rise, and we protect ourselves with US treasury bonds (TLT) when the stock market falls, re-entering the SPY when the stock market rises again.
There is also the possibility of staying in CASH, and that happens when not only the SPY falls, but also the TLT. This last scenario occurs when there is a very high fear in the market and people prefer to sell everything, or when there are significant drops in interest rates, or when there is an expected increase in interest rates by the FED.
What do we measure? Each day we analyze the opening values of:
In the following graph you can see the result of the last 10 years of the strategy starting with 10,000.00 and letting compound interest work for us against the results of the S&P500.
To follow the combined options strategy, what we need, first of all, is education. These are high-risk financial instruments and therefore, it is not possible to follow what we are doing without sufficient knowledge. In this mode we use SPY and VXX options. In this way we take advantage of all the metrics we measure in the rotation strategy (volatility, SPY, TLT, contango).
The following trades come into play here:
We have made a table to, according to the risk tolerance of the investor, invest X% in each of the strategies to get the risk-adjusted result we want.
In the graph below you can see the result we have obtained with the moderate risk profile, starting with €10,000.00 and letting the high returns offered by options and compound interest do their thing, comparing us with the performance over the same period of the S&P500.
We don’t want you to be left with any doubts. If you have any questions or special requests you can write us an email so that we can schedule a video-call.