Okay, we haven’t done one of these takedowns for awhile, and people have been clamoring for more newsletter-debunking truthiness. Several people in particular have asked to take a look at Wicked Profits. As is our usual practice, we don’t link directly to the site, but you can find them via any search engine.
What do they provide? One vertical index credit spread per month - either a bull put spread or a bear call spread. In other words, they send out half an iron condor every month, and hope to be correct about the market direction.
Summary conclusion: meh, shrug.
Honest marketing - Pass
If only every other newsletter or trading service had such a reasonable attitude! There’s a minimum of hype both on their site and on the very limited online advertising we could find. The site promises 5% monthly returns, which isn’t tough to achieve if their directional pick is correct. One sort of weird ad we found (pictured) didn’t seem to match up with what’s on the site - we couldn’t find any mention of a guarantee, never mind one that pays you $3000 if you don’t achieve 100% returns! Given that there are still only 12 months in a calendar year, it’s tough to see how 5% monthly returns could ever give you 100% annual returns, even with compounding and assuming no losing months. But whatever.
Repeatable returns - Fail
Their website doesn’t provide any detailed performance information, so we have no way of knowing what the precise nature of their trades are, how easily those trades would be to execute, how big of a factor slippage and commissions would be, etc. Wicked Profits also doesn’t tell us anything about their trading strategy, like which indexes they trade from, how they look for new positions, etc. In short, there’s just not enough information available to make any qualified judgment as to the repeatability of the claimed results.
We emailed to ask them for more information, and they were kind enough to provide a monthly performance breakdown, but still no detailed trade information. We considered giving them a pass here just because the claimed results are so modest, but accountability is still necessary, even for the humble.
Risk management - Fail
A couple problems present themselves here.
- While vertical spreads are risk-defined, they’re not nearly as well-hedged as iron condors, and since we don’t know how Wicked Options constructs their trades, we don’t know the width of the spreads that they use - which means we can’t assess the riskiness of those trades.
- Another problem is that they only issue one trade per month. That means if they enter a trade on Tuesday and the market moves big against them on Wednesday, they’re stuck. The obvious thing to do would be to add a second position, either by legging into an opposite spread to create an iron condor, or to double down by selling another credit spread at higher strikes. But sticking with just one position just seems like jumping off a cliff and hoping your cushion below doesn’t move too far before you land. Instead, why not buy some more cushions?
- Wicked Profits only enters orders outside of market hours, which would seem to generate a lot of unfilled signals given how much the markets are gapping up and down on the open these days - especially when you consider that they also don’t adjust trades.
Reasonable Price - Fail
Wicked Profits offers a discounted trial membership, which is really generous of them. After that, a subscription costs $90/month, with the usual longer-term discounts. Not bad, right? Wrong. Our “reasonable price” test is to estimate how much our service would cost if we used the pricing standards of the newsletter we’re taking down. In this case, if we followed the example of Wicked Profits, a monthly subscription to Condor Options should cost $270 - $360 (3-4 trades X $90). Add in another $50 or so for the full support and responsive emails we provide, and you’re easily talking about a $400 monthly subscription. We only charge $139; $400/month would be rather ridiculous, and so is paying $90 for the one-shot strategy at Wicked Profits.
We’re sure they’re nice people and all, and we have to applaud their marketing restraint and general honesty, but we think you could do better elsewhere.