Long Term Visa ($V) (Rolling 4s) Play April 2017 – September 2020
Back again with another breakdown of some back testing I did on Visa ($V) with a LEAP option. LEAP options are 1-2 year plays using the Excel pricing sheet created by Mark Monroe to select the strike price. This back test starts in April 2017.
I selected Visa because for this back test since I have been watching it recently. As we are going to a cashless society most transactions in the world are done with a debit/credit card. The biggest players in that space are Visa and Mastercard. So the companies are not going anywhere.
Setup:
Bought Visa when the it bounced up off a key support/EMA (typically 20ema or 50ema) or even breakout price actions. Looking to invest roughly $5,000 each quarter/entry. Objective was to stay in a play for a year.
I did roll a few options into new contracts…that was interesting.
Entries & Exits:
1. April 20, 2017 Purchased Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 90.95 | 18-Jan-19 | $ 110.00 | $ 3.65 | 13 | $ 4,745.00 |
1a. Exited option on June 14, 2018 (1 year and 2 months after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 135.16 | $ 27.65 | $ 35,945.00 | $ 31,200.00 | 657.53% |
*rolled these profits into new contracts check out trade #6
2. June 13, 2017 Purchased Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 95.17 | 18-Jan-19 | $ 110.00 | $ 4.48 | 11 | $ 4,928.00 |
2a. Exited the option on June 14, 2018 (1 year and 1 day after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 135.16 | $ 27.65 | $ 30,415.00 | $ 25,487.00 | 517.19% |
*rolled these profits into new contracts check out trade #6
3. September 9, 2017 Purchased Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 105.60 | 20-Dec-19 | $ 120.00 | $ 7.85 | 6 | $ 4,710.00 |
3a. Exited the option on July 2, 2019 (1 year and 10 months after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 174.75 | $ 55.82 | $ 33,492.00 | $ 28,782.00 | 611.08% |
*in the system I wanted to exit this trade in June 2019, but the TOS system would not trigger a trade until this day. Ideally I wanted to be out of the trade 6 months before expiration.
4. December 7, 2017 Purchased Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 109.69 | 17-Jan-20 | $ 120.00 | $ 11.65 | 4 | $ 4,660.00 |
4a. Exited the option on August 1, 2019 (1 year and 7 months after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 178.95 | $ 60.60 | $ 24,240.00 | $ 19,580.00 | 420.17% |
*wanted to exit the trade about 6 months before expiration
5. March 21, 2018 Purchased Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 124.76 | 17-Jan-20 | $ 150.00 | $ 7.75 | 5 | $ 3,875.00 |
5a. Exited the option on August 2, 2019 (1 year and 4 months after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 176.82 | $ 30.17 | $ 15,085.00 | $ 11,210.00 | 289.29% |
*wanted to exit the trade about 6 months before expiration
6. June 14, 2018 Purchase Visa Call (one was rolled options and the other straight call)
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 135.16 | 17-Jan-20 | $ 160.00 | $ 6.45 | 24 | $ 15,480.00 |
*This was the rolled option from profits of the April & June 2017 trade | |||||
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 135.16 | 17-Jan-20 | $ 160.00 | $ 6.45 | 8 | $ 5,160.00 |
*entered a new trade as well…this was an accidental trade…it should have just been the rolled options
In the video you can see how it worked to roll the options and it shows the net credit that was taken in on the trade for the 24 contracts. This was pretty interesting because now you can see how in the future you could take a good amount of your profits and buy your next call. This allows you to deploy saved capital to a new trade on a different stock or ETF.
Stock Price | Premium | Return | Profit | ROI |
$ 176.75 | $ 21.95 | $ 52,680.00 | $ 37,200.00 | 240.31% |
*profit from the 24 contracts that were rolled | ||||
Stock Price | Premium | Return | Profit | ROI |
$ 176.75 | $ 21.95 | $ 17,560.00 | $ 12,400.00 | 240.31% |
*profit from the 8 contracts that were a separate trade | ||||
7. October 16, 2018 Purchase Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 141.62 | 15-Jan-21 | $ 170.00 | $ 11.30 | 4 | $ 4,520.00 |
7a. Exited the option on January 31, 2020 (1 year and 3 months after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 201.11 | $ 38.22 | $ 15,288.00 | $ 10,768.00 | 238.23% |
*sold when broke near $200 and beyond an year in play | ||||
As I did this trade it was at a hefty ROI. Then as the trading days went along after making a new all-time high. If you had placed a trailing stop on your profits it would have exited your position.
8. January 7, 2019 Purchase Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 136.50 | 15-Jan-21 | $ 165.00 | $ 10.43 | 5 | $ 5,215.00 |
8a. Exited the option on January 31, 2020 (1 year after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 201.11 | $ 42.62 | $ 21,310.00 | $ 16,095.00 | 308.63% |
*sold when broke near $200 and beyond an year in play | ||||
As I did this trade it was at a hefty ROI. Then as the trading days went along after making a new all-time high. If you had placed a trailing stop on on your profits it would have exited your position.
9. March 25, 2019 Purchase Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 136.50 | 15-Jan-21 | $ 185.00 | $ 8.25 | 5 | $ 4,125.00 |
9a. Exited the option on February 24, 2020 (11 months after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 200.43 | $ 27.67 | $ 13,835.00 | $ 9,710.00 | 235.39% |
*with Market breaking from COVID you exit | ||||
This is when COVID-19 hit the stock market like a Mike Tyson upper cut. I am sure most people would have exited when the stock we reaching down towards the 100SMA.
10. August 2, 2019 Purchase Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 176.82 | 18-Jun-21 | $ 200.00 | $ 14.48 | 5 | $ 7,240.00 |
*This was the rolled option from profits of the March 2018 profits | |||||
10a. Exited the option on August 21, 2020 (1 year after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 204.15 | $ 22.67 | $ 11,335.00 | $ 4,095.00 | 56.56% |
For the purpose of closing out this paper traded decided to exit the trade on August 21, 2020 before the stock hit all-time highs
11. December 3, 2019 Purchase Visa Call
Stock Price | Option Exp. | Strike | Premium | Contracts | Investment |
$ 176.82 | 18-Jun-21 | $ 200.00 | $ 14.48 | 5 | $ 7,240.00 |
*This was the rolled option from profits of the March 2018 profits | |||||
10a. Exited the option on August 21, 2020 (9 months after entry)
Stock Price | Premium | Return | Profit | ROI |
$ 204.15 | $ 22.67 | $ 11,335.00 | $ 4,095.00 | 56.56% |
For the purpose of closing out this paper traded decided to exit the trade on August 21, 2020 before the stock hit all-time highs
Summary:
Long term options in the case of Visa definitely still work with the Rolling 4s method. I noticed a few things about this back test:
a. The run up was real nice twice during this timeframe (practically all of 2017 & 2019)
b. Rolling an option is very convenient when you have substantial profits from a previous play
c. Do your best to catch the breakout for the next wave of uptrend movement. This will maximize your profits
d. Lastly, regardless of the plan of sticking to the script there are still factors that would have you exit a trade due to the market conditions
12 Entries and Exits
Total Investments: $71,333
Total Returns: $210,327
Average ROI: 295%
No losses
Also here is a screen shot from my TOS account to show the entries and numbers.
Thank you for checking out the Blogpost.
Think, Live & Be Unstoppable!
The Emotional Trader
Thank you for sharing this was really helpful to see it visual example of the rolling 4s!
ReplyDeleteI agree. Please keep more coming. Can you do one on txn
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