WOULD WELCOME A PAUSE IN THIS RALLY

I'm into the seventh week of my dance with weekly options in what I've dubbed my Absolute Alpha trading strategy which utilizes weekly options in an effort to achieve less volatile returns in the short term, while gaining larger absolute returns in the long term. In addition to the aforementioned goals, another benefit of this strategy is its low touch, nearly auto-pilot maintenance and low volume.

Thanks to the one-way market we've been in since late August (especially in $QQQQ, which is what I'm trading), this strategy has been especially easy as every ATM put option I've sold has expired worthless for seven straight weeks! And this has tallied up a 7.79% return to my portfolio (as of last night's close). However, while this feat is impressive in seven weeks, it trails the performance of $QQQQ which has gained 11.42% during the same period.

This, though, is to be expected. In one-way UP markets, this strategy is expected to underperform the underlying - though still earning gains. So, not a terrible situation to be in.

It may feel to some that this market is never going to go down again. But we all know it will, and I for one would welcome a pullback as I'm eager to see how the performance of my portfolio will hold up during a downdraft. While I like absolute gains, I'd welcome a positive Alpha advantage to take hold even more. As of yesterday, I'm trailing the underlying by 363 basis points. A nice and sustained pause in this market updraft will quickly eat away at this deficit.

Some previous posts where I've discussed this strategy can be found

and

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