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Rebuttal to Condor Options Takedown #8 by Monthly Cash Thru Options - What's better, 70% probability index iron condors credit spreads options or 90% probability index iron condor credit spread options?

Condor Options:   It’s been over three months since we posted a takedown, and you guys are getting restless. So, Monthly Cash Thru Options is one site that people seem to request a lot.  Below is our Takedown #8 of Monthly Cash Thru Options by Condor Options.

Monthly Cash Thru Options:   It’s humorous how a direct competitor, Condor Options, can offer an “objective” review of our index credit spread and iron condor options advisory service.  Our subscribers and prospective subscribers are smart enough to know that they should take your comments with a grain of salt, and regardless of how you try to make this review seem to be objective in nature, your goal is to make us look bad.  Just by the fact that Condor Options spends their time bashing its competition tells us a great deal about their character.  Below is our rebuttal to Condor Option’s “objective review” of Monthly Cash Thru Options, and we added a few new categories that condoroptions did not include in their initial review;  so in essence we are reviewing Condor Options to a certain degree....but in general we don't make a habit of, or use our precious time to bash our competition.

To kick things off, here is an email that we received unsolicited from a past CondorOptions subscriber that was not too happy about how he was treated.   Monthly Cash Thru Options advertises through Google AdWords, and evidently our advertisement was displayed on the Condor Option's site when this person was taking notes and composing his nasty gram.  (Note:  this is typical where websites, such as Condor Options, will frame Google Ads on their site to generate some extra advertising revenue)  This past Condor Options subscriber jotted down some of the businesses that were being advertised at the time on the Condor Option's site and then sent an email to each business warning us that we should not associate with Condor Options. 

“Protect your company image and goodwill. Do not be associated with them [Condor Options] as it could tarnish your image.  The people at Condor Options conduct business in a very unprofessional and unethical manner. The terms of cancellation on their website say they are cancelable at anytime with notification. They changed their website today when I brought this to their attention.  I cancelled my subscription on January 18th [2008] and they responded back to me by email. However, I did not cancel my automatic payment on Paypal, so on February 11th they received a payment. One would think that this would not be a big deal, however, they refused refund the monthly fee. Basically telling me since I did not cancel the subscription on Paypal too bad, informing us on the website or email although nice does not matter. They also go into these extensive unprofessional and derogatory rants about their competitors.”

Sincerely,

Brad Filmanowicz  (dated 2/18/08)

This is FYI, and a recommendation that you might want to consider treating your customers better and be more ethical.  Your amoral behavior makes all of us in the options newsletter business look bad. 

Below is another unsolicited email from an ex Condor Options subscriber dated 2/28/09:

Thanks for trying to help me get into your [Monthly Cash Thru Options] members section. I called my high speed cable provider and after telling them the situation they did a test and found that they had a problem........ also I have been with you guys for 2 months and really like the way you do things. There seems to be very little if any bull___t  involved in what you do. I was with 3 different trading groups last year and lost $91,000.  I am not a negative person, but one of your competitors Condor Options was the worst.  In Jan 2008 it was a 95% loss. They then said it would never happen again because they screwed up.  Come Oct 2008 (9 months later) the loss was 100%. This is what I mean by too much BS.  It's becoming more difficult  to find a company that cares about its clients. Keep up the good work.

Thanks again,
Don

Monthly Cash Thru Options:  It seems to us that CondorOptions should spend less time bashing its competition and spend more time analyzing the markets and their recommended iron condor entry points and strike prices so their customers will have fewer of these devastating losses.

 

Condor Options:   What does Monthly Cash Thru Options provide?   An options newsletter publishing credit spreads and iron condors.  While the basic strategy is sound (hint: we trade iron condors too), we have some serious questions about the risk management and long-term viability of the approach taken on this site.

CondorOptions:   Honest marketing – Pass

To be honest, we couldn’t track down much in the way of marketing for this site in the first place, so they kind of get a pass by default. When you look at some of the worst offenders in this industry (”turn $20 into $2 million in 2 weeks,” etc.), any company that isn’t spending half its time and effort on marketing starts to look like a godsend. Really. So give MCTO a pat on the back for not being sleazy in the marketing department.  That said, we do find one mismatch between their advertising and the actual trades published: MCTO sells itself as a non-directional newsletter, but a very large portion of their trades turn out to be vertical credit spreads, which are directional trades.

Monthly Cash Thru Options:   We at Monthly Cash Thru Options pride ourselves in being honest and having integrity.  We don’t engage in sleazy marketing tactics that many of the directional services use.  It’s amusing how the directional services continuously advertise their winners, but most, or practically all do not provide their actual returns that include both their winners and losers.  Monthly Cash Thru Options posts its monthly returns right on its website at http://www.monthlycashthruoptions.com.   We achieved 50% in 2005, 42% in 2006, 63% in 2007 and 33% in 2008. 

Regarding your comment about Monthly Cash Thru Options not offering non-directional trades, this is NOT correct.   Our newsletter primarily focuses on far out-of-the-money (OTM) credit spreads (not debit spreads) and iron condors, which represent a sideways, non-directional strategy.  Not sure where you came to this conclusion since it’s obvious by reading just the first paragraph on our home page.

In addition to our primary focus of non-directional, income generating index credit spreads and iron condors, Monthly Cash Thru Options also periodically throws in directional bonus trades to take advantage of macro level trends, and for these we use directional debit spreads, calls and puts.  As of early March 2009, we’ve compiled a list of fundamentally sound companies with B++ rated balance sheets or better,  that sold-off 40% or more during the Oct 2008 crash, technically are showing the ability of having a good chance of partially recovering by the end of 2009, and should return 150% to 300% in about 6 to 10 months.  This longer term bullish strategy, where we're opening Jan 2010 calls or bull call spreads, is based on the presumption that the world is not coming to an end and that the stock market will partially recover by the end of 2009.  To see some of the companies that have come out of our scan, the methodology that we used to develop the scan, and the additional technical analysis that we do, please go ExampleDirectionalAdvisories

 

Condor Options:  Repeatable returns - Pass

We’re giving them a pass here, too: the performance data available seems thorough enough. There is a bit of ambiguity in the performance tables - certain adjustments made to trades were hard to follow on a first glance, and there were often wide ranges posted as the possible credit for a given trade. While it’s commendable to note honestly that a given trade may have generated between $0.90 and $1.25 in credit (rather than, say, just pretend that everyone could have been filled at the best possible price), that’s a large enough difference to warrant a bit of concern, if only because the high-risk, low-credit nature of their strategy means every nickel and dime is absolutely essential.

Monthly Cash Thru Options:   Monthly Cash Thru Options is realistic and honest with its returns as shown on our ROI track record page.  Please visit ReturnOnInvestment to see the details of our returns of 50% in 2005, 42% in 2006, 63% in 2007 and 33% in 2008.  

Per your comments about how the Monthly Cash Thru Options approach is a high-risk, low-credit strategy, we’ll cover this topic below.

Regarding Condor Option's returns, we noticed that they removed their monthly returns from their website, and we know why.  The Condor Options Trades for Jan 2008 and October 2008 had close to 100% losses.  This is one of the disadvantages of doing tighter, 40% to 60% probability credit spreads and iron condors.  When we have big, quick moves in the underlying index like we had during Jan and Oct of 2008, these tighter trades give the trader less time to make adjustments and many times the trade will go ITM and take a 90% to 100% loss.  We talk more about the pros & cons of 40% to 60% probability iron condors versus 90% probability iron condors (Monthly Cash Thru Options focuses on 90% trades) at 90percentVersus70Percent.

 

Condor Options:   Risk management - Fail

Which brings us to our primary concerns.  First is the question of asset allocation. A browse through the site’s FAQ yields the following interesting bit of information:   “The MCTO team follows the philosophy of putting 80% of our portfolio into credit-type, non-directional trades to generate a consistent monthly cash flow and about a 50% ROI annually, and then taking 20% of our portfolio and try to “swing for the fences” with other types of directional option trades…we recommend that our subscribers first get 80% of their portfolio productive through the lower effort, less stressful and more consistent credit-type, non-directional option trades to achieve an outstanding 4% to 7% monthly return or 50% or more annually - which is what this advisory focuses on.”  On its face, this is actually a totally reasonable approach to allocation: put the bulk of your capital into long theta and other boring positions, and leave a little room for directional home runs. But if you were a new subscriber to Monthly Cash Thru Options and you read the paragraph above, would you have the impression that you should be putting 80% of your capital into MCTO trades? We would. Even if that’s not what the publishers intend to say, the asset allocation discussions on the site never bother to mention that a reasonable approach to asset allocation means spreading your capital across a lot more than just two or three positions. Elsewhere on the site, they say:    “You can also allocate up to 100% of your portfolio to this single index credit spread system….which is not the case for most other trading systems.”  That’s a much clearer statement of their view, and the thought of someone dumping 100% of their portfolio into one or two RUT iron condors every month is, from a risk management perspective, just horrifying. So when they say “we recommend that our subscribers” do X and X doesn’t include a serious discussion of proper portfolio management, well that’s a major cause for concern.

Monthly Cash Thru Options:   Thank you for pointing out the fact that someone new to credit spreads might attempt to allocate a large % of their portfolio to a few trades.  We refined the text in our web site to make our asset allocation model clearer.  In summary, we state that Monthly Cash Thru Options subscribers can allocate up to 75% of their portfolio to two or three credit spreads and iron condors only after they have been trading this strategy for at least a year, and preferably 2 or more years, allowing them to build up their experience, knowledge and confidence with this strategy.  Please note that when we say 2 or 3 credit spreads or iron condors per month, if the underlying  index becomes volatile in a particular month and starts to move, we would be opening additional spreads with different strike prices, on the same underlying index and in the same month, as we maneuver around the underlying index to maintain a wide “safe zone”.   We do our best to maintain Delta neutral on our iron condors.  For more on this topic, please visit the Monthly Cash Thru Options FAQ page and read the entry entitled "what % of my portfolio could I allocate to iron condors that are based on 90% probability trades?".

 

Condor Options: Second, the strategy employed here is fundamentally riskier than the strategy that we use, and the reasons why aren’t at all intuitive, so it’s easy to get confused on this issue. To get right to the point, there are basically two approaches to trading iron condors and credit spreads:  High-risk, low-credit: you open an iron condor with a really wide body, say 20% or something like that between the short strikes, accept a relatively minuscule amount of credit, and hold to expiration. The advantage of this approach is that it generates what, on paper, look like much higher probability trades, meaning that they should have a higher likelihood of expiring out of the money, allowing you to keep the small amount of credit generated by the trade.

Monthly Cash Thru Options:   The folks at Condor Options have been drinking their own Kool-Aid way too long and are simplifying their “high-risk, low-credit” argument by only considering one variable - risk capital per trade.  Most Index iron condor & credit spread newsletters fall into two camps, either recommending 70% probability trades or 90% probability trades.   Monthly Cash Thru Options only uses 90% probability trades because we believe they represent the best balance between risk and reward, providing an excellent 45% to 65% annual ROI.  Condor Options uses 70% probability trades and they will lead you to believe that their strategy is superior by simplifying their argument by only focusing on the amount of risk capital per trade.  Reality is that both 70% trades and 90% trades will work, but one needs to dig deeper into the analysis of both approaches.  Below we propose a more thorough methodology to analyze the risk associated with 70% probability iron condors versus 90% probability iron condors, discuss the pros and cons of each approach, attempt to dispel possible misinformation in the marketplace, and make a case that 90% trades offer the best risk/reward tradeoff with the least amount of stress and work.

When defining “risk” for credit spreads and iron condors options, most experienced credit spread traders will agree that risk comprises many components.   Two of the more important components are...1) Probability of the credit spread going in-the-money (ITM), and  2)  The risk versus potential reward of the trade.   Additional risk related factors that should be included and that many times are omitted are the following:  3) The amount of time and effort required to monitor and manage the trades;   4) The amount of time available to react to a fast moving underlying security giving the trader sufficient time to make adjustments if needed;  5) The average number of times per year the trades get into moderate danger, that is they get close to going ITM, causing stress and uncertainty for the trader;  6) The average number of times per year that the spreads get into high danger requiring the trader to close out the spread or make adjustments, causing a losing month;  and 7) The average % loss for each of the losing months per year. 

Using an example of a 10 point spread, and doing an apples-to-apples comparison by analyzing a single credit spread, let’s look at both a 70% probability trade and a 90% probability trade in more detail.  The 1.3 standard deviation, or 90% probability credit spread has a 9 to 1 ratio where the trade risks $9 to make $1, it shoots for an approximate 11% return, it has a 90% probability of expiring OTM and profitable, and has a 10% probability of getting into trouble and going ITM.   The 1.0 standard deviation, or approximate 70% probability credit spread has an 8 to 2 ratio where the trade risks $8 to make $2, it shoots for an approximate 25% return, it has a 70% probability of expiring OTM and profitable, and has a 30% probability of getting into trouble and going ITM. 

In order to analyze these two scenarios in more detail, we need to take into account the additional risk related components that we discussed above.  From data that we’ve extracted from several iron condor services, and through our own experiences of trading both types of iron condors, we’ve observed the following: 

90% probability iron condors tend to have on average 9 to 10 profitable months/year, and 2 to 3 losing months/year with typical losses of 10% or less.  Per the level of workload and stress involved, 90% probability trades tend to have 6 months of low stress where they make easy money, 3 to 4 months of moderate stress where no adjustments are required but some of the spreads get under pressure and have to be watched closely, and 2 to 3 months of higher stress and workload where they will have a loss and adjustments are required to keep the loss below 10%. 

70% probability credit spreads tend to have on average 7 to 8 profitable months/year, and 4 to 5 losing months/year with losses usually 10% or less.  Per the level of workload and stress involved, 70% probability trades tend to have 3 months of low stress where they make easy money, 4 to 5 months of moderate stress where no adjustments are required but some of the spreads get under pressure and have to be watch closely, and 4 to 5 months of high stress and workload where they will have a loss, and adjustments are required to keep the loss below 10%.  

Below is a grid that summarizes the characteristics of each approach, and one might come to the conclusion that both strategies can work.  In actuality, both strategies can work and each strategy returns about the same annual returns, over the long run, but the big difference is that the 70% trades come with higher volatility, stress, required work, and risk of getting hit with a big loss if the underlying security moves quickly.

Characteristics Summary of 90% and 70% probability Iron Condors

% probability that Iron Condor will stay OTM and expire 100% profitable

90%

70%

Description of strategy

Wide mouth iron condors; very wide safe zone

Tighter strike prices around the underlying index

Risk capital versus return for best case iron condor

Risk $9 to make $1.40

Risk $8 to make $3.20

Typical targeted return in 30 to 45 days for an iron condor (comprises a bull put and a bear call spread)

10%-15%

25% to 40%

Typical annual return on risk capital

45% to 65%

15% to 90%

Average number of profitable months/year

9 to 10

7 to 8

Average number of months/year iron condor generates "easy money" and has low stress level

6

3

Average number of months/year and associated probability that iron condor will get under pressure generating a moderate level of stress and some additional workload to watch the trade  closely

3 to 4 

about 20%

4 to 5 

about 40%

Average number of losing months/year and associated probability where iron condor gets close to going ITM, and adjustments are needed  causing  higher levels of stress and required time.  With adjustments,  losses are usually 10% or less.

2 to 3 

10%

4 to 5 

30%

Amount of time to react to a fast moving underlying index

Ample

Limited

Chance of having a large loss if underlying index moves rapidly

Moderate

High

From looking at the chart above, some traders prefer the 70% probability iron condors, that comprise both a bear call spread and bull put spread, that shoot for a 25% to 40% return in 30 to 45 days and they accept the fact that:  1) There is about a 40% probability, or about 4 to 5 months/year that their iron condor will get under pressure causing a moderate level of stress and requiring additional time to watch the trade closely;  2) They accept the fact that there is a 30% probability, or about 4 to 5 months/year that their iron condor will get into high danger by a quick moving underlying index resulting in a high level of stress and a higher work load to make adjustments to minimize the loss for the month;  3) And investors that embrace 70% probability iron condors are ok with the fact that because of the higher probability of the iron condor going ITM causing a large loss, they should allocate no more than 5% of their portfolio to any single trade.  As a result, the trader will need to spend time researching and opening additional, non-related trades to put their available capital to work.

In contrast, some traders like the 90% probability iron condors that shoot for a 10 to 15% return in 30 to 45 days and they like the fact that:  1) There is a high, 90% probability that the iron condor will expire OTM and profitable, and as a result there is less work & time involved, it’s more hands-off, the trader sleeps better at night when the market gets volatile, and it's a good fit for people with a day job;   2) There is low stress about 6 months per year when the 90% probability trades generate “easy money”;   3) Traders that embrace 90% probability iron condors accept the fact that there is about a 20% probability, or about 3 to 4 months/year that their iron condor will get under pressure causing a moderate level of stress and requiring additional time to watch the trade closely;  4) There is a 10% probability, or about 2 to 3 months/year that the iron condor will get into high danger by a quick moving underlying index resulting in a higher level of stress and workload to make adjustments to minimize the loss for the month;  and finally... 5) The experienced traders that have 2+ years of experience with index credit spreads & iron condors can leverage 90% probability trades to allocate up to 75% of their portfolio into this single strategy where they don’t have to trade any other strategies if they don’t desire or have the time.

In summary, both strategies can work since they both return, at least over the long run, about the same ROI, but the 90% probability trades come with less volatility, stress, work, and less risk of taking a large loss if the underlying moves quickly.  Moreover, 90% probability trades are more hands-off, the trader will sleep better at night when the markets get volatile, and it's a perfect strategy for people with a day job.  This is why Monthly Cash Thru Options only uses 90% probability trades.  To view this article on-line, please go to 90percentVs70percent.

 

Condor Options: Medium-risk, high-credit: with this approach, you open trades that have a narrower body, and thus a lower probability of expiring out of the money, and in return for that lower probability you receive a significantly higher credit up front. The advantage of this approach, besides the obvious one of a higher potential profit, is that the higher initial credit acts as a buffer against losses in the event of a spike in the underlying.

Monthly Cash Thru Options:   We cover this topic above.  And Monthly Cash Thru Options shows all returns on its website at ReturnOnInvestment;  On the other hand, Condor Options removed their returns from their website in early 2008 because they had too many huge losses in the 95% range and they wiped out many of their subscriber's portfolios.

 

Condor Options: This is a site takedown, not a trading article, so we won’t get too detailed here, but on first glance it may seem that approach #2 is the riskier one, right? Your probability of the trade expiring worthless is lower, so doesn’t that make the strategy riskier? Not exactly. In trades following approach #2, you might risk $1 to make $0.65, and your trades may have about a 50-70% chance of success. In trades following approach #1, you might risk $1 to make $0.10, and your trades may have about a 90% chance of success. The reason that approach #1 is actually a much higher-risk strategy is that you’re putting a lot more capital at risk for such a small reward, and that dramatically unbalanced risk-reward ratio means that the occasional loss will have a much, much harsher impact.

Example: for January 2008 expiration, MCTO sold the SPX 1330/1340 put vertical for a $0.75 credit. That means that one contract of this trade would put $925 at risk in order to make $75. Monthly Cash Thru Options uses this high-risk approach to trading iron condors and credit spreads, but doesn’t admit the higher risk involved.

Monthly Cash Thru Options:   Yes, this is the typical risk/reward ratio for a far out of the money credit spread, and it works nicely.  We covered this topic above.

 

Condor Options: Finally, like so many condor trading sites out there, MCTO insists on trading the big index products like SPX, RUT, MID, etc. That’s fine for institutions and professional traders, but new and smaller retail traders are at a distinct disadvantage when using those products instead of the corresponding ETFs (SPY, IWM, etc.). We’ve written about this many times before so we’re not going to rehash old points, but suffice to say that using those bigger products only makes the risk management process more difficult for individual traders.

Monthly Cash Thru Options:   We primarily trade credit spreads and iron condors on the RUT and the SPY, just like what Condor Options does.   We stopped trading the SPX years ago since the liquidity was too low.  As all experienced traders know, it’s wise to focus on just a few underlying indexes because we need to become an expert at knowing how the indexes will move in different market conditions.  Our new subscribers with smaller trading accounts can follow our trades on the SPY.

 

Condor Options: Reasonable Price - Fail

This is kind of a subjective determination, but from what we can tell MCTO publishes one, two, or sometimes three iron condors or credit spreads per month. At $85 per month, it’s not particularly pricey, but then, you also get what you pay for: there’s no blog or other ongoing educational aspect that we could find, and the educational content that is available isn’t all that detailed and is mostly of an introductory and/or practical nature (e.g.: “what are credit spreads?” “How to tweak the bid on your order”). The content on the site in general isn’t well organized and has all the charm of a text dump. They don’t offer autotrading.

Monthly Cash Thru Options:   Monthly Cash Thru Options charges $85/month which is an excellent value for the amount of information and analysis that our subscribers receive through the service.  We continuously hear from our subscribers that our advisories are top-notch and offer the most detailed analysis of the overall market and the underlying indexes we trade as compared to any of our competitors, including Condor Options.   To see what a typical advisory looks like please visit  ExampleAdvisories.  Our advisories look very different that what you will see from Condor Options or any other iron condor newsletters.   To see what some of our subscribers are saying about Monthly Cash Thru Options, please read some of our testimonials at Testimonials.   We also here from our subscribers that we have the most complete Learning Center with myriad case studies and tons of risk/reward pictures and screen shots clearly explaining the details of credit spreads, iron condors, and the debit spreads, puts and calls that we use for our directional trades.  You can view our Learning Center at LearningCenter.   We also try to keep things as simple as possible using minimum techno speak. 

We are on schedule to start offering auto trading in late March 2009, and our blog for our subscribers will be up and running in early April.   Regarding our educational content, as we mentioned many times above, our Learning Center is unmatched and Condor Options doesn't come even close to offering what we offer.  Please see for yourself at  LearningCenter.

In contrast, the Condor Options team has no Learning Center, what is deemed as learning is buried in their blog archives so they are hard to find, the Strategy Guide is incomplete and they’ve been promising to complete it for the last year, (this would be the closest thing to our Learning Center), they spew out a lot of “journalism”, but most of it is academic in nature, it’s difficult to read, the author seems to love his thesaurus and tries to use as many difficult words as possible, and overall most of it is useless in making money.  Just as an example of some of the phrases that you see in just about every post.

*The VIX futures term structure has moved into backwardation. 

*The slight negative delta bias will be offset by delta-driven gains.   

*Are short-term extremes in horizontal implied volatility skew predictive of short-term mean reversion in the underlying? 

*The negative gamma risk outweighs the positive theta risk at less than 4 weeks out.   

No kidding, these are real sentences in their blog posts, and it's pretty typical.  Just about every post is peppered with complex words and written in a very difficult style.  So get ready to pull out your dictionary folks.  I personally want to laugh out loud when reading the Condor Options posts.  (and we do understand our Greeks, like delta, gamma, theta...but when we feel that it's necessary to discuss them we'll make our explanations clear and easy to understand)   Monthly Cash Thru Options focuses on practical information with tons of pictures, graphs, screen shots and clear explanation (no dictionary required)  that is useful for both beginners and advanced traders to learn the index credit spread and iron condor strategies and to make money.  We pride ourselves of telling our subscribers everything we are thinking about when we make a trade.  We don’t hide our secret sauce, but tell all. 

 

Condor Options: In fact, we may be able to save you the subscription fee altogether: every other week or so, pull up your options chains on SPX/RUT/MID, and find a trade that generates about $0.50 or so (that is to say, gives you $50 in return for you putting about $950 at risk). Let the trade expire worthless, or exit at the market price the day before expiration if it’s in the money. That’s about it!

Monthly Cash Thru Options:   This is far from the truth, and we wish it were that easy.  If it were, then everyone would be doing it and this strategy would no longer be paying 45% to 65% annually.   We need to be nimble and move with the ebb and flow of the market and the underlying indexes that we open trades on.  Our strategy is to first start with initial strike prices, just like what Condor Options does, but we then constantly adjust our strike prices as the indexes move allowing us to keep far out of the money credit spreads in a reasonable neutral delta state.   We call this “staying ahead of the wave” strategy, where we are constantly moving our strike prices, bringing in premium, and doing our best to keep our spreads in the same month.  I believe Condor Options calls this “flock of condors”….and this subject is not yet covered on their website, and we’re not sure how much of this strategy is used.  For Monthly Cash Thru Options, we’ve been using this strategy since 2006 and it reduces our risk considerably.

 

NEW Category:  Quality of Weekly Advisories and Willingness to Teach and Tell-all:  (this was not part of the original Condor Options review)

Monthly Cash Thru Options:  Monthly Cash Thru Options writes second-to-none weekly advisories as compared to any of our competitors.  We perform detailed technical analysis on the major indexes, the VIX, and the underlying indexes that we trade (usually the RUT and SPY) each week, we show screen shots of the daily and weekly charts, give thorough interpretations of what drove the market the prior week and what will most likely drive the market and our underlying indexes in the upcoming week, and explain the technical analysis that we did.  We hear from our subscribers often that we offer a lot of detail but make it readable and understandable for people with different skill levels.  Read what Monthly Cash Thru Options subscribers are saying about our service at Testimonials.  We enjoy teaching this powerful strategy and we tell all and don't hide anything, so our subscribers usually become good technicians and credit spread traders in about 12 to 18 months.   To view what the Monthly Cash Thru Options advisories look like, please visit ExampleAdvisories.

In contrast, Condor Options shows very few charts, they don’t share what technical analysis they do on the underlying indexes, much less teach their subscribers.  They recommend a certain credit spread or iron condor option trade with very little information on how they made their decisions on strike prices and timing of when to enter a trade.  They do output a lot of "journalism" through a blog, but most of it is academic in nature, it's hard to read, you will need to pull out your dictionary since they love to write like it's an academic journal, and most of it is available for free through their home page and blog;  So it's not really worth paying their high $139/month price for the value and quality that you get.

Below is one of their quotes in their website;  they don't want to teach you everything since they want you to keep paying their high $139/month price:

We use a Condor Options branded secret sauce to determine the range of the spreads we work with.  But we’ll give you a hint that the formula includes ingredients such as std. deviations, historical volatility, implied volatility and the price of tea in China.

 

NEW Category:  Ability or willingness to make adjustments or to roll ITM credit spreads:  (this was not part of the original Condor Option review)

Monthly Cash Thru Options:   The Monthly Cash Thru Options team hates to lose money and we'll do whatever it takes to adjust credit spreads and/or roll them, even if they go ITM to minimize our loss during the handful of difficult months we'll have each year.   We have many case studies in the Learning Center that cover multiple adjustment strategies.  One of our adjustment strategies is called “staying ahead of the wave”, and we have a specific case study in our Learning Center entitled "what happens if the market surges and puts out bear call spreads at risk...how do we protect ourselves?".  You can see a preview of this case study by going to the Monthly Cash Thru Options LearningCenter.  The staying ahead of the wave strategy has a good track record of usually keeping our losses during our losing months below 10%.  And because we open 90% probability trades, we typically have 2 losing months each year, versus 3 to 5 losing months per year that you'll have with 70% probability trades. 

Condor Options says on their website that they are the “only iron condor service that recommends and teaches how to open multiple spreads with varying strike prices at different times"...called a condor flock.  This is NOT true and it's false advertising.  This seems to be the same as the "staying ahead of the wave strategy" that Monthly Cash Thru Options has been using for 4 years.

And when a trade gets into trouble - like going ITM, the folks at Condor Options will just throw in the towel and let their subscribers take a huge loss.  Condor Options had a 95% loss in Jan 2008 and a 100% loss in Oct 2008.  They don't bother with rolling and just let their subscribers lose all of their money.   In contrast, we at Monthly Cash Thru Options won't give up, and in the unfortunate event that some of our spreads go ITM, we'll roll them until we get back at least 65% of our original risk capital.  We have many case studies in our Learning Center on rolling ITM spreads.

 

Condor Options: Conclusion

We weren’t sure where to put this last point, but MCTO imposes this bizarre requirement that all subscribers open multiple accounts for trading their picks. We’ll let them explain:

Here is an example of why we need multiple accounts: Let’s say you have a SPX July 750/760 Bull Put Spread. Now the SPX (S&P 500 index) rallies and you would like to open a SPX July 760/770 Bull Put Spread to push your spread up a little closer to the underlying SPX index. If you try to open this new spread in the same account, your short 760 Put will cancel out the long 760 Put and you will end up with a 20 point wide 750/770 bull put spread. We want to keep the spreads 10 points wide and not 20 points. Thus, you will need to open up a secondary account to hold trades that would normally overlap with existing trades in your primary account.     That’s just absurd and weird. A 20 point wide spread is no riskier or different in any way than two 10 point spreads that have an overlapping strike. Maybe they’re working with a broker that is hostile to options trading and imposes draconian margin requirements or something.

Monthly Cash Thru Options:   It's not bizarre at all.  When trading 10 point spreads on the RUT which only offers 10 point increments in strike prices, a secondary account is needed.  In the above example, if we didn't already have an associated bear call spread creating the iron condor, we could have opened the 760/770 bull put spread in the same account, thus creating a 20 point spread.   However, if we do already have an "attached" bear call spread creating an iron condor, and we end up creating a 20 point bull put spread, the broker's computer will disconnect these spreads and the required maintenance will double.  Therefore, we do our best to maintain the same point spread for both the top spreads and bottom spreads in order to minimize the risk of having to double pay maintenance. 

On the other hand, we don't need to do this when opening trades on the SPY since options on the SPY are available in 1 point increments, giving us more granularity when "clicking up" and "clicking down" our strike prices.

Condor Options:  When you consider the minimal education, the poor portfolio management, the old-school SPX preference, and the high-risk strategy - not to mention the prefab template website straight out of the early 1990s - there are definitely better newsletters out there than Monthly Cash Thru Options.'

Monthly Cash Thru Options:   We're not sure what site you've been looking at, because it must not have been ours.  Regarding your comment about the SPX, we haven't traded it in years because it lacks liquidity; we primarily trade the SPY and RUT,  just like you do. 

In conclusion, as compared to Condor Options, Monthly Cash Thru Options offers:  More "where the rubber meets the road" education and case studies with dozens of risk/reward graphs to make the information easy to understand - (your articles are more academic in nature, are hard to read and are unnecessarily complex, and many won't help your subscribers make more money);  Our weekly advisories are second to none and offer a lot more detail, (yours offer less than half of the detail that we offer...go to our site and see for yourself);  We focus on 90% probability credit spreads which give us more time to react if the market quickly moves against us...and if it does, we are also experts at making adjustments and we teach our subscribers how to do them with the help of the many case studies in our Learning Center; these adjustments help us avoid huge losses (you had two 95%+ losses in 2008, and when one of your spreads gets into trouble you seem to just throw in the towel and let your subscribers lose everything, which is very sad);  We enjoy teaching, we tell-all and we don't hide anything so our subscribers become competent credit spread traders who can "graduate" in about 12 to 18 months (you hide a lot of information with the goal of holding onto your subscriber base);   Our returns are better and they are posted on our website, (yours aren't);  We have fewer losing months per year, typically two, and our losses during these losing months are usually -10% or less, and because we have fewer losing months our system is less stressful; (you have 3 to 5 losing months per year translating into more stress for your subscribers);   Our web site is clean, well organized and easier to navigate (yours is based on the blog posting model where its rather confusing and it's hard to find things);  And our price per month is almost half of what you charge.