The first quarter is already behind us, and it's time for an update on the results—the returns and risks —of my S&P 500 Weekly Option System.
The world is in turmoil. Stock markets are fluctuating wildly. The first quarter of 2025 turned out very differently than most people had expected.
My weekly option system has not lost a single week. In addition, the return was achieved with a risk that was significantly lower than the market.
Maximum drawdown
Maximum drawdown refers to the largest peak-to-trough decline in the value of the index or my system over a given period. It measures the largest loss an investor would have experienced if they had invested at the peak and then sold at the trough.
For example, if the value of an investment reaches $10,000 and then falls to $7,000, the maximum drawdown would be 30% ($3,000 divided by $10,000).
Maximum drawdown is an essential metric for assessing the risk of an investment or trading strategy because it provides insight into the potential losses an investor could incur. Lower drawdowns generally indicate a more stable investment, while higher drawdowns indicate greater potential losses and more risk.
The maximum drawdown is therefore an indication of the risk incurred. It is unfortunate that most providers do not provide information about the maximum drawdown.
If we compare the maximum drawdown of my system with the related index, you can see that we have achieved returns with very low risk. And that is the strength of my system: stable returns.
The results
My S&P500 Weekly Option System achieved a return of 4.2% in the first quarter. The return on the S&P500 index was negative at -4.8% during the same period. This represents a significant outperformance.
The maximum drawdown of the system was less than 1%. By comparison, this was almost 11% for the S&P500 index. Here you can see the power of investing with options. With options, it is possible to generate a higher return at a lower risk.
Forecast
I generally don't make predictions about the stock market. The only prediction I make is that the stock markets will continue to fluctuate. I'm confident about that prediction, and it's as good as certain. And there's certainly no shortage of fluctuation on the stock markets these days!
However, it is likely that we will experience some (significant) declines for the rest of the year. This month, the stock market has already started to decline, with no end in sight. My S&P500 system did not suffer any losses in the first week of April. I do not anticipate any cause for concern regarding the future. It is good to see that the system is functioning as intended. It almost never loses money and generates returns when the stock market is rising, falling, or remaining stable. The focus is on risk management and capital preservation. We steadily make a small return each week to end up with a nice percentage at the end of the year.
Sincerely,
Bram Voermans
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