The first half of the year is now behind us, which means it's time to look back at the performance—in terms of both return and risk—of my S&P 500 Weekly Option System.
The US stock markets started the year with significant losses, but then rebounded remarkably strongly. We even saw one of the fastest and largest price increases ever. Investors who simply held the S&P 500 recorded a return of more than 5% in the first six months, but had to contend with a sharp decline of 22% before that.
My weekly options system has once again performed better: not a single week of losses and a significantly lower risk than the market. One measure of risk is the maximum drawdown.
The maximum drawdown is an important indicator for assessing the risk of an investment strategy. It shows the largest loss an investor would have suffered if they had entered at the highest point and sold at the lowest point.
Example: an investment rises to €10,000 but then falls back to €7,000. The maximum drawdown is then 30%: a loss of €3,000 compared to the peak.
A low drawdown generally indicates a more stable investment. The lower, the better—especially if the return remains stable. Yet many providers omit this important figure, even though it is crucial information for investors.
A comparison between my system and the S&P 500 index shows that we achieve comparable—or even better—returns with significantly less risk. And that is precisely the strength of my system: stable and controlled growth.
The S&P500 Weekly Option System achieved a return of 7.2% in the first six months, compared to 5.5% for the S&P500 index. That is a nice outperformance.
Even more striking is the maximum drawdown:
• My system: less than 1%
• S&P 500: a whopping 22%
So: higher returns, no losing weeks, and minimal interim fluctuations compared to a much more volatile market.
This illustrates the major advantage of active investing with options. It enables you to achieve good returns with very limited risk.
I don't usually make stock market predictions. The only prediction I dare to make is that the markets will continue to fluctuate. As a trader, you can anticipate that.
Whatever the rest of the year brings—declines, increases, or sideways movements—my system is ready and performing as intended. Losses are rare, returns are realized almost weekly, and the emphasis is always on risk management and capital preservation.
Week after week, we are steadily building up a nice annual return.
Then follow my systems and start investing in a structured and risk-aware manner.
Sincerely,
Bram Voermans