May Core Strategy Pre-trade Analysis

Intro

As a new feature, I plan to provide some insight to my expectations for the Core Options Trading Strategy prior to the trading cycle each month.  As part my analysis I am going to look at historical data to try and determine what should be the best (statistically) performers for the upcoming cycle.   Some of the criteria I will look at will include:

  • Winning histories
  • Average yields
  • Frequency

Historical Performance for May

Monthly performance for May is very optimistic.  The lifetime winning history for May is an astounding 92.50%, which is second only to July.  Perhaps even more impressive is the staggering 153.58% average yield for the month.

May lifetime winning history at common returns:

Return Winning History
10% 90.00%
20% 88.75%
30% 83.75%

Historically Successful May Picks

Many stocks have high historical performance for the month of May, however, only a few have been traded with much frequency:

Stock Frequency Winning History Average Return
BRCM 5 100% 137.32%
DIA 5 80% 141.66%
EBAY 5 100% 149.39%
IBM 6 100% 310.60%
QQQ 7 100% 118.18%

Statistical Expectations for May

May obviously looks to be a strong month.  Both March and April were unfavorable to the Core, providing negative or lackluster results, which could set us up for a strong May cycle.  Statistically, QQQ (as usual) provides a strong return with minimal risk as it is also one of the best all time performing stocks for the Core Options Trading Strategy.  IBM also looks to be a winning play for May.

These recommendations are independent of Dave's monthly core picks and are intended to provide traders with a framework to build upon.

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