Honey Growth Fund 12,000%+ Cumulative Return

I don’t know if this is still possible to do. But couple years back when vix was popular. What u do is find a option with a wide spread. Like shorting a vix 50 call. You set up short 200k contracts on c2 at 0.10. Obviously it won’t trigger the trade say the current bid is 0.00/.20.

Since none of these strategies has any subscriber, Then you get on etrade and buy 1 contract for .10. Boom c2 will trigger all 200k contract sold for 0.10 and expires end of the week. You can do the same for long or short options right before closing or before expiration.

Just like all the high flyers before, 12000% first year. Once they get a real subscriber I would be shocked if they can repeat 100% or 50% the year after. All they want is to be steady and easy to collect the fees each month. They know if they have a large draw down they will lose all subs.

2 Likes

Looks like something like that happened. Most real funds will take days or even weeks to reposition their portfolio because the sheer volume alone can drive the prices in 1 direction.

Thus they cannot get in and out of positions within seconds and minutes unless they are simulated trades. This is why simulated trading results can actually vary differently in live trading which is why large funds will not day trade thinly traded instruments.

I wait patiently and interestingly to see what kind of results the first subs will get…lol :popcorn:

Hi honey growth, how do you offsett the ‘naked’ option trades, if in fact you do? We all know how easy it is to short calls until the day they fail, along with your account and possibly more?..

Yeah I’m not holding my breath.
We’ll see. :rocket::+1::popcorn:

truly amazed how much attention 12,000 gets :smiley:

Doesn’t everyone want 12,000% return every year? :stuck_out_tongue_winking_eye:

1 Like

Adding to this conversation…the track record has a win rate of 68.8% and an average win size of $140k vs average loss size of $256k. This results in a very modest edge of only 0.066. Generating 12000% on an edge of 0.066 would seem to imply massive leverage.

As an example, look at the system’s first trade: 15 GOOG calls purchased for a total of $68,700, with 5 days to expiry, on capital of $150k. That’s a lot of risk to take on one options trade. I wonder if there was a fixed stop in place. There’s another GOOG trade on 4/20/18 1 minute before the close, this time selling $34k worth of calls, expiring the same day, on capital of ~$200k. The weird timing of the trade aside, if that went the wrong way without a stop a significant piece of the account could have been lost.

I’ll be curious to see how this strategy does going forward.

1 Like

I mean like most high flyer what you see most losing trades are just layer trades. They made $500k on a funny trade and mixed 200 other scalp trade here and there. Much harder to detect. Rarely any subscriber actually look thru trade details of a system with 12 month record and 500+ trade records. Other than the few on the forum willing to spend the time digging thru these funny trades.

To me once they get 1-2 real subs I usually don’t count any performance before that. Like I said before once he start to get subs this strategy will stay nice and easy going forward. They won’t bet 60-80% of acct balance on every trade anymore.

3 Likes

All those TSLA trades took place between 14:47 and 15:45, but the trading was halted because of the tweet from 14:08 to 15:46 so this is complete abuse of C2 system and not some “our scanners”

Or for example this:

2 Likes

Agreed on the TSLA. Wasn’t sure if it also applied to options.

Also you are correct on the MU trade. Also bogus. Thing was $0.70 away from $62 with no real hope of moving that far in 10 minutes. Flagrant abuse of the C2 system.

1 Like

I noticed this set of MU trades as well. I find it highly implausible that anyone could sell the 62 strike for 30c, cover it for 1c a minute later, resell it for 30c again another minute later, cover again a minute later, and then resell the same strike for 30c again 4 minutes and of course cover again for 1c a minute after that.

4 Likes

[NOTE: This post was uploaded on April 12 and then very substantially revised on April 13. Commenters above and below noted that the way that option expirations are handled at C2, some expiring options on Saturday show that they are bought and sold in the same minute on Saturday morning, which is an artifact of how C2 reports expirations. To determine profit and loss, one would have to consider longer term options that expired at the same time on Saturday as well.]

The above posts are fascinating stuff.

The Honey Growth strategy shows profits of $18.83 million as of now (the evening of April 12). I downloaded the 1,119 position trades in the CSV file and analyzed them. Necessarily excluding the positions that are not shown in these public data, the net profit from those 1,119 trades was still a staggering $16.60 million on a $150,000 investment.

Because of the way that C2 handles expiring stock options on Saturday mornings, it is difficult to assess exactly how long those positions were actually held. What we do know is that they were at least held overnight. Accordingly, all Saturday expiring options are treated as being bought at least one day before the expiration.

1. Trades held longer than 1 minute lost $1.49 million

Overwhelmingly, the bulk of the profitable trades appeared to be based on either scalping or stale prices (stale prices occur when C2 leaves bids and asks at prices that are many minutes old).

The 127 trades that were held for 1 minute or less generated net profits of $18.09 million, while the 992 trades that were held more than 1 minute generated a net LOSS of $1.49 million . The 552 trades that expired on Saturdays generated a net profit of $1.84 million, while the rest of the trades held for 2 minutes or more lost $3.33 million, resulting in a $1.49 million net loss (3.33-1.84=1.49) for positions held more than 1 minute. (It is not surprising that one would more likely hold winning trades until expiration.)

Thus the records show that the Honey Growth Fund is a bad predictor of the market direction of options.

2. Strategy does not work on manual trading

In this thread, Honey Investing suggested that investors who couldn’t (or didn’t want to) invest the $180,000 minimum necessary to trade at a scaling of 1% at C2 could do manual trading and still get the same profit:

“manual entering a resized position by the subscriber, would still carry the same risk/reward profile as structured on our trades.”

That is manifestly FALSE .

If you were a manual subscriber, there would be no chance that you could log on and trade quickly enough to capture a scalped position and then sell it—all within 1 minute of Honey Growth broadcasting its signal to open a position. You would be lucky even to be opening your position before Honey was closing theirs.

Remember, the scalping trades at Honey are spectacularly and unrealistically profitable—in forward testing at C2—but the strategy has been unsuccessful—even in forward testing at C2—in predicting the direction of the securities that Honey buys and holds more than a minute. Honey is a combination of a directional and a scalping strategy, but realistically, a manual subscriber can only execute the directional strategy—which so far has been hugely unprofitable—losing $1.49 million on a $150,000 original investment.

3. Huge profits on hypothetical TSLA trades on stale data

If the time that TSLA was halted for trading is reported accurately by Yair_S (and I haven’t checked that), then there were no actual trades by anyone in the world at the stale prices presumably listed on C2 at the time of the 68 minute TSLA halt on Aug. 7. Nonetheless, Honey opened and closed 6 trades during the halt, generating $3.81 million in profits on a $2.21 million account just during the halt. Five of the 6 trades were open for a minute or less. So the account more than doubled in value on Aug 7, 2018 during the trading halt with trades that C2 should reverse.

Note that these are probably not the only stale prices that Honey Growth used, just the clearest ones found so far. My impression from looking at the trading pattern is that most of the paper profits for Honey Growth are from stale prices that are not possible to trade, not real scalping or capturing temporary price spikes.

4. Bad ratio of Av Gain / Av. Loss

C2 reports the average gain as $140,557 and the average loss as $253,994. That is well below the 1.2/1 ratio that reduces the chances of system failure at C2. Honey Growth’s ratio is even lower than the .76 cutoff, which greatly increases the chance of it failing or having major problems.

See Study: Risk Factors for Failure or Serious Trouble Are High Win % and Low Ratio of Avg Gain to A

In the study at the link, the relative odds of failure for a strategy with a .76 ratio or lower was 1288% higher than for a strategy than a .76 ratio or higher.

5. What should C2 do?

A. C2 should cancel the TSLA positions opened and closed during the Aug. 7 trading halt when there was no market for TSLA options and the prices on C2 were stale.

B. C2 should investigate the dozen or so most profitable trades not involving option expirations to make certain that there were actual trades in the vicinity of Honey’s prices during the minute that Honey’s trade was made, and adjust the trade prices to fit the best price that Honey could have actually achieved. This would be possible for older options only if they have access to minute-by-minute open/hi/low pricing for expired options, data that is not available for free.

C. Because the profitable part of the strategy is the scalping, and scalping is not doable (if it’s doable at all) without autotrading, the recommended minimum investment for Honey Growth should not be $35,000, but rather $180,000, the minimum to scale at 1% for autotrading.

8 Likes

Are any of the trades lasting <30 seconds in the money calls and puts that were exercised and allocated on Saturdays? If so, might want to exclude them from your analysis.

3 Likes

@QuantitativeModels , @PhilD1 has a good point. Might change things a bit. I’d be curious.

Regardless though, outstanding research job man.

I tip my hat to you, sir. :face_with_monocle:

1 Like

Either way, even if he excludes the option assignments on Saturdays, the fact remains that (more credible) trades lasting longer than 1 minute lost a metric ass-ton of money.

I feel like this thread should be required reading for every new member as this is a textbook case of how to pick through something that looks too good to be true.

2 Likes

Yes, great point. I redid my analysis accordingly.

If I had just excluded the options that opened and closed in one minute on Saturday (as you thought and I first tried), it would have unfair to Honey Investing, because those profitable opens and closes were often offset and triggered by longer term options that expired at the same time and were treated as losing money. Dog Zebra saw this problem. So I included ALL the Saturday expirations and properly treated them as being held overnight, which they functionally were.

Either way, even if he excludes the option assignments on Saturdays, the fact remains that (more credible) trades lasting longer than 1 minute lost a metric ass-ton of money.

After reanalysis, positions held longer than 1 minute lost $1.49 million on a $149,000 investment.

I feel like this thread should be required reading for every new member as this is a textbook case of how to pick through something that looks too good to be true.
[/quote]

Thanks. I should have been doing some publishable data analysis that a co-author is waiting for.

In Honey Growth’s favor, the last apparently stale-priced trade was on Nov. 23, 2018 (it’s hard to be certain). The returns since then have still been good, though nothing like the returns before Nov. 24.

If i understand it properly:

Since 11/23 he made 1.872 M$

But two examples:

Shorted AMZN Feb22’19 1610 call, expires worthless
Gain according to C2 4.345 M$
Real price of AMZN at expiration 1631.56

Shorted AMZN Mar1’19 1637.5 call, expires worthless
Gain according to C2 3.452 M$
Real price of AMZN at expiration 1671.73

And i didn’t check other big gains. So even since 11/23 , he lost millions of $.
It’s just pure scam

1 Like

I don’t want to be too critical of trade leaders in the early stages but a clear sign of a strategy to avoid is one that shows impossible gains such as this one. Even if the trades were real (which I doubt) it clearly does not represent the future track record and is completely misleading. This is called a ‘bait and switch’ tactic and is definitely very scammy.

Gotta love the ability to trade thousands of options contracts so easily…lol :roll_eyes:

But I love the drill down of the trades in this strategy in this thread. Very entertaining read…lol :smile:

4 Likes