Options systems have wrong results

It appears there is a problem with options systems and how C2 records the trade when the option expires.

It appears that if one sells and options and it expires in the money the subsequent exercise of the option is not properly recorded on C2. This means any system that allows options to expire has potentially incorrect results on C2.

As an example look at the Shorting Options system (not to pick on this system - I like it and think it’s based upon sound principles).

Look at the trade for SWGHU (Aug 09, Spy 99 Call). It’s shown with a profit of $166 ($83 per call).

This is quite incorrect. The option was let expire while it was in the money. Therefore an exercise of 200 SPY @ $99 should be shown as a trade. This would mean a loss of $3.97 (based upon SPY closing price of $102.97) per share e.g. the system should show a $794 loss for this trade.

I don’t know what other trades with other systems are affected by this but until this is fixed, any system that lets options expire has suspect return numbers.


My system Kauai is shorting options, and so far I have never experienced any problems with in-the-money expirations. If an options expires in the money, C2 automatically opens a position in the underlying. Look for example at the Jul '09 2.50 AXL put option position opened on 6/17/09 for Kauai. It expired in-the-money on 7/19/09, and C2 automatically opened a long AXL position at $2.50 that day (while the stock traded around $1.40 or so that day). The same thing would happen in a real account as well.

A bit off-topic, but worth noting (doesn’t happen that often). My [LINKSYSTEM_37449582] system bought 700 shares of AXL at 3.16 to then sell 7 contracts AUG 4 calls at 0.20.

Nice return if not called HUGE return if called away. But it got STOPPED at my “breakeven” point (stock price minus option sell price): 2.96.

As you know the market’s shaky in summer and I still liked this stock (chart & fundamentals w/market bias). So I immediately re-opened 400 shares at 2.92 and sold the Sep 4 calls at 0.35 (giving me a lower stop-loss target).

Interestingly I woke up and the stock vaulted 120%! Since the position was amply OTM (out-the-money) it gave me appreciation up to the $4 strike price or a 50% return!!!

Kind of makes up for those (calculated) occasions where a high-yield CC position tanks at the open - giving a larger than usual loss. KEY: diversify and keep your stops. Over the years I have seen my share of 25% returns on a given position - but this one topped them all by a large margin.

No you can’t bet the farm on hitting that one lucky trade, but it was a doozy.

Reads like a synthetic straddle to me.

That’s very good to hear - perhaps what happened was just an anomaly. Your system has been trading for some time and I assume based on your comments, C2 has done the right thing.

The Shorting Options trade should be corrected to provide an accurate assessment of the system.

Matthew - any comments on why this happened?


C2 automatically handles options expirations properly, such that in-the-money expirations are assigned (or exercised) when appropriate. I will need to look into why, in this particular case, the options expiration was not handled properly. Thanks for bringing it to my attention.