Trading System #3–Naked Puts (Part 1)

The words “naked puts” are enough to turn most investors pale white only for the moment before they disappear in a puff of smoke for fear of losing everything.  I feel comfortable with naked puts due to several years of live trading and backtesting experience.  I would not recommend anybody trade naked puts until and unless they have accrued significant option trading experience along with years of backtesting to become intricately familiar with how they work. I may or may not spend more time writing some educational content later.  For now, I want to stick with performance results of this trading system and to start analyzing some implications.

Here is an initial equity curve for the naked puts trading system:

Courtesy OptionVue 7, the initial performance analysis is as follows:

Take a couple minutes and study these numbers.  I will begin to delve into the analysis with my next post.