The Cyclical Nature of Stock-Picking Methodologies

Dual Edge Research publishes two powerful newsletters that work great individually — and even better together. The Bull Strangle Newsletter focuses on stocks and options, combining stock ownership with premium-selling strategies to generate consistent income and market-beating returns. The Smart Spreads Newsletter specializes in seasonal commodity futures spreads, offering a diversified approach with low correlation to equities. Together, they deliver a complete investment perspective — one focused on income, the other on diversification — all under one simple subscription.

The Bull Strangle Newsletter, released weekly, shares a trading strategy that has achieved a documented 76%-win rate and outperformed the S&P 500 by 240% since inception. The strategy combines buying stock and simultaneously selling out-of-the-money covered calls and cash-secured puts to generate option premiums and manage risk.

Introduction

No stock-picking strategy performs well all the time. Even the most disciplined, well-researched approach inevitably moves through periods of strength and weakness. These fluctuations aren’t a sign that the system is “broken” — they’re a reflection of how markets rotate through different regimes of volatility, leadership, and sentiment.

Market Regimes Change — and Strategies Respond

Every methodology is designed around a set of assumptions. Momentum models perform best when trends are strong and persistent. Value screens shine when fundamentals drive prices rather than narratives. Volatility-based systems like the Bull Strangle Strategy thrive when markets offer option premiums rich enough to compensate for the risks of short option exposure.

When conditions shift — for example, from high volatility to a narrow trading range — the opportunity set changes with it. The same filters and signals that produced consistent gains in one environment may temporarily underperform in another.

The Role of Statistical Discipline

Periods of drawdown or relative underperformance can tempt traders to override the system or abandon it entirely. Yet, history shows that disciplined adherence through full market cycles is what separates long-term success from reactive decision-making.

Back testing across multiple market decades demonstrates that every strategy’s performance curve includes both peaks and valleys. Recognizing this pattern helps traders stay grounded, focusing not on short-term noise but on the underlying logic and probability edge that defines the system.

The Bull Strangle Perspective

The Bull Strangle methodology was built with these cycles in mind. By combining long stock ownership with dual option selling, it captures returns from three different sources: stock appreciation, time decay from option premium, and volatility normalization.

• When markets rise steadily, the long stock component drives returns.
• When markets flatten or drift, sold options continue to generate income.
• Even in mild downturns, premium income helps buffer drawdowns.

This multi-dimensional design reduces dependence on any single market condition — but it doesn’t eliminate cyclicality altogether. There will still be stretches when premiums are compressed, volatility is unusually low, or stock selection temporarily lags.

Managing the Cycles

The key is consistency.

• Maintain position sizing rules that prevent overexposure during hot streaks.
• Avoid “strategy drift” when results soften.
• Use measured capital allocation — such as investing 25% of capital each week — to smooth the timing risk of entering during temporary drawdowns.

By viewing performance through the lens of market cycles rather than week-to-week results, traders can better appreciate the durability of the process.

Final Thoughts

Every disciplined approach experiences both tailwinds and headwinds. The goal isn’t to chase what’s currently working — it’s to stay with a statistically sound system that performs across a range of environments. In the Bull Strangle framework, consistency comes not from predicting which market regime will dominate next, but from positioning intelligently so that all regimes can contribute over time.

More Information

Now you can get two powerful newsletters — for one simple price!

• For stocks and options, the Bull Strangle Newsletter shows you how to combine stock ownership with dual option selling — a disciplined strategy that has consistently outperformed the S&P 500.
• For commodity futures, the Smart Spreads Newsletter focuses on seasonal commodity spreads — a proven, low-correlation approach that thrives in all types of markets.

Each newsletter is designed to deliver consistent income on its own — but when used together, they create a complete, diversified trading approach that works in any market environment.

Visit BullStrangle.com to subscribe for just $1 for the first month.

For a video overview of the Bull Strangle Newsletter

For a video overview of the Smart Spreads Newsletter

Darren Carlat

Dual Edge Research

(214) 636-3133

DualEdgeResearch@gamil.com

www.BullStrangle.com

Disclaimer

This information is for informational purposes only and should not be considered as investment advice. Past performance is not indicative of future results, and all investments carry inherent risk. Consult with a financial advisor before making any investment decisions.