Case Study of the Week

This case study is based on actual trades using the strategies taught by the team at Options Money Maker.  Our focus is to teach traders a consistent and conservative approach to trading credit spreads, debit spreads and other combination spread strategies to earn higher than average returns.

We believe that there is no better manager of your money than you, armed with the education and experience to create great returns and do it with peace of mind.  We also believe that there is no better way to learn than to “mimic the masters” and then actually do it yourself!  These case studies are designed to be a supplement to your education and show you real examples of the trades we open, close and adjust while minimizing risk, eliminating fear and growing a big account.

Case Study

Many investors head for shore at the first sign of waves out of fear and others like those who follow the principles of Options Money Maker grab a board and ride the waves with confidence!  We have seen some very volatile moves in the market over the past few weeks that have created some great opportunities for profits for our investors.  If you were one of the investors that closed positions for losses during the most recent turn down in the market, you now have two reasons to feel bad.  One is the loss and the second is that the market has cycled back up.  We know the market cycles up and down…it just does.  The unknown of course is exactly how much and exactly when.  We use technical indicators to predict market movement but combine that with strategies that build in “forgiveness” in the event that the market moves contrary to the anticipated directional bias. The following graph illustrates a typical cycle.

What Happened…?

Despite what feels like chaos, if you analyze the chart for SPX above you will see that it actually has been oscillating very regularly within a 96 point channel. The low on the 2nd was 1903 with a high of 1974 the next day. Four days later (actually one trading day due to a three day holiday weekend) the low was back down to 1911 followed the next day with a high back to 1970. Even after a 60 point run up on the 8th, the SPX still opened higher on the 9th by 12 points. Later in that same trading day, SPX began moving downward and actually was minus 15 around mid day.  The point is that all of this happened in a pretty predictable pattern within our defined 96 point channel.

What Did We Do…?

Our investors simply stayed on the course that allows us to take profits on whatever the market chooses to give us. Some of our techniques involve specific directional bias.  If our prediction is correct, we make money immediately. If the market moves contrary, we build time into the position to allow the market to cycle in the opposite direction and create a profit.  We have additional combination strategies that allow our investors to prosper regardless of the direction of market movement. Management techniques provide yet another layer of confidence.

Which Picture Fits Your Level of Trading Confidence in a Volatile Market?



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