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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

How well can you predict the direction of the stock market based on the headlines or “talking heads” on the national financial shows?  If you said you had great success, you are not being honest! Bottom line is the market will react the way it reacts and we have no real way of predicting based on emotion, headlines or anything else. Some negative news stories result in the market reacting in a negative fashion and some elicits a positive move in the market. Also, please be reminded that the so called “experts” on national news programs are “entertainers” and have no real positive track record on predicting the market or trading successfully. So what do we at Options Money Market do with this?  We state frequently that we use technical indicators to predict the natural bias on what the market might do next. That is different than telling you that we can predict the market movement. We take those biases and establish positions based on that information that will allow us to benefit from the expected move, but be protected against an unexpected move. Does any other financial advisor really explain their process this way?

How do we do it…?

We know one thing with 100% certainty; the market will cycle up and down. We don’t always know how much or on what time frame but we know this will happen. As long as you establish positions that have a “forgiveness factor” you will be successful in the majority of your transactions. One of those key factors is time. We build plenty of time to react into our positions so that we can implement management strategies if needed.

What is our philosophy…?

This case study is about strategy and philosophy rather than a specific position. It is important as you read about our various case studies that you understand the logic behind the trades. What happens if the market moves against you? If you have built in time to respond you will do fine implementing management moves to create a profit where most investors take a loss and move on.  We use Calendar Spreads, Iron Condors, Vertical Credit and Debit Spreads and other strategies to achieve our goals. Do you really know how to do this?!

Do you have the kind of confidence and comfort that our investors do?

What is keeping you from taking action? Let us teach you how to think like a trader?

Click Here to Learn How to Trade Like the Masters

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

Slightly green bananas have a forgiveness factor. If you don’t have a chance to eat them right away their value actually improves because they ripen with age.  Forgiveness factors are also in play when we coach our investors on how to establish a Calendar Spread and understand the logic behind it.  We shared a trade with our investors; a Put Calendar Spread on NDX.  A Calendar Spread is a debit spread using the same strike prices but with different expiration dates. We selected a Put Calendar Spread because that type of position benefits from a downward movement in the index and our chart indicators were showing a bias to the down side. We selected strikes that were 65 points out of the money; 4350 with the index trading at 4415. We bought to open the 4350, 3 weeks out and sold to open the 4350, 2 weeks out.

What happened next…?

This position can create a profit in a couple of ways. If the index moves down, a profit is generated because of time value decay on the short Put and the long Put increases in value as the index moves down.  In the event that the index moves upward, investors can still harvest profits from the short Put while keeping the long Put, which they still have time to manage. It is always difficult to explain to your neighbors why you are rooting for the market to decline!

What Happened Next…?

Over the next two days the NDX moved down 70 points. This is not an unusual move for this particular index. Some of our investors chose to close the position and take a profit.  Others chose to hold the position longer to allow for additional time decay and a further move to the downside.  It is great to have choices! There is no right answer.  Do what you think is best for your account and never look back!

Do you have the kind of confidence and comfort that our investors do?

What is Keeping You From Taking Action? Give Yourself a Confident Investment Strategy?

Click Here to Learn How to Trade Like the Masters

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

You do not need to be Albert Einstein to follow the rules and execute options trades with the help of our experts.  Regardless of your level of experience, you are able to leverage the vast experience and years of success of our master traders.  Some people may not take action because they don’t think they are smart enough to execute the trades. This is very far from the truth. We assist people with all different degrees of ability and develop them into successful traders. A bigger obstacle to overcome is our emotions that sometimes influence us to make bad decisions.  By adhering to our basic set of rules and executing the appropriate management techniques, trading can be very low stress.

So let’s use the example of opening a Put debit spread on SPX which is a downward bias position.  We opened up a 5 point spread of 2045/2050 for a net debit of $2.30 when the index was trading at 2060 and there was 3 weeks to expiration. In this case, the SPX made a strong move upward.  One of the nice features of a Put debit spread is that if the market moves contrary to your desired movement, the short Put increases in value to largely offset the decrease in value of the long Put.

What happened next…?

The SPX moved to 2080 but the value of the spread only decreased to $2.00. When the individual legs were evaluated, there was a significant “paper” profit in the short Put and a significant “paper” loss in the long Put. We gave our investors the option of “working the trade” to generate a profit. Some chose to close the short Put for a realized profit and leave the long Put to manage. This did not require Einstein skills, just basic skills that can be executed by an average person. That is a good transition to the next move which is to cost average. By adding two contracts to the initial two, the average cost basis declines, which increases the chances of a profit. The index does not have to move as much to get back to the new average cost.

What Happened Next…?

Not all of our clients chose to work this position. Many chose to do nothing since there was still nearly 3 weeks to expiration. The charts still indicated a likely move downward in the index which would create a profit in the position. In fact the index did move down 10 points two days later allowing those who had cost averaged to exit the position for a profit. Those who held the original position were better positioned to make a profit but had to wait for further time value to decay or for a continued move downward to achieve a reasonable profit.

It is great to have choices! There is no right answer.  Do what you think is best for your account and never look back!

Do you have the kind of confidence and comfort that our investors do?

What is Keeping You From Taking Action? Give Yourself a Confident Investment Strategy?

Click Here to Learn How to Trade Like the Masters