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?!

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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

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

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

One of the key strategies we teach our clients is the use of a good-til-canceled (GTC) order.  Many people believe that because of their busy lifestyle and work schedule that they simply don’t have the time to invest in options trading. Options Money Maker teaches basic principles and strategies that simply do not require you to sit in front of the computer all day.  This is illustrated with a current RUT Call credit spread that many of our investors chose to open.  This position was opened with a $5 spread at strike prices of 1145/1150 when the index was trading at 1110. There was 4 weeks until expiration and the credit received for this position was $1.50.  The logic behind this position is that we believed that the directional bias of the index was down and a Call credit position takes advantage of a move lower.  We want the index to close below 1145 at expiration and then we would realize the full $1.50 credit received. In reality, we generally do not allow the positions to go all the way to expiration. As time value decays the value of the credit, we close the position prior to expiration once we have a reasonable profit. In this case, we advised our investors to place an order to close the position for $.80 which would be a $.70 profit or 20% on cash at risk. By consistently making quick profits like this, reclaiming our cash and entering the next position, we take advantage of the power of compounding.

What happened next…?

One of our clients relayed a story that illustrates the automation that can be used once you have a logical position in place such as the Call credit spread described above. He called this experience his own frequent flyer ticket program. While on a 3 hour flight to meet a business client the following scenario unfolded.  He had purchased his plane ticket for $350, had a comfortable flight and while the plane was taxiing to the gate, his phone dinged a message. His GTC order for the RUT Call credit spread had filled at $.80 due to a fairly sharp downward move in the index. He had purchased 5 contracts of the spread and had a profit of $.70 times the 500 shares represented in the 5 contracts which totaled a profit of $350 not including commissions. He called this his own free ticket, frequent flyer program and he did not have to redeem any of his miles!

What Happened Next…?

Our client went to his meeting, had a successful day and knew that when he got on the plane to go home the next day that the ride was free! That evening he looked at his charts to begin evaluating a potential next position that he could execute prior to boarding the plane for the return trip home.

Some of our investors chose not to simply create the Call credit spread but to also add a Put credit spread to the position to create what is referred to as an Iron Condor.  Look for more on that strategy during a future Options Money Maker Case Study. 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?

Have Automation Working for You!

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

One of the key strategies we teach our clients is how to keep time on your side.  This is being demonstrated with a current RUT Call credit spread that many of our investors are in at the moment.  This position was opened with a $5 spread at strike prices of 1070/1075 when the index was trading at 1075. There was 4 weeks until expiration and the credit received for this position was $1.40.  The logic behind this position is that we believed that the directional bias of the index was down and a Call credit position takes advantage of a move lower.  We want the index to close below 1070 at expiration and then we would realize the full $1.40 credit received. In reality, we generally do not allow the positions to go all the way to expiration. As time value decays the value of the credit, we close the position prior to expiration once we have a reasonable profit. In this case, we advised our investors to place an order to close the position for $.80 which would be a $.60 profit or 16.6% on cash at risk. By consistently making quick profits like this, reclaiming our cash and entering the next position, we take advantage of the power of compounding.

What happened next…?

Over the course of the next three weeks the RUT index cycled up and down several times but the overall trend was up. This was contrary to the identified bias, but as everyone knows, no one can accurately predict market direction 100% of the time. That is why we build time buffer into our positions. Options and option spreads are not like owning a tangible asset like a stock. They are a like a “melting ice cube … you need to have the market move in your favor or you need to find a way to extend the “melt time” until you have managed to a profit or at least a break even position. Most investors do not know how to do this and simply close the position for a loss.

What Happened Next…?

There are several methods that can be used to manage this position but one of the simplest is what we wanted to share in this case study. That is the process of a simple roll out to an expiration date further out in time. In this case we had 1 week to expiration with the index trading at 1090.  The index needs to move below 1070 for this position to become profitable. That is very feasible when looking at the charts. The strong bias was for the next move to be down. The problem is that the move downward might not happen in the next week. We instructed our investors to roll out the same position one additional week. The cost of this move was $.20 which lowered our adjusted credit to $1.20.  Now we have an additional week for the market to move downward creating a profit.

Some of our investors chose to not only roll out the position and buy more time but also to adjust the strike prices higher to provide a better chance of creating a profit.  The trade off is that the cost of that move is greater and would reduce the adjusted credit to something below $1.20 depending on how high the strikes were set. 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

One of the key strategies we teach our clients is the Calendar Spread.  This spread can be created with either Puts or Calls depending upon the directional bias of the index you are trading.  Case in point is a Put Calendar Spread that many of our investors entered this past week on NDX.  The index was trading at 4299 and there were indicators suggesting a downward bias for this index.  A Calendar Spread utilizes the same strike price but different expirations.  It takes advantage of the movement of the index as well as the time decay of the options that have different delta values and expirations.  The strike price was selected at 4250 which was almost 50 points out-of-the-money with an expiration date on the short Put that was 2 weeks out and expiration on the long Put that was 3 weeks out.  This is a debit spread position with a net debit of $24.70.  A Put debit spread is a downward bias position.

What happened next…?

One day later, the NDX moved downward as anticipated by 30 points.  This increased the value of the spread which allowed our investors to close the position for $28.00. This represented a net profit of $3.30 or 13.4% in one day!

What Happened Next…?

Some of our investors chose to keep the position longer in an attempt to gain a larger profit. Those that did actually benefited. Some closed the position later in the day for $30.10 which was a greater profit than those who closed at $28.00. There is no one perfect answer.  Our stance is that you can never go wrong by closing a position for a profit! Do what you think is best or 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

Let’s give credit where credit is due. What if you could get an advance of cash on your credit card without incurring any fees in advance?  Then what if your advance was $1000 but you can pay the credit received back in full for only $800?  That would be a great deal you would want to do every week right?

That is essentially what we are doing with our credit spread technique.  With a credit spread, you are establishing the directional bias of an index like NDX then choosing to open either a Call credit spread (downward bias position) or a Put credit spread (upward bias position) The credit spread is established via buying an option and selling an option at different strike prices with the same expiration date. The position allows you to take a credit (cash) into your account at no cost other than your broker’s fees to complete the transaction. The position is designed to take advantage of the time decay of the position while having the index remain out-of-the-money.

Case in point is a Call credit spread opened this week by many of our investors on NDX.  The index was trading at 4325 and all technical indicators revealed a bias to the downside.  The Call credit spread was established via buying to open the 4430 and selling to open the 4425 with 3 weeks to expiration.  Our investors received $1.40 of credit into their accounts for establishing the position.

What happened next…?

We want the position to be out-of-the-money with the index trading below 4425 at expiration for our investors to be able to retain the entire $1.40 credit in their accounts.  We have build buffer of movement and time to increase our chances of this happening.  The index would have to move up around 100 points or more and remain there through our expiration period for this position to be problematic. We normally don’t hold a position to expiration.  We look for a move in the index in our favor and close the position for a nice profit prior to expiration, take our cash back and move to the next opportunity.

What Happened Next…?

As anticipated, the NDX made a move downward over the next two days that reduced the value of the credit in our position from $1.40 to $.80.  Many of our investors chose to close the position, take their profits and start over. This represented a 17% profit on cash at risk in just 2 days.  It is the equivalent of paying back a $1.40 advance on our credit card with only $.80. The difference of $.60 is our profit. We encourage our investors to take these fast profits and move on. Some choose to hold the position longer for a potentially higher profit. That is their personal choice. There is no one perfect answer.  Our stance is that you can never go wrong by closing a position for a profit!

What would have happened if the NDX had moved up significantly rather than down?  There are no guarantees to accurately predicting every market move.  The answer is very comforting for our investors. Number one, due to the buffer we have built into the position, the index must move significantly in the unanticipated direction before our position become problematic.  If that occurs, we teach various management strategies such as rolling the position out to create more time buffer, or adjusting the strike prices to turn the position into a profitable scenario. Do you have that kind of confidence and comfort? 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 don’t have to be Albert Einstein to recognize that the market has still been behaving in a rather choppy, chaotic manner.  If you listen to the news, some so called “experts” say the market is on its way down while others are calling for a rebound. What did the Masters at Options Money Maker do this week?  We ignored the news and simply guided our investors through another week of making money and taking advantage of market volatility and the cyclical ups and downs. We know the market moves up and down so how do we position ourselves to win?

The Iron Condor is a great strategy that we use to make profits regardless of the direction of the market. The main concept is to create a Put Credit Spread and a Call Credit Spread with a “sweet spot” that takes advantage of the time decay of options to create profits. Many of our investors recently opened an Iron Condor on SPX with 4 weeks to expiration. The Call strikes were 1975/1980 and the Put strikes were 1855/1860. This trade was opened when the index was at 1900.  We received $1.40 credit for the Call spread and $1.25 credit on the Put spread for a total of $2.65. If both positions remain in the sweet spot until expiration, our maximum profit would be $2.65 as both spreads would be out-of-the-money and expire worthless. We very rarely hold positions to expiration. We look for a reasonable profit in the shortest period of time possible and then bring the capital back into our accounts to open fresh positions. You can never go wrong taking a profit and moving back to a cash position!

What happened next…?

The market reacted to more news and the SPX moved down 90 points to 1810 over the course of only a couple of days.  This move down allowed us to close the Call Credit Spread for $.60 which was a profit of $.80 or 22% on cash at risk after only 2 days. We were now left holding the Put Credit Spread which would benefit from a move upward in the index.  We had built 4 weeks until expiration into this position, allowing for adequate time for many cycles to occur during that period. We relaxed, did nothing and waited because we had the luxury of time and the peace of mind of management techniques to adjust this position if the market continued on a downward path.

What Happened Next…?

The SPX moved from 1810 to 1870 in just three days, once again, placing the Put Credit Spread out-of-the-money.  The strike price was $1.25 which placed us back in a break even position on this spread. Now our investors have several options and they did not all take the same path. Some closed the Put Credit Spread at break even, took the previous profit and all the original cash back into their account and moved on to the next position.  Others simply held the position for further time decay to occur to allow for a profit. Others added a Call Credit Spread to once again establish an Iron Condor Position. Patience is a virtue in trading as long as you know what to do and when to do nothing.  It is very difficult to be patient when you don’t have the knowledge and tools to succeed in a fluctuating market.  As a result, many investors trade on emotion and end up losing money on a regular basis.

What is Keeping You From Taking Action? Give Yourself a Stress Free 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

Take a close look at the sign and the road pictured above. There seems to be confusion on what to do. That is what many traders feel like when the market is up and down, has knee jerk reactions to the news and provides a lot of uncertainty.  The beauty of what we teach our clients at Options Money Maker is that we don’t trade on emotion, we place positions based on the indicators and that we build plenty of “forgiveness” into the positions. A case in point is the NDX which has been moving in pretty dramatic 50-100 point moves in a day recently. We coached many of our investors to create a recent Put Calendar Spread on NDX.  With this type of spread, the strike prices are the same but the expiration dates are different.  We chose expiration dates that were 3 weeks out on the short Put and 4 weeks out on the long Put. This debit spread by nature is a downward bias position but having the strike prices the same and factoring in the delta values on both legs will sometimes create a profit with a short term movement.

What happened next…?

The market reacted to more news and the NDX moved up 62 points over a short period of time. Our investors had opened the position for a net debit of $17.00. Because of the quick movement up and the delta of the short leg being slightly higher than the long leg, the value of the spread increased to $18.70 after just one day. We were able to close that position for a profit of $1.70 or 10% and had our cash back in our account to create the next trade.

For the same reason we don’t want our doctor confused when we go to see them, we don’t want to be confused regarding our investment strategies in a market that can create confusion. Do you want to “practice” with your hard earned money or do you want to trade with confidence and success?

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