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!

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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

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.

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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

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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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

It has been a chaotic first two weeks of the year in the stock market with a downward movement that has people wondering about the state of the economy.  Is this just a temporary selloff, a short term reaction to news or the start of a major recession like we experienced in 2008 and beyond? How did your investments fair in the last major downturn. How will they fair if we have another market meltdown?  Just this past week we experienced SPX moving 50 points at a time and NDX moving 100 points or more in a day. Do you know what to do to not only protect your assets in a volatile market but to actually benefit from the chaos?  Our expert traders at Options Money Maker know how to make money regardless of market direction.

Case in point…our investors had Put Debit Spreads on SPX and NDX this week during a day that the SPX made a 50 point move down and the NDX made a 110 point move down. These were downward bias positions which meant that our investors were able to take advantage of the large and sudden move downward to close out for some very nice profits.

What happened next…?

There were a number of investors in our live trading room that had purchased and held long Put positions rather than a spread on SPX and NDX overnight.  The value of Puts increase when an index decreases so these investors experienced some massive profits of several thousands of dollars in one day. This is not the norm, but it sure is great to experience a grand slam in the middle of a game where you are hitting singles, doubles and triples on a daily basis.

What Happened Next…?

The next task was for our investors to try to explain to their neighbors why they were so happy that the market had moved down today, while everyone else is watching and agonizing over the decreasing values of their 401K plans.

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A New Year’s Resolution Case Study

As we begin a New Year it is often the time to reflect on our lives and create Resolutions. Often this is centered on things like smoking cessation, weight loss, being kinder to our loved ones, etc. All are worthy of our consideration. How about giving yourself an Ability for the New Year?  The gift of education and learning how to trade options like the Masters creates an infinite amount of opportunities for you.  What is stopping you?

Case Study

 

Every day of the year someone decides to buy or lease a new car and create a monthly payment obligation.  Typical monthly expenses are $300 to $700 per month with a standard lease period of 3 years or a loan period of 3-5 years.  At the end of the lease period you either need to take out a new lease or buyout the remaining value of the car.  At the end of a traditional loan to purchase a car, you must then decide to drive your vehicle which has now depreciated rapidly or trade it in on a new purchase and start the cycle over again.  The bottom line in either case is that the process is expensive and you don’t really have much to show for the expense at the end of your obligations.

 

What if you learned a skill that did not depreciate…?

In the first 9 months of our Profit Builder’s Program, the results have been an 84% profit on a starting risk of just $5,000.  The monthly cost of this program is less than half of a typical car payment and provides something much more tangible…the ability to make consistent monthly income using the skills learned from mimicking the Masters.

What if you made enough money to go buy a car with cash…?

Our live trading room has been averaging profits of over $1600 per day on a total risk of $20,000.  Many people take advantage of the trading room even though they don’t have as much capital to trade as the Masters. The results could realistically allow you to create enough profits to pay cash for that next car, have no car payments and keep on making profits month after month using the techniques offered by Options Money Maker.

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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

We just finished the holiday season and time to reflect on what we wanted to see under the Christmas tree. What would you rather have, a card containing $100 cash, or an educational process that would create $100 time after time after time throughout the year? The answer is obvious so what is keeping us from taking action? Give yourself the gift of financial control by clicking on the link above.

Case in point…our investors had a Put Credit Spread on RUT at 1100/1095 when the index was trading at 1125. There was 4 weeks to expiration and the credit was $1.30. After a review of the charts it was uncertain which direction that the index would move next so we instructed our investors to add a Call Credit Spread to create an Iron Condor.  We selected the same expiration period as the Put Credit Spread and received a $1.30 credit for strikes of 1160/1165.  This would allow us to create profits regardless of the direction of the market and provided a nice “sweet spot” between 1100 and 1160.

What happened next…?

RUT moved up 15 points the next day which allowed us to close our Put Credit Spread for a profit of $.55 or a very nice 15% on cash at risk. The Call Credit Spread still had 4 weeks to expiration. All indicators were that the next move in the index was likely to be down even though the index was now trading at 1145. Now it was simply a situation of patience to wait for the inevitable cycle down which would create additional profit for us by closing the Call Credit Spread.

What Happened Next…?

We had desirable answers to 2 of our 3 key questions used to evaluate a position…

Did we have time pressure? No, there was 4 weeks to expiration.

Did we have price pressure? No, the position was still out of the money.

Did we have a profit? No.

Options included rolling out the position to gain additional time, rolling up the position to a higher strike price to enhance chances of a profit, or to wait another day or two to see if the index declined.  Those investors who chose to do nothing were rewarded. Over the next two days the RUT declined by 13 points which allowed them to close the position for a profit of $.40. So we made money on the move up and more money on the move down.  Why would investors be willing to do nothing and hope for a significant decline in the index? Because they knew that if that did not occur that they could still execute other management techniques. Would you have known what to do? How would you have managed this situation?

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Case Study of the Week

This case study is about having a buffer 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

This is the case study of managing and profiting from having a buffer.  We know one thing for sure…the market cycles up and down.  We want to take advantage of those movements to make profits but a process is only as strong as the weakest link.  For that reason we build buffer into our trades.  An example this week is an RUT Put Credit Spread that was established with the strikes of 1100 and 1095 when the index was trading at 1138.  We received $1.25 in credit for this $5.00 spread so our total risk was $3.75.  We placed the trade with 4 weeks to expiration and want to take advantage of the time value decay to make a profit. This is a rising bias position, so we would prefer that the index move upward. However, having the buffer factor of being 38 points out of the money provides piece of mind in the event there was a move downward in the index.  We have time on our side and there is no price pressure on this position.

 

What happened next…?

RUT declined 15 points over the next two days but because of the buffer factor we did not care.  The index will likely cycle many times over the course of the next four weeks.  If there is a move upward, it is likely that we will be able to close the position early for a profit. If the index just cycles up and down, we just have to be patient and let time decay produce our profit. If there was a dramatic move downward, we would use additional management techniques to buy more time or adjust our strikes or both.

What would you do in this situation? Would you know how to profit? What would your anxiety level be?

 

Our investors know how to manage trades with confidence and are profiting every week by mimicking the Masters, but more importantly, learning to think like a trader and control their own destiny.

What is keeping you from taking action?

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Case Study of the Week

This case study is a call to action 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

 

This is the case study of managing and profiting from the Yo-Yo effect.  We know one thing for sure…the market cycles up and down sometimes in a smaller saw tooth effect and at other times in a more dramatic Yo-Yo effect. Let’s look at the most recent 4 trading days for the SPX index. Last Thursday the SPX had a daily decline of 30 points. Our investors were able to profit from that move downward because of the presence of a strategy that provides profits when the index declines. This is not “taming and profiting from a bear market,” this is simply taking advantage of short term downward cycles which invariably occur.

What happened next…?

The next day on Friday, the SPX had a daily increase of 40 points! What a difference a day makes. Are we now in a bull market? No, we just experienced what is sometimes called a “retracement” effect when the market rebounds or “Yo-Yos” back up after a significant decline. Our investors were able to take advantage of this move because of a second segment of a combination strategy that provides profits when the index increases.

What Happened Next…?

Over the course of the next two trading days the SPX declined again by a total of 35 points. In summary, the SPX went down 30 points, up 40 and down 35 over 4 trading days. How well did you do over the past week? Do you know how to structure a combination strategy that accomplishes the following?

  • If the market stays rather stable, time value will allow you to close the entire position for a profit.
  • If the market increases, you can close the upward bias side of the combination position for a profit.
  • If the market decreases, you can close the downward bias side of the combination position for a profit.
  • If point two or three happens rapidly, you might be able to re-open a position and wait for another profitable cycle up or down.

 

Our investors know how to do this and are profiting every week by mimicking the Masters, but more importantly, learning to think like a trader and control their own destiny.

What is keeping you from taking action?

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

Many of our investors recently held a Call Credit Spread for SPX at 2080/2085 with an expiration date that expired in 5 days. The average credit was $1.30 and the index was trading at 2080. This is a downward bias position and our investors wanted the index to trade below 2080 and create a profit through the time decay of the options. With 4 trading days to expiration, the speed of time decay accelerates and the position could be closed for a small profit of $.20.  Most of our investors held the position one more day to gain a larger profit.  This seemed like a good approach given the technical chart indicators still showed a downward bias.  A little patience and one more day of time decay would likely create a much better profit.

What happened next…?

Despite our best effort to predict what the market will do, we cannot be guaranteed to be correct all of the time.  The next day, rather than the index continuing to decline, it actually rose by 23 points with a closing price of 2103.   This increased the value of the credit from $1.00 to $3.00 turning a small paper profit to a significant paper loss. Our total risk in this $5 spread was $3.70 so a plan with multiple options needed to be developed to protect against a possible loss.

What Happened Next…?

We had undesirable answers to our 3 key questions used to evaluate a position…

Did we have time pressure? Yes.

Did we have price pressure? Yes.

Did we have a profit? No.

Options included rolling out the position to gain additional time, rolling up the position to a higher strike price to enhance chances of a profit, or to wait another day or two to see if the index declined.  Those investors who chose to do nothing were rewarded. Over the next two days the SPX declined by 53 points which allowed them to close the position for a profit of $.80. What a difference a day or two makes! Moving from a paper loss of $1.70 to a profit of $.80 was a very desirable reward for a little patience.  Why would investors be willing to do nothing and hope for a significant decline in the index? Because they knew that if that did not occur that they could still execute the other management techniques mentioned above. Would you have known what to do? How would you have managed this situation?

What is Keeping You From Taking Action?

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

Two distinctly different characters in history came to the same conclusion but verbalized it differently. Yogi Berra stated, “It’s Déjà vu all over again.”  Albert Einstein stated, “The definition of insanity is to keep doing the same thing and expect different results.”  How have you been doing with your own investing?  Take action now by engaging the expert team from Options Money Maker to create a new strategy with different outcomes.

                     

Let’s take the example of an Iron Condor that we used to our investor group’s advantage this past week. This position was initiated using the RUT index when it was trading at 1170. We established a Put Credit Spread (upward bias position) with 3 weeks to installation at strikes of 1145/1150 and received a credit of $1.50.  We added a Call Credit Spread (downward bias position) with the same expiration at strikes of 1200/1205 and received a credit of $1.40.

What is the logic behind this process…?

The Iron Condor creates a “sweet spot” that takes advantage of the time decay of positions that are out-of-the-money.  It is possible to make a profit on both spreads, create a profit by closing one side of the Iron Condor at a time based on market movement and there are also opportunities to re-establish closed positions at different strikes.

What Happened Next…?

Two days later RUT moved down sharply from 1170 to 1145. This movement created a profit on the Call Credit Spread. Many of our investors closed the position for $.90 which was a $.50 profit.  We chose to advise our investors to keep the Put Credit Spread in place even though the position was at-the-money.  There was adequate time to expiration so there was no need to close the position for a loss.  There was a reasonable chance of a retracement pull back which would eventually create a profit in that position as well. In addition, there could be an opportunity to re-open the Call Credit Spread at lower strikes to lock in profits and create additional premium. It is great to have multiple options.

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