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!

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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

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?

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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

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?

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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?

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

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.

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

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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.

What is Keeping You From Taking Action?

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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?

What is Keeping You From Taking Action?

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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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