November 30, 2016
Inside Trading
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George Angell




One-time West Coast contributing editor of Futures Magazine, George Angell is the author of eight books on the futures and options markets, including Winning in the Futures Markets, which has been translated into Chinese, and is still in print 28 years after its first publication. He was a Chicago floor trader during the Eighties and credits that experience for the success of West of Wall Street, which he co-wrote with S&P pit trader Barry Haigh during his Chicago years, and Sniper Trading, which tracks the valuable lessons he learned while on the floor. In recent years, he has turned toward trading small stocks. 'There are enormous sums of money to be made trading undervalued small stocks,' says Angell, whose most recent two books -- Small Stock, Big Profits and The 50 Best Small Stocks for 2007 -- were published in the past year. A graduate of New York University, Angell currently resides in Key West, Florida which he considers the perfect antidote to the stress-filled years of the Chicago pit trader.


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George's video course, The Money Miracle, will teach you everything you need to know in order to trade the physical commodity markets - and hopefully make a lot of money doing it. Here's what's included:

- Over 5 hours of Step-By-Step Video Instruction on how to analyze markets and place your trades to gain the most "bang for your buck" with the lowest risk.

- The 151-Page Money Secret Manual, which clearly reveals and details each of George's successful methods.

- 3 Special Reports a $119 Value!
1) The 7 Secrets Of Successful Options Investing, 2) How To Make Money Day Trading Commodities, 3) How To Make A Fortune Investing In Seasonal Commodities.


- Special Bonus: Winning In Futures Report The latest edition of George's $400-a-year Winning In Futures advisory report is included at no extra charge!

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Our featured author this week is George Angell. In his article, George walks us through some of the best seasonal spread trades.

Lee Gettess provides our next segment with his weekly video newsletter analyzing market performance.

Then, Jon Najarian explains how volatility affects options prices.

Last, Wendy Kirkland wraps up with her Prime Entry Profits (PEP) Rally Newsletter.

Enjoy!

Adrienne LaVigne
TradeWins Publishing



 

The Best Seasonal Spreads

by George Angell

The following is an excerpt from George Angell's Money Miracle

In the fall of 1980, I published a book devoted entirely to seasonal spread trading. Five years later, I went back to my computer studies and again re-tested the successful spreads. Amazingly, some of them didn’t miss a year of profitability! One of the conclusions that the statistical studies made clear is that the “bear spreads” (long the back month, short the nearby), made much more consistent patterns relating to seasonality than did the “bull spreads”.

With this in mind, let’s take a look at some of the more reliable seasonal spreads. In each spread, studies were performed to determine not only the point of entry, but also when to take off the spread, and the percent of profitability as well as maximum adversity during the period when the spread was held. In all, the spreads listed here offer an excellent risk-to-reward ratio. Moreover, they are ideal for newcomers to the market in that they reward patience, keep transaction costs to a minimum (they are often held for months at a time), and give one a taste for commodity trading first hand without a lot of exposure to risk. Below are some of the best spreads (all with the same calendar year).

Buy December Cotton – Sell July Cotton: Buy December cotton and sell July cotton on February 12. Liquidate the spread on June 30.

This spread was 75 percent correct over a period of 12 years, earning in that period almost $10,000 on a one-contract basis. The studies show that the spread works well because, regardless of the price level of cotton when the spread is being placed, the nearby July contract tends to weaken prior to expiration. The resultant gain in the nearby July contract tends to offset the loss in the back-month December contract. This weakness is especially noticeable after May 28, suggesting you can often place the spreads with good prospects for profitability after February 15, and right up to expiration around the first week in July. For reasons of safety, you should exit prior to the delivery month. In the 12 years studies, the spread has a maximum profitability at liquidation of $2,755, yet the maximum loss was just $380 – a solid performance record by any standard.

Buy December Corn – Sell July Corn: Buy December corn and sell July corn on October 15. Be certain to spread the distant December, more than a year out, against the nearer July contract. Liquidate the spread on April 15.

Like other grains, corn has a very well defined seasonal pattern based upon the commodity growing season. The corn crop year runs from October 1 to the following September 30. While corn has a very complex pricing mechanism, the major components of the supply/demand equation consist of the weather on the supply side, and the demand for animal-end products on the demand side.

It is important to understand that the spread we are talking about here involves contract months in the same calendar year – December 2007 corn, for instance, spread against July 2007. The reliability factor in this spread is very high.

The Best Seasonal Spreads

 
 

Lee Gettess' Market Sense

by Lee Gettess

Lee Gettess is a top trader who is excited to bring you his video newsletter. Each week, Lee will share his predictions on what he anticipates from the bond and S&P markets.


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How Volatility Effects Option Pricing

by Jon Najarian

The following is an excerpt from Jon Najarian's Dr. J's Little Black Book

The most basic way to price an option is to start with a strike price. If IBM is trading, for example, at $90 a share, and you decide to buy a call – or in Wall Street parlance, to go long a call – at the $95 strike price, you are buying the right, but not the obligation to own IBM for $95 a share until that option’s expiration. Now, take that $95 and multiply it times the interest rate that you would have to pay if you borrowed money from the bank, say 8 percent. If you’re not borrowing the money, multiply the strike price times the interest rate you would get paid if you put your capital in a certificate of deposit (CD) today, say 1.8 percent.

For the sake of illustration, let’s pick an interest rate of 8 percent to borrow money to buy the $95 call: $95 x 0.08 = $7.60.

Now, multiply that by the number of days for the life of the option, such as 30 days for a one-month option: $7.60 x 30 = $228.00.

This would give you the value for that $95 call, assuming there were no volatility considerations.

But that’s like computing the value of a piece of property based on square footage alone – and not taking location into account, like 500 square feet of land in a remote part of Utah versus 500 square feet in Central Park.

As market makers, professional traders, and sophisticated retail investors know, the biggest component in the price of an option is volatility. In the simplest of terms, volatility is a measure of risk. The more volatile something is, the greater the risk. Put another way, if the price of something is bouncing around like crazy – up one day and down the next – there is greater risk that you could be caught short or long with the price moving against you. The volatility increases your risk.

How Volatility Effects Option Pricing

 
 

Prime Entry Profits (PEP)

by Wendy Kirkland

The following is an excerpt from Wendy Kirkland’s Prime Entry Profits

Every day Wendy Kirkland shares her “Prime Entry Profits” (PEP) Rally Newsletter. The following is her thought for the week, along with what she expects this week in trading.

Thought for the Week

When a big change occurs in your life it forces you to change direction. Sometimes the new path may not be easy, but you can be absolutely certain that there is magnificence for you on the new path. You can be absolutely certain that the new path contains things that you could not have experienced otherwise.

Today

Please check earnings dates on your trade candidates:

CVX- Chevron - P3
AAL- American Airlines - P3.5
AAP- Advance Auto Parts - P3.5
CSX- CSX Corp - P3.5
FDX- FedEx - P3.5
GOOG- Alphabet - P3.5


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PLEASE READ. Past results are not necessarily indicative of future results. There is a substantial risk of loss trading commodities, stocks, bonds and options with or without this or any other advertised product, service or system. Also hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Since the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.