Our edition of Inside Trading this week features Don Fishback
who explains vertical spreads and how they work.
Next, Jea Yu
provides a clip on mindset, looking at how traders can avoid "TILT".
Then, Wendy
Kirkland writes an article on what can be expected when trading options.
Last, the editors of TradeWins Publishing present
the "free trade".
Enjoy!
Adrienne LaVigne
TradeWins Publishing
From Don Fishback's "Options Wizardy from A to Z", this video
clip explains the vertical spread. How does it work? Fishback explains the
debit aspect of the vertical spread. Last, Fishback provides an example to
demonstrate this trade in detail.
Click the above image to view the video
In this clip from "Trading Full
Circle", Jea Yu discusses what he refers to as TILT -- the point at which
traders lose control. Yu suggest that it is important to: know your triggers,
pace your activity and maintain control. He goes on to explain how traders get
to the "TILT" level, and how it can be avoided.
Click the above image to view the video
Trading Options: What to Expect
This excerpt is from
Wendy Kirkland's P3 System
With careful
candidate consideration, you can achieve significant short-term profits on
funds you invest in the options market.
Your profits are made by purchasing option contracts (calls and puts)
with the express intention of selling the contract after the underlying stock,
EFT, or index, has moved in price, either up as with calls, or down, as with
puts, and you sell well before the options expiration date. When you purchase an unripe tomato from the
produce market, you know the tomato still has a while before it has to be
eaten. In terms of options, the idea is
to sell the tomato before it becomes fully red with brown spots, soft and ready
to expire.
By
incorporating this line of thought, you never exercise your option to buy the
underlying stock, ETF, or index. Your
goal is to hold the option long enough for the price of the underlying asset to
increase in the case of a call option and decrease in price in the case of a
put option. You don't intend to exercise
the option, but someone will want to, and that's its value.
by The TradeWins Publishing Editors
The Free Trade combines the best principles of money management and the
advantage of "undervalued" and "overvalued" options;
however, the most exciting aspect of the free trade is that it allows you to
build a large position in a trending market without increasing your initial
risk.
The "FREE TRADE": A Quick Introduction
The Free Trade is used in trending markets to purchase options of low to
medium volatility that are close to the money (particularly on pullbacks or
reactions against the trend). Farther out-of-the-money options which can have
much higher volatility levels are sold on rallies to complete the Free Trade.
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During my first decade as a trader and analyst, I was introduced to a strategy
that had an extremely high probability of profit. I wanted to understand the
mathematical reason for the extraordinary success. It was then that a friend of
mine uttered the words that changed my life and ushered in a period of groundbreaking
research. My friend Pete said, "It has something to do with that bell
curve thing." From that point forward, I have used my mathematical skills
to discover unique and profitable trading systems.
It's been more than 20 years since I first entered
the financial services business as a broker. I still remember my first
speculative trade; it was a futures spread trade involving Live Hogs (all of my
friends in the business were farmers). Soon after entering the finance
business, I moved away from the brokerage side to the analysis side where I
really wanted to be. I must have been doing something right, because I promoted
to Director of Research at the nation's largest options-only research boutique.
In 1993, I left that firm to start my own company to focus strictly on
volatility.
Don Fishback's Options Wizardry from A-Z
A full course on
options trading, including numerous high-probability strategies for every
market. Emphasis is on the ODDS program, numerous spread positions, and
selecting the right strategy at the right time. Step-by-step instructions make
this a complete course with valuable insights for all traders beginner to
advanced. Highly recommended if you are considering trading options.
Learn more about Don Fishback's
Options Wizardy video
Andy Chambers
Chuck
Hughes
Darrell
Jobman
Dave
Caplan
Ken
W. Chow
Peter
McKenna
Ray
Frazier
Tom
DeMark
Tony
Catalfamo
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PLEASE READ.
Past results are not necessarily indicative of future results. There is a substantial risk of loss trading
commodities 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.
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