Risk Free Insurance Plays with Options

New Trading System by San Jose Options

WE JUST GOT BETTER!
We already had some of the safest option trading strategies ever taught anywhere, but one thing leads to another, and we just got even better!

RECENT DISCOVERIES
Recently, we’ve developed a Self-Adjusting trading system which in a few words is “Simply Amazing!” What we’ve done is discovered a way to trade with nearly Risk-Free Insurance. What this means is that the insurance we use to protect our trades virtually risks nothing if we do not use it. In a normal situation, insurance strategies lose money each month and eat up your profits, but we’ve designed a way around this problem!

FOR EXAMPLE
Let’s say you want to trade an Iron Condor, but you want to do this with insurance to the upside and to the downside. Well, 99.99% of all option traders only know how to design a trade where the insurance will eat up most of the profits if the Iron Condor is profitable.

With our newly designed Risk-Free Insurance Method, we can trade the Iron Condor with surrounding insurance plays which do not take away from the Condor profits. In fact, many of our insurance plays will also make money while simultaneously adding insurance to the position.

STUDENT FEEDBACK
Student feedback on this new strategy has been awesome. I am loving it myself. In all my years in the option educational field, I have never seen or heard of this technique. Students are saying that I invented this. They could be right, but all I know is that our new Risk-Free Insurance strategy is the best thing I have ever seen when it comes to trading options.

Are Credit Spreads worth the Risk?

Credit Spread Options Adjustments

Hi there and welcome to this article on credit spreads. In a few words I’d like to express the risk involved in this type of option spread just in case you are new to trading options. The reason I would like to bring this up now is because I have had many phone calls from option traders who lost huge chunks of their trading portfolios in October of 2008. Some traders lost up to 80% of their trading capital using this strategy, and the reason is because although this trade has a 90% probability, the risk and the stress involved is not often addressed correctly.

Unfortunately, the options credit spread is one of the first trades learned by all option traders. I think most option traders are first attracted to this option spread because it is very simple, it makes money over time, and it has a very misleading high probability rating. The other reason most beginning option traders begin using this strategy is because it is all over the Internet. However, it is not publicized all over the Internet and in basic option trading courses because it is a great strategy, but rather, it’s very simple to learn and to teach. This is the main reason why it’s all over the Internet.

It is very well known that we can construct an options credit spread with a probability of 90%, but how much money will be made with a 90% probability options trade? Not very much at all… usually we can make between five and 10% in one month. This sounds like a lot of money, but what are the risks involved? What happens to your portfolio when this trade goes against you? Catastrophic losses can and will occur to your trading capital if you have the least range short-term credit spreads.

People don’t talk about how they can be way behind on the trade sometimes the whole time they’re in the trade. People don’t talk about how they get down to the very last day and they are risking 90% just to make a small 10%, and they don’t talk about how they can’t sleep at night and how they are praying to God that their stock might go up tomorrow. Finally, one of the most important things that nobody tells you about the credit spread is that a 90% probability doesn’t mean that you’re going to make money nine times in a row and then lose one time. The sad truth is that you might lose 90% on your first trade. This happens all the time.

Credit spreads are actually very directional trades. If you look at a risk graph of a credit spread, then you understand what I am saying. Even though this trade has been on its side, the Gamma is so high that it makes the trade extremely risky. If this trade goes against you, you will lose money really fast. If you are trading short-term credit spreads, and often times you will find yourself at the edge of a cliff and about to lose all of your money.

Well to conclude this class on the risk of the credit spread, I just like to finish and say that there are many other types of trades that are much safer than this particular option spread. And if you do insist on trading credit spreads, try to combine them with other strategies so they are not so risky.

Learn Maximum Reward Option Credit Spreads in our Live Options Trading Rooms at San Jose Options.

Steps to Success with Option Trading

Steps to Success with Options (1 of 6)

Stock Option Trading Best Courses
by Donald Scott

Would you like to learn how to trade options for monthly income? Don’t just join any options course. Before choosing, there are many things to think about. Is the course taught by real option traders? Is live mentoring included in the course? Does the company answer your emails quickly? Can they be reached by phone? Are there references that you can talk to before joining?

So those are some of the very important questions one needs to ask before purchasing a course. Without live help, it’s nearly impossible to become a success in this business. Let’s take a moment to talk about one of the best courses on the market today.

San Jose Options is a very unique course which is based on real trading at a very modest price indeed. Students have the benefit of getting personal help as well as working in small groups nearly 2 hours each day if they wish. Over 1,000 archived videos can also be accessed on the student website at their own convenience. This options course teaches some of the safest strategies known to option traders, and they have invented many of their own, unique trades. Finally, the course is lifetime for just under $3,000 as we are writing this article today.

San Jose Options truly believes that hands on experience is the way to learn this craft. Each student is given a paper account and works at managing trades right next to the mentor in live classes each day. They focus on super low-risk trades that can yield monthly profits. Another highlight of the course is the explosive strategy played over earnings, and they have software which can back-test trades in a few seconds.

San Jose Options Mentoring, here since 2007, was first a retail investore out of California, just down the street from eBay. A few months later, the mentoring program was born. Since then, they have developed some of the most unique and safest income strategies that are being taught around the globe. If you are looking for low-risk option trades, then be sure to check them out.

Learn to Trade Options with the lowest risk possible in the San Jose Stock Options Trading Program.

I Lost It All on Iron Condors

Trading Options – Iron Condors to Stay Away From

Hi all and welcome to this article by San Jose Options Mentoring. The purpose of this instructional writing is to warn beginning and intermediate option traders about the risks involved in trading Iron Condors. Although Iron Condors can produce monthly income, they can also produce catastrophic losses to your trading account if you do not trade them correctly. Now, unfortunately most books and most option courses that teach how to trade the Iron Condor, push that the Iron Condor should be traded near expiration. This strategy will work for a few months in a row, but then when the market wants to wake up, the trader using this option strategy will also wake up to find most of his trading capital gone.

If you have a few minutes, I would recommend watching the video that we have included with this article. You will see an Iron Condor on the SPY which demonstrates the type of Iron Condor that can wipe out your entire trading capital.

This is the strategy that is taught by 99% of the courses on the Internet. Don’t be misled, and don’t fall into the trap. Take a look at this video and see firsthand the stress and the risk involved with this option strategy.

As this Iron Condor approaches expiration, the trade becomes more volatile and risky. This is because of the option Greeks. The Gamma is extremely high which causes the Delta position to move outrageously fast. This means that the option trader can lose all of his profits in a single day if the market has a decent move. To understand exactly what I am talking about, please watch the video at the six minute mark.

Hi option traders and welcome to this article on the risks of trading Iron Condors. Although the Iron Condor can be a great income option trading strategy, it can also be very risky if one does not trade it correctly. All over the internet people preach trading condors close to expiration. Many option traders attempt to bring their Iron Condor into expiration day hoping to make 100% of the original credit. These option traders fail to see the incredible risks that they are taking on, and unfortunately one day they will meet this catastrophe face-to-face.

In this article you’ll find an embedded video. This video is a good demonstration of how NOT to trade Iron Condors.

Specifically, this video is on trading an Iron Condor on the SPY with less than one month to go for expiration. The problem with this strategy is that the underlying symbol does not have very much time or wiggle room. Often times the option trader will bring his trade into the last week of expiration, and the underlying will be right next to the short strike which is extremely dangerous. This is a typical Iron Condor that is taught in 99% of the courses on the Internet. This is the Iron Condor that can ruin your life.

As this Iron Condor approaches expiration, the trade becomes more volatile and risky. This is because of the option Greeks. The Gamma is extremely high which causes the Delta position to move outrageously fast. This means that the option trader can lose all of his profits in a single day if the market has a decent move. To understand exactly what I am talking about, please watch the video at the six minute mark.

So to conclude, I hope you have learned something about the Condor from this article. Trading them into expiration might appear to be easy money, but if you do it long enough, you’ll find that it’s a very stressful way in deed to trade options. It’s one of the riskiest trades you could ever do. Now, if you are interested in learning how to do this trade correctly, then by all means give San Jose Options a visit. They have developed one of the safest ways known to trade this option strategy.

Learn the Safe Way to trade the Iron Condor at San Jose Options Trading and Mentoring.

The Options Toolkit First Release

First of all, I’d just like to say hi to all the option traders out there, and then I would like to tell you about some of the exciting things that are going on with the San Jose Options Mentoring Program. Where do I start? Well, let’s begin with this week. This has been a very exciting week for me. San Jose Options just launched the Options Toolkit which can back-test over 4,000 optionable stocks with just a single click of the mouse.

I am very excited about the new software, and to give you an idea of the power of this monster, listen to this. What used to take weeks of research using other options back-trading software, now can be done in the Options Toolkit in just 1.2 seconds!

The Options Toolkit is power. How would you like to know if your Iron Condor strategy is really the best it can be? Wouldn’t you like to test a few of your ideas? Just imagine how valuable it would be to compare all of your condor ideas and adjustments in just a few minutes. Refining strategies to perfection has never been easier.

Earnings Plays Week 1

The Options Toolkit has just released its earnings tester, and after using it just one week, I have had great results. I made 4 different trades and yielded about 30% net. That is after paying commissions. The software quickly back-tested these stocks for me and gave me the data and confidence I need to make the trades.

I’ve been waiting for a tool like this for quite some time now. I’ve spent many hours back-testing my option strategies by hand, and I got burnt out. The Options Toolkit back-tests for me and does a better job than I could possibly do manually. This tool is awesome to say the least.

Let’s look at an example of what I can do in the software. If I want to see what a stock would do over earnings, I just enter the symbol, select some parameters and click the mouse. Just one second later I have a good idea if that stock is a good candidate for that particular strategy over earnings. I instantly know how much it made in the past and can make a confident trade now. I have extensive data that would have taken me hours to do with other software.

Anyway, you get the idea. I used to use very expensive options software to find these same types of trades, and it took me so many hours to find them. I can’t tell you how many days and nights I’ve spent at my pc back-testing my ideas. It’s been worth the effort, but it’s time to move on to a superior piece of options software, the new Options Toolkit by San Jose Options Mentoring.

Learn more about the Options Toolkit and the San Jose Options Mentoring Program, please visit www.SJOptions.com and receive your Free 45 Minute Video on Option Trading Greeks. Learn what Low-Stress Option Trading is all about.

What You Should Know Before Trading Options

Let’s discuss the complexities of options and how they differ from trading stocks. First of all stocks are simply one-dimensional trading vehicles, the dimension of “price movement.” For example, one can go long a stock if he/she is forecasting a rise in the price of the underlying asset. The stock trader doesn’t need to worry about time or changes in volatility affecting the outcome of his trade. The stock trader only needs to focus on the asset’s price movements.

So we all know that stocks are simple, directional investments, but what about options? Well, trading options is actually trading 3 Dimensions…time, volatility and direction. I guess this makes options three times more complex than stocks. Now, let’s look at a trading example to compare the difference. Look at this scenario:

Let’s say that AAPL moved up 20% in one year. The stock holders would have made 20% in return for holding on to the stock all year long. Now, if an option trader was holding a Call contract all year, he may have just lost his investment.

So why did the option trader lose money if the stock went up? Well, it’s quite simple really. The option trader lost the time value of his options. Each option has time premium factored into the option price, and if the move doesn’t happen fast, then the option trader will most likely lose money if he is simply buying Calls. Also, the volatility will most likely drop on the asset as the price rises, and this will also cause the price of the option to fall.

This is why we need to be educated in order to trade options. Simply buying Calls and Puts makes option trading very difficult because of the elements of time and volatility. Remember, options are three-dimensional vehicles, and if we don’t understand how to manage these 3 complexities, we shouldn’t trade them. After we understand options more in depth, these investment vehicles can make money in any type of market. Options are very adaptable and allow investors to be very creative once the understanding is there.

Our motto is Max Safety, Max Reward Option Trading. Learn the option trading strategies that are changing the lives of others. Visit www.SJOptions.com and Receive a FREE Option Trading Video Now!

Option Trading Based on Volatility

In today’s blog you’ll find tips about managing an Options Portfolio based on Volatility in the stock market. We’ll explore adjustment concepts that can be applied to any type of option strategy such as the famous Iron Condor, the Butterfly Spread, Calendar Spreads as well as all the others.

At the time that this article is first being written (the latter part of 2008), the VIX is presently in its higher range of the previous couple years, making options inflated in value. So while making adjustments nowadays, each trader must make it his duty to know where volatility is and forecast where it is leading to. Should we acquire expensive, inflated options or do we sell them? What is the latest volatility forecast on the major markets?

Most option traders make the mistake of buying OTM Calls and Puts to adjust their portfolio at which time the volatility is moving down, and they don’t see why their options lose worth so quickly. Each retail option trader should comprehend how volatility affects an option strategy to create intellectual changes to their positions.

LOOKING AT A HYPOTHETICAL OPTIONS POSITION

Let’s say that we have on an Iron Condor, and the market has been in an uptrend for two weeks. If this is the case, then we might be looking at an adjustment right? We are getting close to our short strike, and we need to do something to manage our risk. In this situation the IV of the asset has probably been dropping, since the IV normally moves the opposite direction of the underlying being traded. So, what do we do? Well, if the IV is at support and the technicals indicate that it might rise again, then we’d be looking at doing a positive Vega adjustment.

Options have endless possibilities. Many traders have no idea what adjustment to make when they see their portfolio in danger. If we learn and deeply understand the fundamentals, then adjustments are much easier. They just make sense.

So in this case we may see the VIX is about to rise. We could place a long debit spread on the VIX itself as insurance. We could also use a Calendar spread to the downside. We could also use a Broken Wing Butterfly to the downside. Each of these mentioned strategies can take advantage of a rise in IV since they are positive Vega. Also, if your current portfolio is negative Vega, adding positive Vega can help you hedge any loss that you might incur from a rise in IV. Remember, with option trading we are trading direction, volatility and time.

There is really an unlimited number of ways to create a positive Vega position, but the most common positive Vega spreads are Debit Spreads, Short Butterflies, Broken Wing Butterflies (OTM), Short Condors and Calendars. In our mentoring course we discuss these option strategies and adjustments in detail.

To conclude for now, if the stock market moves against you when you are in an option spread, then always study the IV of your underlying asset. Knowing what is going on with volatility can really help you make better decisions while managing your portfolio. This will definitely reduce your exposure to risk while increase your chances of being a profitable trader.

Learn more about Option Trading and Volatility. Stop by San Jose Options Mentoring and receive a FREE 45 MINUTE VIDEO on Option Greeks and see what this new knowledge can do for you.

Interesting Conversations with Option Traders

Recently, I had an important chat with a stock-option trader who is still seeking for the mysterious formula to yielding dependable returns with option each month. He said many things which I completely understood and brought up many past memories.

One thing that stood out was when he said “Non-directional option trading doesn’t mean we can make money in any direction. It means that we make money if the underlying doesn’t move in any direction. In other words, it’s still a directional trade, sideways.” This is correct, and most people advertise that it’s easy to make money with options because we can make money on any direction. This is true in some respects and not true in others.

Those investing with Condors understand what I am saying, especially if you are investing in the Iron Condors which most programs and written materials preach. If you are investing with this option strategy during 2008 and 2009, you most likely aren’t doing much good. The reason for this is that the Iron Condor is just as directional as other option positions only that its direction is called “Sideways.” For most traders, it’s just as difficult to forecast a neutral move as it is to predict an upward move or downward one.

Over the last few months I have had many phone calls from option traders losing most of their trading capital with Condors and Credit spreads. They all have said one thing in common: “I was making great returns at first, and then one day, I lost most of my money.” I’ve heard this tale many a time.

This is exactly why I don’t teach traditional Condors and Credit Spreads. If you are a few days from expiration, and the RUT is right at your short strike, then you are trading the way most people trade this strategy, and soon you’ll be telling the same story to your best friend, and you’ll be hiding the truth from your wife! You laugh now, but you won’t be when it happens to you. Another problem with this style of trading is that the stress level is so high that it really ruins your life.

Anyway, to deal with this problem San Jose Options Mentoring has redesigned Iron Condors and Credit Spreads. We have a different technique which gives the underlying much more wiggle room, lowering our stress level and keeping us out of dangerous situations. Remember, the less you have to adjust your condor, the better off you will be in most cases.

Besides teaching a safer way to trade Condors, we’ve also developed techniques to lock-in our profits on them. Most option traders exit their trades when they make a profit, but we can lock-in our profits and stay in the trade.

There’s yet another technique we’ve developed that I’d like to mention before we go. Every trader has some trades that don’t work out right? Well we obviously do too, but in our case, we usually end up with a Bonus Trade which gives us a chance to make back our loss with very little or no risk at all. It’s these little details to trading that make all the difference at the end of the year.

So winner or loser, we have developed a pretty nice way to trade Iron Condors as well as many other strategies.

Are you ready to become an elite option trader? Improve your Option Trading now by visiting San Jose Options Mentoring online at www.sjoptions.com. Visit today and get a Free Video on Option Greeks, a $200 value absolutely free!

Locking in Profits on Iron Condors

We’ve been working hard lately on our option strategy backtester, so forgive me for not posting here in a while, but we’ve also been refining strategies and coming up with methods to lock in profits on almost every trade we do. It’s really quite incredible that we can make money on a trade, lock in the profit, and stay in the trade to make even more. I haven’t seen these techniques used by my mentors, so I am really happy that I’ve discovered them.

So far we have locks for Iron Condors, Broken Wing Butterflies, Calendars and Credit Spreads. If you’ve ever been ahead on a trade and gave it back to the market, then you really need to learn these tricks.

We’ve also just come up with our Walking Condor which is great for trending markets and our Tight Rope Butterfly which is an extremely low risk directional trade.

Finally, our strategy backtester has just been released. It’s in the baby stage, but it’s powerful. With the click of one button and just one second, you can have years of backtesting results at your fingers. What takes 5 hours in Optionvue or Think or Swim, takes us 1 second with our new tool.

Well, have a good weekend and thanks for all the support. Our students are the best!

Option Adjustments – Locking In Profits

HAVE YOU EVER HAD A PROFIT THAT TURNED INTO A LOSS?
Don’t let those profits slip away!

The focus of our course lately has been on locking in profits. The stock market can be rough enough as it is, but if you don’t know how to lock in profits when you have them, you’ll most likely never become a successful trader. As you know our course is on options. The thing I love about options is they allow us to be creative. There are endless possibilities on the option chain. We have so many strikes and months to choose from, so many deltas, vegas, thetas and gammas. Yes, it’s Greek, and yes, it’s a creative business. This is why I love options.

Who Knows How To Lock In Profits?
Most option traders have no idea how to lock in profits. My former mentors did not teach me these tricks. It’s almost like magic really. We’ve been working hard as a group and coming up with adjustment techniques that are far beyond what I was ever taught, and I have a very expensive option trading education.

Learn The Secrets at San Jose Options
We’ve developed a technique to lock in profits on Broken Wing Butterflies, Calendars and other strategies. Imagine that you are 20% ahead on a trade, and that you can lock in the profit and still remain in the same trade with a possibility of making more! This is what we have done. There are few option traders in the world who know how to do this. This technique alone clearly sets San Jose Options apart from the rest!

San Jose Options Mentoring