Today, I’m going to let you in on the secret to my success trading options — a simple, yet powerfully effective approach, carefully calibrated over a 45-year career. I believe these tactics to be crucial for any trader actively managing his or her own account in this 24/7 world of online trading.
As an options trader, you have the potential to make 10 times the profits over straight stock trading. That's exactly why many people are interested in learning to trade options. It doesn't matter if your account is $1,000 or $100,000 -- there are profits you can make while risking only a very small percent of your money.
And with my specialized “near-certain” strategies, you actually get paid to put on a trade! In Maximum Options, I show you how to start collecting money every month with these lesser-known options strategies.
In fact, I’m extremely pleased you decided to request this Special Report now.
At Maximum Options we specialize in what I call “near-certain” trades — strategies proven to produce winners at a remarkable 85% win-rate.
And you’re getting in the mix just at the right time. Shortly, you’ll have the best opportunity on 2018 to join me in trading there - at a heavily discounted price. So please keep an eye on your email inbox.
But first, the best trades start with the best opportunities, so it's important that I show you how I choose my personal trades which I then share with my Maximum Options subscribers.
Look for bargains when there's "blood in the streets."
Above all, I’m a bargain hunter. I’m looking for a situation where panic or “blood in the streets” is occurring that brings a high-quality stock down dramatically. Then, I take advantage to get positioned on a contrarian bullish play.
I can always tell if it’s enough of a panic to fit that criteria if I have the feeling in my gut that the market is going to fall apart. That’s how I felt with February’s big move down of some 12%. But for me to get interested, it has to be a stock that I like overall.
Right now, a prime example of a stock in that category is General Electric (GE). Everybody hates the stock, it’s dropped dramatically, they’re ready to hang the former CEO…this is the kind of a stock that I’m interested in long-term.
In deciding whether to take this sort of position, I look at price-to-earnings ratios and any other sense that there is some value there. For example: Do they have any real assets? What’s the price to book value?
And I’m also looking at, do they produce enough cash for the company to last a long, long time? You always want that to be the case — and that had been the problem with GE; it just was not generating enough cash. But now, my indications are that it is.
Get the best odds of success.
Just as importantly, I’m looking for “sure bets.” A very high probability of winning is critical to me and something I’ve always targeted in my 45 years trading options. My computer program, Option Master, has a feature in it that tells me what the probability will be — and I kind of follow that.
More generally, on the long side, I do not like to invest in anything where I spend a lot of money upfront. So, if I’m bullish, I’ll often look for call debit spreads where I’m putting a small amount of debit at risk — but getting a very expanded potential reward.
That sets me apart from some of these commentators who are the “option experts” on TV. Their debit situations are much too expensive. And the problem is, with a debit position, you need the stock to move…and the further it has to go to be profitable, the more dangerous it is — and the less likely to be successful.
We were able to pay just $0.29 for a TripAdvisor (TRIP) call debit spread in July, for example. Personally, I use TripAdvisor all the time and find their ratings to be critical. So, when the stock got to an area at which I saw good odds of a rally — and I spotted unusual volume in TRIP calls — I was willing to take a contrarian bullish position. We bought a $40 strike call and shorted a $44 strike call to take our upfront cost down to $0.29. A couple weeks later, our TRIP call debit spread had climbed to $0.80, allowing us to take 175% net profits.
But, on the other hand, you also have to keep in mind that 80% of all options expire worthless. Where is the profit going to be made from that outcome? From the writing side of the equation. That’s where the professionals are…and that’s where the amateurs are not.
I’m aiming to win 85%–90% of the time in plays that I make. So, on the bullish side, those "near-certain" plays would be put writing or put credit spreads. If I’m bearish, I’ll do call credit spreads, but I typically avoid naked calls because of the danger to the buyer.So, while trading is a 50-50 crapshoot for most people, you can do much better with my methods. For example:
We traded Yahoo (YHOO) 7 times — all winners — for $2,310 profits.
14 Twitter (TWTR) trades made us $7,900 richer.
Trading Facebook (FB) 6 for 6 earned $2,540 gains.
8 eBay (EBAY) trades handed us $2,620.
We banked 8 winning Baker Hughes (BHI) trades for $6,600.
That’s $21,970 profits for just 5 ticker symbols, trading 10 options contracts each time. And, knowing that we had the highest odds of success, we were able to sleep peacefully while doing it.
And soon you’ll have the opportunity to join me at Maximum Options at the very best price of 2018. Watch for all the details coming your way soon. I know you’ll love our easy, near-certain trades proven to win 85% of the time!
Assess the stock's volatility to find "fast action."
My personal trades that I share in Maximum Options are all pretty short-term ideas. I take profits very quickly once they materialize. We do not wait around and see what’s going to happen next. In that regard, it’s very critical to analyze the chart to determine technical support levels, because that lets me know where to get out if things go wrong.
To find the right position, volatility is your friend. And remember, there’s two sides to the coin. If you’re going long, you’re looking for a quick move in the future. In the midst of the February sell-off, I spotted just such an opportunity in the oil market. We put on a bearish position — a United States Crude Oil ETF (USO) put credit spread — and nabbed 80% profits just 2 days later.
On the short side — with put writes and credit spreads — you want the opposite. At the outset, you want to get in when volatility is high…but is likely to slow down very soon. That way, the shares won’t move too far while you’re in the position.
That’s why I love using exchange-traded funds (ETFs). They might make a large move on a dramatic headline, but ultimately they won’t go too far; since it’s a blend of so many different stocks, there’s not a lot of surprises there.
iShares 20+ Year Treasury Bond ETF (TLT) is one of my go-to funds for this strategy. Most recently, as bonds apparently move into a bear market, we took a bearish TLT call credit spread in November — and again in January — for 100% returns each time.
Take the market's temperature with the VIX.
Overall, the CBOE’s S&P 500 Volatility Index (VIX) is the lead. Since the VIX is calculated based on the premiums traders are willing to pay for next-month puts and calls on the S&P 500, it’s a good barometer of market sentiment. If the VIX is down low, there’s no need to gear your portfolio more bearish. But if the VIX starts to increase, you want to add options that provide “portfolio insurance.”
In other words, if the market starts to get wilder (like it is now), then I’m going to have a put debit spread in there as protection. That way, if the market does collapse or come down quickly, we’re going to be in a good position to make some big profits.We certainly did so during the recent sell-off. As the market correction deepened on Feb. 7, we put on a SPDR S&P 500 ETF (SPY) put debit spread, to help protect bullish positions we had elsewhere in our trade line-up. The very next day, we took half-profits of 122%, and the day after that brought a 234% second-half profit!
I love volatility because it expands the option premiums. When you’re doing put writing or credit spreads, like I do, you need premium to do that. But at times like these — when the volatility is a lot higher than it’s been in a long time — you do want to have some insurance as well.
Find stocks that are breaking out of trading ranges.
What I really like is to see a breakout from a long trading range — to the upside or the downside. Then I can key in on that with an option position.
With trading ranges, the tighter they are, the better…and when they do break out, you either go calls or puts, depending on the direction of the break out. That’s my technical angle that I use all the time: a slow-moving stock that suddenly breaks to the upside or the downside.
And I think the perfect example of that is a recent trade in American International Group (AIG). I went into an AIG Mar. 16th $55.50 naked put write, but I knew if it broke all the way through support at $58 and headed to $57, I was going to get out. When you are short and you’re close to the money, you better really be concerned, because you just don’t know what’s going to happen next, okay? And it did then break the long-term support line…so, I got out quickly. I don’t fool around with risky positions.On the flip side, American Express (AXP) was already breaking through — to the upside — when I recommended a bullish play in mid-September. It had been quite a while since Costco (COST) dropped American Express for its members’ cards, and since other credit-card companies had been doing extremely well, I figured it was about time for AXP to leave the doldrums behind. Sure enough, our AXP call debit spread paid off in less than two weeks with a 68% profit.
To sum it all up, here are the keys: find bargains; look for panic and “blood in the streets”; and also look for sure bets — a high probability of winning. Most often, I’ve found, that involves either put writes or credit spreads.
In closing, I’d like to thank you for your interest in my Special Report and Maximum Options, where we use pro-style strategies that produce winners 85% of the time.
Better yet, I present these trades in a way that make them incredibly easy for you — with full, easy-to-grasp buy and sell instructions.