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 theoptionclub@nospam.com (Christopher Smith) theoptionclub@nospam.com (Christopher Smith) Thu, 09 Sep 2010 11:06:00 -0700 Thu, 09 Sep 2010 11:06:00 -0700 http://backend.userland.com/rss e107 (http://e107.org) 60 John Summa, Ph.D., Position Adjustment Techniques http://www.theoptionclub.com/member/news.php?item.194.5
Register For The Presentation


John Summa, Ph.D., is the founder and president of OptionsNerd.com, LLC (Online Since 1998) which provides professional training and educational support to stock, options and futures traders. Dr. Summa is also an economist, author, and an options trader.

On Thursday we will discuss a few of the techniques that Dr. Summa teaches and uses to modify an option trade. Such techniques are very useful for keeping your trade out of trouble and responding to market changes.

The presentation is complimentary, but seating is limited so I encourage you to get yourself registered now and then clear your schedule for Thursday evening so that you can join us.

I look forward to seeing you then.

Christopher Smith
TheOptionClub.com]]> support@nospam.com (C.Smith) Tue, 03 Aug 2010 08:13:25 -0700 http://www.theoptionclub.com/member/news.php?item.194.5 Trading Room Update... http://www.theoptionclub.com/member/news.php?item.191.4
While the system was down PayPal continued to bill as that process runs on their server, but credit cards were not charged as that process is initiated from our server. We will be verifying that anyone charged while the system was down is properly credited and that any accounts not billed are processed and that the account remains active and accessible.

This upgrade took much more time than I anticipated, but it was needed. I am also looking into more ways of expanding our capacity to accommodate our ever growing video library. For the time being the David Vallieres Daily Review videos remain off-line as there are a large number of them and they are some of the older material that we have, but everything else has been restored.

This weekend we will continue our training sessions, addressing volatility as requested by one of our members in the forum. I hope you can join us for that presentation.

Thank you for your patience during the upgrade process!

Christopher Smith
TheOptionClub.com]]> support@nospam.com (C.Smith) Thu, 22 Jul 2010 07:50:05 -0700 http://www.theoptionclub.com/member/news.php?item.191.4 Tonight's Presentation http://www.theoptionclub.com/member/news.php?item.187.5 6:00 p.m. PDT / 9:00 p.m. EDT for what should be an extremely interesting presentation. Matt is the U.S. Navy FA-18 fighter pilot who has adapted the lessons taught at TOPGUN to help him achieve success as an options trader.

Join The Presentation


Even with my techie headaches I hope to have this presentation recorded and available in the download section tomorrow.

Christopher Smith
TheOptionClub.com

]]> support@nospam.com (C.Smith) Mon, 05 Jul 2010 12:40:17 -0700 http://www.theoptionclub.com/member/news.php?item.187.5 Temporary Service Outage - Update http://www.theoptionclub.com/member/news.php?item.186.4
Here is the good news...

Everything was backed-up on remote systems. Aside from the inconvenience there has been no long-term damage done of which I am aware.

The bad news...

I need to upload all of the video files. I began this process yesterday. As of this time, much of the Tradingology course is restored as well as the videos from last few live training sessions. I continue to upload video files and this will require some time to fully restore. I have not yet begun uploading the historical Daily Review videos produced by David Vallieres as I have prioritized these very low since they are somewhat dated. They will be restored eventually, however. It just takes a great deal of time to transfer the files from a remote location.

What now?

I have spent a good deal of time both yesterday and this morning on the telephone with the hosting company. My initial concerns were that the site had been hacked or otherwise compromised, but there seems to be no evidence that this occurred. Regardless, all administrator passwords will be changed. No credit card information is stored on our server so even if we were hacked your personal financial data is secure.

The technicians' best guess as to what happened has to do with the overall size of the site. The hosting company is no longer able to back-up the site as part of their routine service. In fact, we are about 5 times too big for them to accommodate as our service plan is currently configured. So, I bit the bullet...

A new server is being built for TheOptionClub.com and the Trading Room. Later this week the site will be physically transferred from its current server to the new machine. We will have more drive space, more memory, a larger bandwidth allotment, etc. It's supposed to be "bigger and better" in all respects. (Including price.) If all goes well, neither you nor I will notice the difference with the exception of improved reliability. I have also made arrangements for the hosting company to perform weekly and daily back-ups, which will hopefully eliminate this situation where I have to remotely upload large video files in bulk.

However, when the transfer is taking place the site will be down. This will be scheduled for a time when it is less likely to inconvenience anyone. Because the transfer will be to a new physical server I will need to update the DNS information, which tells the Internet where the website is located. Once I make that change it will take a little while for the changes to take effect. Again, we will schedule this whole operation for a time of low usage, i.e., in the wee hours...

What else?

Here is some more good news... I think.

1. I have been working on a comprehensive foundational options course that teaches the fundamentals of how options work. The curriculum is being tested and refined. I intend to start uploading those materials in the near future. As a Trading Room member you will have access to what will essentially be a beta copy of the course. I will need your feedback to make it as good as it can be. Once the course is more or less finalized I intend to make it available as a home study course and will consider conducting live classes. Some version of the course will become part of the Trading Room.

2. With the addition of the new course to the Trading Room and now the added costs I am incurring to purchase upgraded servers, back-up services, and other support the price of the Trading Room will increase. But not for current subscribers. As long as you choose to remain a member your monthly fee will remain where it is at and you will not be charged any new or additional licensing fees for any new content added to the library. Any price increase would be applied to new members, only. I do not know what the new pricing will be or when the pricing change will take place. A lot of that will have to do with how quickly and smoothly these changes take place with the server and with the final development of the new course. I suppose if you have a friend or two who are thinking about joining the Trading Room you might tip them off that they may want to make their decision sooner rather than later because once the price is increased I won't be making exceptions because if I make an exception for one person I pretty much have to make it for everyone else.

So, that's the news. A couple frustrating days for me but I did manage to watch some fireworks with my wife and daughter, so all is good here. We're getting on top of things, upgrading the infrastructure and spending money so hopefully the economy rebounds as a result. In all seriousness, I appreciate your patience and understanding and if there is anything I can do to make this transition a bit easier for you be sure to let me know. I'll to my best to make it right.

Christopher Smith
TheOptionClub.com]]> support@nospam.com (C.Smith) Mon, 05 Jul 2010 00:51:57 -0700 http://www.theoptionclub.com/member/news.php?item.186.4 A TOPGUN Pilot's Approach To Options Trading http://www.theoptionclub.com/member/news.php?item.185.5
After leaving active military service, Matt took the lessons he learned at TOPGUN and during his career as an FA-18 Hornet pilot and adapted them to civilian life. Specifically, he used the skills he had developed to survive and thrive as a fighter pilot to survive and thrive in the financial markets.

I am reading his book right now, "Sea Level To C-Level" which tells his story of transitioning from military to civilian life. Yesterday I spent some time on the phone with Matt, talking about that transition and how it has helped him achieve and maintain success as an options trader.

He and I talked about the same sorts of things I share with you here in the Trading Room. As exciting as it may be to fly a fighter plane into combat, these guys are professionals who have learned how to identify and manage risk. They have learned how to shift the probabilities to their favor and how to disengage when things just aren't going their way.

Matt brings a fresh perspective to the usually dry subject of risk management. I asked him whether he would be willing to join us on Monday to share some of those insights and perhaps a story or two.

Register For Monday's Presentation Featuring
Matthew "Whiz" Buckley


We had to change the time a little, however. So, instead of our usual 4:30 p.m. PDT start time we will be starting at 6:00 p.m. PDT.

Matt also asked that we open the presentation up to our entire community. I wanted to first let everyone in the Trading Room know about the presentation before broadcasting it to the entire community so that you can get registered.

There are limits to the number of people we can accommodate on the GoToWebinar platform. I don't think it will be a problem, but to be sure you can get a seat I encourage you to register now.

I will be recording the presentation and barring some sort of technical snafu the video will be added to the download library the following day. If you can make the live presentation it should be a great opportunity to gain some insight into Matt's approach and ask a question or two.

Christopher Smith
TheOptionClub.com
]]> support@nospam.com (C.Smith) Fri, 02 Jul 2010 07:49:17 -0700 http://www.theoptionclub.com/member/news.php?item.185.5 Disney Falls Below The 200 Day Moving Average! http://www.theoptionclub.com/member/news.php?item.184.6
Now, here's the thing. Up until the stop was triggered my mind had been playing all of the tricks on me that you might expect when a trade is not going the way you had originally hoped. Disney is a good company, right? Yep. Cramer was just touting it for his "kid's portfolio" and the analysts had just upgraded it, right? Yep. This stock is going to rally as soon as the market comes to its senses, right? You bet.

It's so easy to talk yourself out of executing your plan...

So don't! Yes, all of those things floating through my head were true but the bigger truth is that the market is bigger than all of us and will do what it wants for as long as it wants whether it makes sense to us or not. So, don't get into a debate with the market.

I'm out of my DIS trade...

The position was closed for a $2.93 credit. I suffered a loss of $1.12, not including commissions. I was trading two spreads and planned for a maximum loss of $500.00. The math works out to a loss of $224.00.

The story doesn't end there, however. The RUT position that I opened as a pseudo hedge was up. In fact, the profits as of yesterday offset all the losses on DIS. I was at break-even...

So, now what do I do with RUT?

Simple. I execute my plan. What was the plan? Part of the plan was to close the trade for a 10% to 15% profit. With the market down again this morning I canceled my stop order and then placed an order to close the position...

The vertical bear call RUT spread was opened for a credit of $1.83 and this morning I paid .55 to close it out, netting me a profit of $1.28. This was a ten point spread so my total risk was those ten points less my opening credit, or $8.17. My yield is the realized profit of $1.28 divided by the risk of $8.17, or about 15.7%.

So, I grabbed the upper range of my target yield a week after the trade was first opened.

Here is a lesson to learn...

I had a losing trade. It happens. It will happen to you. The trick is not to take it personally or to think of it as a personal failure. It's just part of the business of trading. Your mind will play tricks with you because your ego wants you to stay in the trade and be proven right.

I used a stop for two reasons: 1.) because if I was not sitting in front of my computer when DIS hit $32 per share I did not want to wait until the end-of-day to exit, and 2.) I want to separate my emotions and my trading as much as practicable.

I also had a winning trade. It happens. It will also happen to you. The trick here is to not mess it up. You established a sound trading plan when you opened the trade. Stick to it just like you stuck to the trading plan on the losing trade. I could have stayed in RUT to eek out some additional gains, but my plan was to take 10%, as much as 15%, and get out. That's what I did.

Total loss on DIS? About $224. Total profit on RUT? About $256. Net profit or loss between the two? A profit of about $32.

Not real exciting, but it sure beats an equity draw down plus you're probably going to work yourself up to the point where you'll be taking more than two trades at a time. If you can be right more than 50% of the time and limit your losses on those inevitable losing trades you should do just fine. But the key is to limit the loses like its your religion because if you lose sight of and fail to manage your risk, or stay in the losing trade and grow that loss out, you will need a lot more than one trade to turn things around.

One more thought before I stop typing here...

This is a very rough market to trade. If you're struggling realize that you're not alone and that there are many experienced traders having difficulty, too. Markets change. This one will change, too. If you can develop the skills in this market that prevent you from losing money you will be a seasoned steely eyed professional when things settle down and when we actually see a nice trend emerge.

When that happens you'll likely see your win/loss ratio improve. Resist the temptation to relax your risk management discipline, but take full advantage of those "easy" times.

Why not wait until the "easy" times come? It doesn't work like that. I can't tell you what is an easy month or a rough month until after it has occurred.

Christopher Smith
TheOptionClub.com
]]> support@nospam.com (C.Smith) Thu, 01 Jul 2010 08:20:42 -0700 http://www.theoptionclub.com/member/news.php?item.184.6 How Much Pain Did Yesterday's Sell-Off Cause? http://www.theoptionclub.com/member/news.php?item.183.6
Yesterday showed how right I was. The DJIA closed down 268.22 points today and DIS gave up nearly a dollar to close at $32.30, which is just 30 cents above my stop. Bad day for me, right?

Well, don't get too worried because on Sunday I also started talking about the idea of portfolio management. The basic idea being that your account does not have to be a bull or bear, but that you can run the two in your account at the same time. A little worried about your long delta positions? Look for a bearish trade to cut back on the positive deltas.

That's what I did last week. As I explained on Sunday, with my growing concern about market weakness I was looking at the many, many possible trades available to me. I decided that I wanted to find a good bearish trade and that I would add that to my account with the idea of hedging against losses on the DIS position.

But, this was not going to be a trade on DIS. Instead, I took a bearish trade entry signal I had received on the RUT and looked to construct a trade that would serve double duty as a directional play on the RUT and as insurance on my long DIS position.

How can I hedge DIS with RUT?

It really is not that wild a concept. It is commonly appreciated that the majority of stocks move in concert with the overall market. If the market goes lower I am pretty well assured that RUT will also move lower. If DIS moves lower, it's probably making that move with the rest of the market.

How is all of this working in real life?

Well, with the DJIA down over 250 points yesterday I lost $65 on the DIS spread. But, I made $140 on my RUT vertical bear call spread. I was up for the day!

Keep in mind that these are just two small positions that I am trading for demonstration purposes. But they are real-life live positions. The concept can be adapted and expanded for use in larger portfolios. The idea is to find trades that make sense on their own, but that compliment each other from a risk management perspective. For instance, if you have a bullish trade like I did and you are a bit concerned about the directional risk you have with it you might then look for a bearish trade on a similar product.

In my example, DIS tends to move along with the broad market and RUT, being a broad market index, is pretty much the market even though it is a small-cap index and DIS is a large cap stock. The correlation between the two is still sufficiently high that a high probability trade like an out-of-the-money vertical should provide me with the sort of directional hedge and positive trade expectancy I want.

I will continue to keep you posted on the trade. In the meantime, if you are interested to know more about how these trades were selected and the trade plans designed and implemented you might consider downloading the videos from the last two live training sessions.

Our next training session will not be on Sunday due to the July 4th holiday, but will be on Monday at 4:30 p.m. PDT. I will send out an e-mail with log-in information this weekend.

Christopher Smith
TheOptionClub.com]]> support@nospam.com (C.Smith) Wed, 30 Jun 2010 06:47:14 -0700 http://www.theoptionclub.com/member/news.php?item.183.6 Identifying Market Trends... http://www.theoptionclub.com/member/news.php?item.176.5
It's an old saying and on its face it makes a lot of sense. We can improve our probability of success by trading with the market trend. But how should we define trend?

Join The Presentation


It is a seemingly simple question, but answering it can be surprisingly difficult. Today we will tackle it head on and see what answers we arrive at.

Christopher Smith
TheOptionClub.com]]> support@nospam.com (C.Smith) Sun, 16 May 2010 16:20:04 -0700 http://www.theoptionclub.com/member/news.php?item.176.5 Trading in a Crisis with Mark Sebastian http://www.theoptionclub.com/member/news.php?item.175.5
The presentation promises to be informative and quite possibly one that could make a real difference for you in the coming weeks.

Register For "Trading In A Crisis"
with Mark Sebastian
Thursday, May 13, 2010, 6:00 p.m. PDT


Mark has provided an outline of what he intends to cover...

Units and Puts

  • what is a unit
  • why they are important
  • how and why they work
  • picking the right unit
  • example from last week


Trading In A Crisis

  • what happens to the markets
  • why this happens
  • how to take advantage if you are winning
  • how to protect yourself if you are losing
  • unwinding a winning or losing trade


When Is It Safe To Trade?

That seems like a lot of ground to cover in an hour, but I trust that Mark will do his best. I will also be on the line to add my own thoughts and observations. We look forward to having you join us for this presentation.

Christopher Smith
TheOptionClub.com]]> support@nospam.com (C.Smith) Sun, 09 May 2010 12:06:24 -0700 http://www.theoptionclub.com/member/news.php?item.175.5