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TheOptionClub.com helps individual investors and traders build the foundation for an options trading career. Discovery how options really work, calls and puts options are explained, as are advanced option strategies. When you are ready we will also reveal how you can begin building an option trading business to generate a monthly cash flow, grow and protect capital, and speculate about market direction.
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The Trading Room is our private members' area. Membership provides access to priority support in our members-only forum, live training events, and an expansive library of trading videos and other materials.
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Not only will you find articles addressing numerous subjects related to options and trading, but you will also find videos and other materials intended to help you build a solid understanding and foundation.
articles.php
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Option strategies work best when they are applied to favorable market conditions. Some option positions work well in bullishly trending markets, others are better suited to slow moving or consolidating markets, and there are those that thrive in bearish conditions. Learning to analyze market conditions and then select an appropriate option strategy will go a long way in helping you become a more effective and profitable trader.
market_analysis_and_theory.php
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Probability of Success and Probability of Touching studies can both be valuable tools, but it is important to recognize that they have significant limitations and that they cannot be relied upon to accurately quantify the true probability of a trade returning a profit or, even more imporatntly, avoiding a crippling loss.
why_probability_of_success_or_touching_does_not_work.php
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The ongoing financial crisis has made the central bank's decisions -- interest rates, quantitative easing (QE2), monetary stimulus, etc. -- a permanent fixture on six-o'clock news. Yet many of us don't truly understand the role of the Federal Reserve. For answers, let's turn to someone who has spent a considerable amount of time studying the Fed and its functions: EWI president Robert Prechter. Today we begin a 3-part series that we believe will help you understand the Fed as well as he does. (Excerpted from Prechter's Conquer the Crash and the free Club EWI report, "Understanding the Federal Reserve System.") Here is Part I.
robert_prechter_explains_the_fed,_part_i.php
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The ongoing financial crisis has made the central bank's decisions -- interest rates, quantitative easing (QE2), monetary stimulus, etc. -- a permanent fixture on six-o'clock news. Yet many of us don't truly understand the role of the Federal Reserve. For answers, let's turn to someone who has spent a considerable amount of time studying the Fed and its functions: EWI president Robert Prechter. Today we begin a 3-part series that we believe will help you understand the Fed as well as he does. (Excerpted from Prechter's Conquer the Crash and the free Club EWI report, "Understanding the Federal Reserve System.") Here is Part I.
robert_prechter_explains_the_fed,_part_ii.php
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The ongoing financial crisis has made the central bank's decisions -- interest rates, quantitative easing (QE2), monetary stimulus, etc. -- a permanent fixture on six-o'clock news. Yet many of us don't truly understand the role of the Federal Reserve. For answers, let's turn to someone who has spent a considerable amount of time studying the Fed and its functions: EWI president Robert Prechter. Today we begin a 3-part series that we believe will help you understand the Fed as well as he does. (Excerpted from Prechter's Conquer the Crash and the free Club EWI report, "Understanding the Federal Reserve System.") Here is Part I.
robert_prechter_explains_the_fed,_part_iii.php
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Of all the belief systems of Wall Street, few can claim the devoted following of the Efficient Market Hypothesis, the idea that stock prices adhere to the same laws of supply-and-demand that govern retail products. Once coined the theoretical "Parthenon" of economics, this notion has consistently endured the test of time ----- until now. Academics and advisors across the globe are currently exposing crack after crack in the "Efficient" model so deep as to bring the entire theory crashing to the ground.
efficient_market_hypothesis.php
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Learn the fundamentals of technical analysis in a free 7-part video training course hosted by an experienced professional trader.
understanding_technical_analysis.php
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This is the first of seven videos that introduce the topic of technical analysis from a trader's perspective. Each video is a short presentation that covers a fundamental aspect of chart reading and the use of technical analysis as part of your trading discipline.
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This video profiles two high probability chart patterns, that you can start incorporating into your chart analysis today.
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This installment focuses on simplifying your analysis. It touches upon basic trend analysis and then reviews some basic studies such as MACD, Stochastics, and other oscillators. The goal is not so much to pick tops and bottoms, but to identifying emerging trends and then jump on board for a significant portion of the move.
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Adam Hewison covers three methods of using stop losses in this video. If you're trading without stops, it's probably because you're unsure about how to use set your exit points.
Take about 7 minutes and watch this video, which will review three methods for selecting exit points. Incorporating this lesson into your trading could be one of the best things you could do for your financial success this year...
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In this edition of the Traders Whiteboard we are introduced to the concept of establishing a trading game plan.
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In this 6th lesson, we get into the interplay between fundamental and technical analysis. The whole video is a little under 7 minutes in duration, but it touches upon a couple key concepts so it's time well spent.
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This seventh video covers continuation patterns. A continuation patten is one that signals a continuation of, or a return to, the prevailing trend.
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Aggressive marketing and the media can leave us with an inflated notion of what can realistically be achieved in our investment and trading accounts. We all like to hear about the spectacular gains realized on a handful of select trades. What we do not talk about are all of the lesser performing trades - not to mention the losing trades - that tend to moderate the overall performance of our portfolio. While it is fun to imagine achieving returns like those alluded to by those marketers and media pundits, actually chasing them can leave you over leveraged and exposed to catastrophic loss. Establishing realistic profit targets will afford you greater stability within your portfolio and provide you with a foundation from which to achieve long-term capital growth.
realistic_trading_expectations.html
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If you are new to options we will provide you with a basic understanding of what options are and how they work in the articles and other resources we have made available here. Learn the basic functioning of an option contract, the difference between a call option and a put option, and receive the answer to several questions important to both novice and expert options traders.
options_basics.php
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A basic overview of stock option contracts and an introduction as to how they can be used in your trading. Both call options and put options are covered.
overview_of_stock_options.php
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Before you can hope to experience long term success you will need to invest your time, your diligent efforts, and some money to learn about the markets and how to navigate them by reducing risk and leveraging profitable investments and trades. If you choose to pursue the education, you will have the oppotunity to learn how to truly build wealth consistently and methodically.
learn_about_stock_option_trading.php
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Explanation of a stock option, call option and put option, including strike price, expiration date, and underlying security.
what_is_a_stock_option.html
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A long call option can be used to reduce market risk, while also leveraging profits from stock option trading.
call_option.html
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The put option is reviewed as a tool to protect a stock portfolio from losses, to profit from falling prices with limited trading risk, or to buy stock at below market prices.
put-option.html
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An introduction to stock option selling. Selling options is also referred to as option writing and generates a cash premium to the seller's account. We cover the basics of being an option writer.
selling_stock_options.html
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Options are complex, derivative securities and their price is influenced by several factors.
options_pricing,_volatlity_and_the_greeks.php
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A short video presentation to help you master the greeks and stock option pricing conepts.
key_concepts_stock_option_anatomy_and_pricing.php
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Often overlooked and mis-understood by new option traders, learning how to price stock options is a critical skill that cannot be overlooked. The option greeks are fundamental to success.
stock_option_pricing_and_the_greeks.php
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Understanding the effects of theta, or time decay, is another key to improving your stock option trading results. Learn how to increase your probability of profiting!
theta_and_time_decay.php
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Vertical credit spread stock option trading strategy of two varieties; bull put spread and bear call spread. When properly used, they are high probability trades in range bound or trending markets.
vertical_credit_spread_option_trading.php
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Bull put spread and bear call option spread defined. A high probability credit spread for trading range bound or trending markets.
bull_put_and_bear_call_credit_spread.php
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Take your stock option trading knowledge to the next level. Discover how to combine two credit spread positions to reduce risk and enhance profits by creating an iron condor.
the_credit_spread_and_the_iron_condor.php
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Learn how to trade the iron condor option strategy on the SPX or other large stock index for consistent monthly trading profits.
anatomy_of_an_iron_condor_option_trade.php
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butterfly_option_strategy_overview.php
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A central theme in our curriculum is the concept of diversifying risk across different securities, different price levels, and different time frames. In assembling the Tradingology course, David Vallieres combined a wide range of techniques and trading concepts - highligting the use of multiple securities, differing price level risk, and multiple time frames. We have licensed the course, which is now available to Trading Room members.
tradingology_course_by_david_vallieres.php
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The "Black Swan" in the context of options trading is an unexpected dramatic price move that can devastate monthly income option trades. By their very nature these events are not predictable. In the Trading Room we discuss trading methods to incorporate protection into an options portfolio to help reduce the risk of loss. These methods are not always readily apparent because they do not adhere the underlying normal distribution assumption through which most analytic platforms view the market.
understanding_black_swan_market_events.php
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By legging into an iron condor a trader hopes to enhance the overall yield and probability of success for their trade. The market offers nothing freely, however. Discover the pitfalls of legging into a trade before deciding whether you want to attempt this practice yourself.
should_you_leg_into_an_iron_condor.php
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Iron condors are typically constructed so as to provide a high probability of success to the option trader but this does not guarantee success because the market is capable of making very quick moves in excess of three standard deviations. When one of those moves occurs, the iron condor trader is vulnerable and will most likely experience a significant loss of capital absent some intervening factor preventing the loss. An iron condor trader must really take on the role of risk manager. Once you realize that your attention needs to be focused upon loss avoidance and mitigation, then you can being taking steps to prevent the crippling blow while allowing the profits to accumulate.
iron_condors_and_risk_managment.php
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Every month options are sold by traders who seek a steady monthly return ranging anywhere from a percentage point or on up. Monthly income trading has become popular with options traders, but remains an elusive objective. Here we tackle the myth of monthly income trading.
the_myth_of_monthly_income_trading.php
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The Parabolic SAR is a technical analysis tool used to set training stops. Discover how to use the Parabolic SAR to effectively identify stop-loss price triggers on your directional option trades.
how_to_use_the_parabolic_sar_to_set_stops.php
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trading_as_a_business.php
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Ron Ianieri from Options University is exposed! Learn about Ron's background and what qualifies him to be your option trading instructor.
ron_ianieri.html
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Radioactive Trading by Kurt Frankenberg is a married put strategy that employs several position adjustments to lock in profits resulting from favorable market moves. The service tends to over sell the married put option strategy and is primarily a stock picking service that will benefit during bull markets.
radioactive_trading_review_-_kurt_frankenberg_trades_married_puts.php
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The Trading Room is the private members-only part of TheOptionClub.com. The monthly fee is just $30, less than a daily cup of coffee at that coffee house we all enjoy so much, but with so much more to offer. A HUGE video download section, live training webinar presentations, and a member's support forum where you can get help with pretty much anything related to options and options trading. You are welcome to join us anytime you choose.
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An archive of stock and option trading videos.
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On Tuesday, January 10, 2012, Dan Sheridan joined us to talk about and share some thoughts about iron condors - whether you should trade them and, if so, how you might want to trade them - in the coming months.
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John Summa, Ph.D., is a professor of economics and a very experienced trader who has a particular affinity for trading iron condors. He has developed a series of iron condor adjustment strategies or “defense tactics” that he uses when his trades come under pressure from an unfavorable market move. Some of those adjustment strategies were shared with us during a one-hour web-cast presentation.
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This was a one-hour webinar presentation featuring Dan Pasarelli, a veteran professional options trader, educator and author. Attendees of this presentation came to learn how to find and manage quality time spread option trades, learn how to "roll-in" and "roll-out" of time spreads, and discover how to use adjustment techniques to best capture profits, and repair losing trades.
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On Tuesday, August 16, 2011, Mark Sebastian from the OptionPit joined us for a live after-market presentation to share some ideas about the types of options trades he believes make sense under the market conditions that we have been witnessing lately. While this presentation was not intended to serve as any form of trading advice or recommendation, it offered insight and ideas into how we might look at the market as retail traders for opportunities created by the uncertainty and volatility that accompany these types of market sell offs.
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There were two key concepts addressed during this presentation. The first concept is the idea that to be profitable over the long term there needs to be a focus upon risk management, so that if you earn 5% on a trade in the “winning” months that you cannot take a 15% or greater loss during a “losing” month. We then introduced some current and former students from Sheridan Mentoring to share some of their trading results so that we could see the level of discipline they were using to manage risk and limit losses and how each found a method to remain accountable to someone concerning their implementation of and adherence to their trading plan.
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The Lentz Volatility Indicator was developed by Steve Lentz to assist options traders in evaluating whether market conditions are favorable for non-directional option selling strategies such as iron condors, butterflies, or calendar spreads. In this one-hour presentation Steve Lentz provides a thorough explanation of volatility in the context of options trading, shares the rationale behind his development of the Lentz Volatility Indicator, and then discusses how it might be used to guide your option premium selling.
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Popular media and the marketing that finds its way into our mailbox and e-mail folder focus upon the idea of achieving spectacular gains, which has left retail investors and traders with very optimistic financial targets. Mark Sebastian joined us to throw some cold water onto the discussion and confronted us with a question...
What are realistic trading expectations?
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Modern Portfolio Theory (MPT) is the foundation for much of the investment advice provided to retail investors. In this video Christopher Smith from TheOptionClub.com and Dan Sherdian from Sheridan Mentoring take a look at the effectiveness of MPT and discuss methods and techniques that might provide the retail investor and trader a strategic advantage over portfolio diversification and the traditional "buy and hold" approach.
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Charles Cottle provides an introductory training session for his Diamonetrics Java technical analysis tool. Technical analysis seeks out patterns in the market that are believed to provide a trader with a higher probability of correctly anticipating market direction. Charles Cottle also looks for symmetry within the market. As you will see in this training video, Diamonetrics is a symmetrical transparent diamond-shaped grid that can be used with any charting application you might have on your computer - everything from the highest end proprietary charting package to basic free charts you might find on the Internet.
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Weekly options have become a somewhat popular subject of discussion. They do offer many benefits, but there are also some potential pitfalls involved. Dan Sheridan joined us to provide some insight into both the good and the bad of weekly options.
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Mark Sebastian presented his "Reverse Harvey" butterfly adjustment technique. As options traders we typically look at adjustments as a way to "save our trade" when things are not going well in the market for us. but tend to overlook the opportunities we have to reduce risk and lock in profits when a trade is performing well. This butterfly adjustment technique falls into the later category; it allows you to reduce risk in the position.
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In this timeless trading lesson on Elliott wave analysis, Elliott Wave International's Senior Currency Analyst Jim Martens gives you an answer to a very important question: "If you've identified the wrong Elliott Wave pattern, how do you find the right one?"
how_to_find_correct_elliott_wave_patterns_in_market_charts.php
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The trials and tribulations of these four countries (that have run up huge deficits) have been well known for quite some time. What is more important in my opinion is not the size of the debt, which is staggering, but rather what is going on with market perception. It's more important to the market than Ireland, Greece, Portugal, and Spain combined
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I have been very pleased with the results I have been getting with a trading system called the “RMO.” In this live presentation I explain exactly what the RMO is and how I use it to trade options.
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The compound collar is a trading method developed by Mark Espy, designed to protect stock position against a market decline. He uses a married put to lock-in profits and protect his equity position during rallies and rolls into a collar position by selling front-month calls under specific conditions. The result is that Mark sleeps very well knowing that his portfolio is safe.
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An introduction to the subject of option volatility featuring guest speaker Mark Sebastian from the OptionPit. Discover the fundamental concepts behind volatility and its effect upon option prices.
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Charles Cottle demonstrates advanced dissection techniques which allow a trader to identify the hidden realities within a larger option position, allowing for a discrete modification of the risk-to-reward profile of a complex option position. During this presentation Charles Cottle identifies and dissects out a series of "baby butterflies" from a larger butterfly position.
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Adam Hewison from MarketClub demonstrates how to analyze a trending currency market. In this presentation he focuses in on the Aussie Dollar to reveal powerful trend analysis studies.
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Steve Lentz from Discover Options joined us to discuss the concept of divergence in the MACD and how it might be used as part of a credit spread trading system.
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Mark Sebastian from the OptionPit returned for the second part of his presentation on the VIX, VXX and VXV. In this session we got down to brass tacks and began talking about how we can use all of this knowledge about these products to trade and hedge our portfolios.
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Mark Sebastian digs into the VIX and other related products, to explain what this index is and how traders might use it to their advantage. He also explores ETN (Exchange Traded Note) products like the VXX and VXV, explaining what they are and how they can be used. It was a lot of information that was covered during this presentation.
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Brad Stafford from Market Club demonstrates how exceptional returns can still be found in the stock market. The key is identifying and trading with a confirmed trend using a reliable trading method.
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The iPhone will potentially have a signifcant impact upon Apple. Adam Hewison took some time to review the charts and share his insights on trading Apple in advance of the product launch.
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Build your trading library with books, videos, and other materials from our trading bookstore.
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An options blog providing a constant stream of thoughts about today's option trading opportunities, upcoming trading events, and a fresh perspective on the world of options.
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Links to some of the best stock and options trading resources available on the Internet.
resources/resources.php
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This discussion forum is an adjunct to TheOptionClub.com community, which has been helping people for the last several years learn about stock options. Whether you are new to options or a seasoned veteran, we are happy to have you as part of our community.
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Contact Pages are are great way to engage with your visitors and demonstrate that you are a real person rather than simply an anonymous web site.
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