Bear Market Blueprint - Security BEFORE You Need It

When do you think is the best time to buy a home security system?

Would it be after someone breaks into your house or before?

Of course, it would be before you are burglarized. After the fact doesn’t help you prevent a loss.

When looking at a market crash, the same rule applies.

The best way to prepare for a market crash is beforehand.

I've just added my Bear Market Blueprint training to MarketClub Options - my full and comprehensive options training course.

The Bear Market Blueprint covers…

  • 7 methods I use to protect my money during a market crash.
  • How to make money when the market crumbles.
  • The buy and hold strategy we used to triple our 401K account.
  • And much more…

In my training, I'll walk you through this blueprint and show you the plan that MarketClub Options will put in place when the market shifts.

Learn More About MarketClub Options

Sincerely,

Trader Travis
MarketClub Options

Buying Call Options - Defining Risk, Optimizing Time Value and Realizing Gains

Options can provide an alternative approach to the traditional buy and hold strategy. Buying call options can add value to one’s portfolio via leveraging a small amount of cash while defining risk with unlimited upside potential. Simply put, buying a call option is bullish in nature as the buyer is positioning the trade with the thesis that the underlying shares will increase in value. When one buys a call option, she is buying the right to purchase shares at a specific price on a specific date in the future for a nominal price. In this scenario, the buyer thinks the shares are undervalued hence why she is willing to buy the option now to secure the right to purchase shares in the future at a higher price. If the shares approach the specific price or rise above the specific price before the expiration date, then the underlying option becomes more valuable. This more valuable option can now be sold higher than when she purchased the contact to realize gains. Regarding percent, call options can be very profitable and scaled as needed. The risk in buying call options is capped based on the amount of the option itself thus downside risk is defined, and upside potential is great. Here, I’ll discuss buying call options along with my approach, strategy and real-world outcomes.

Anatomy of Buying Calls

I rarely buy call options however in opportunistic scenarios the risk-reward is very favorable given a decent time horizon. Nominal amounts of cash can be deployed in opportunistic scenarios to capitalize on sell-offs in high-quality stocks. Buying calls can be implemented as a means to leverage cash on hand without committing to purchasing the underlying shares of the company with the end goal of capitalizing on share appreciation via the option contract. The option price is determined by two variables, time and intrinsic value. The amount of time until expiration of the contract determines the time value, the longer the contract will translate into more time value in the contract (Figure 1). Generally speaking, if the underlying stock falls in value (moving away from the strike price), then the option will decrease as a function of time value. Alternatively, if the underlying stock appreciates (moving towards the strike price), then the option will increase in value as a function of time value. As the stock moves away or towards the strike price, the underlying stock is less likely (decrease in option value) and more likely (increase in option value) to reach the strike price, respectively hence the change in option value.

Intrinsic value isn’t applicable here until the underlying security breaks through the agreed upon price (strike price) before expiration. Every penny that the stock appreciates beyond the strike price is a penny of intrinsic value that increases the value of the contract. Any increase in the stock price will result in an increase in the option value regardless. Continue reading "Buying Call Options - Defining Risk, Optimizing Time Value and Realizing Gains"

10-minute trade update: 1 month later...

If you were able to attend our live MarketClub Options Webinar that I hosted in March, you are probably curious what happened to the three 10-minute trades that we placed on AMAT, INTC, and NEE.

Watch the webinar recording below (no registration needed) to see how and why we placed those three trades.

MarketClub Options

Now here's your update: as of 4-26-18, all 3 trades show a small loss of $125.

Am I embarrassed that the live trades I placed are losing money? Nope!

Why?

Because losing money is normal.

A few losing trades here and there are no big deal. In fact, I teach (and follow) a money management formula that allows up to 25 losing trades in a row before it starts to hurt your account.

It is important to me to show how losses like this are par for the course. Ultimately, losses are overshadowed by your gains when you use a time-tested strategy like the MarketClub Options Blueprint.

Enjoy,
Trader Travis
MarketClub Options | options@ino.com

AbbVie Put/Call Combination Produces 400% Greater Return

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction and Set-Up

Below I’ll discuss my year-long call/put combination using AbbVie as an example. I’ve successfully been able to obtain a 15.3% return based on the current stock price while the buy and hold strategy would've only yielded 3.6% return. This is greater than a 400% difference in overall returns for this given stock over the past year. Leveraging the coupling of calls and puts around a core position over time can accentuate total returns and mitigate risk on a given stock. As discussed in more detail below, covered calls and covered puts can be combined to one's advantage. This is especially true in large-cap, dividend-paying stocks that tend to trade within a narrow range for long periods of time. AbbVie Inc. (NYSE:ABBV) is a prime example that fits this narrative and thus the stock of choice for this piece. Over the past two-plus years this stock has traded in a tight range between $55 and $65 per share while paying a dividend of ~4% on an annual basis (Figure 1). The company has strong fundamentals, financial stability and a robust pipeline for potential growth and sustainability. The goal here to initiate a position in AbbVie using a covered put to purchase the stock at a lower price than it's currently trading at a future date while collecting a premium in the process. If the stock isn't assigned then walk away with the premium and freed up cash that was earmarked for the potential purchase. If the stock is assigned, then shares are purchased at the agreed-upon price (strike price), less the premium for the actual purchase price. Now we've entered the position via leveraging a covered put, now the shares can be leveraged for covered calls to extract additional value throughout the holding of the stock while collecting the dividend. Ideally, we want to enter the position via a covered put and endlessly sell covered calls while collecting the dividend. However if the stock is called away during the selling of a covered call then this process can be repeated while being cognizant of the x-dividend dates to enhance overall returns.

Chart of AbbVie Inc. (NYSE:ABBV)
Figure 1 – AbbVie’s tight trading range over the past 2-plus years
Continue reading "AbbVie Put/Call Combination Produces 400% Greater Return"

Realizing Gains Without Owning Shares Via Leveraging Cash

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

I’ve written many articles highlighting the advantages options trading and how this technique, when deployed in opportunistic or conservative scenarios may augment overall portfolio returns while mitigating risk in a meaningful manner. Here I’d like to focus on leveraging cash-on-hand to engage in options trading, more specifically selling covered puts. In laymen’s terms, I’ll cover option variables, an example, strategy and empirical results with commentary.

The Questions

1. Why buy a stock now when you can purchase the stock in the future at a lower price while being paid to do so?

2. Why buy stocks at all when you can make money on the underlying volatility without ever owning the shares?

Overview

Timing the market has proven to be very difficult if not altogether impossible. However creating opportunities to lock-in downward movement in a given stock one is looking to own is possible. If a stock of interest has substantially fallen to at or near a 52-week low, then one has an option to “buy” the stock at an even lower price at a later date while collecting premium income in the process. Alternatively, it's also possible to make money on the option itself without owning any shares of the company via realizing options premium gains as the underlying stock appreciates in value off its lows. This is called a covered put option, covered in the sense that one has cash to back the option contract. Leveraging covered put options in opportunistic scenarios may augment overall portfolio returns while mitigating risk when looking to initiate a future position in an individual stock. In the event of a covered put, this is accomplished by leveraging the cash one currently has by selling a put contract against those funds for a premium. It's also possible to make money on the option itself without owning any shares of the company via realizing options premium gains as the underlying stock appreciates in value. Continue reading "Realizing Gains Without Owning Shares Via Leveraging Cash"