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Daily Routine
Investing Education Websites
Steve Fought
stevefought@aol.com
1. OPTION PLANET – TOS
Options for Traders
An options course aimed to equip you with all the tools necessary to dive into
complex option strategies.
While this is the most basic class we offer, it is not beginner-level class.
SATURDAY - 03/07/09: 9:00 am - 3:00 pm
Sheraton Delfina Santa Monica
530 W. Pico Blvd.
Los Angeles, CA 90405
(310) 399-9344
Got to TOS or Options Planet for more info
Upside is
Free.
No need to take vacation day
Sat so traffic will be better
2. OIC SEMINAR
Options Industry Council
Saturday, March 14th
Hilton Orange County Costa Mesa
3050 Bristol Street
Costa Mesa, California, 92626
Schedule:
7:30 a.m. Registration
Opens 8:30 a.m. Options Fundamentals
10:15 a.m. Developing a Trading Strategy
12:15 p.m. Option Greeks and Volatility
1:15 p.m. Technical Analysis and Charting
2:30 p.m. Rapid Fire Stock Analysis
4:00 p.m.Program Concludes
For more information, visit OptionsEducation.org
or call 1-888-OPTIONS (1-888-678-4667).
Garden Grove
OPTIONS PLANET - TOS
Options in your IRA
Learn defined-risk option strategies that can be used alone or in conjunction with a stock
and mutual fund portfolio in your IRA. And stick around for the "how to's" of order
entry and execution.
WEDNESDAY - 04/08/09: 9:00 am - 3:00 pm
Marriott Anaheim Suites
12015 Harbor Blvd.
Garden Grove, CA 92840
(714) 750-1000
Burbank
Options Planet - TOS
Position and Portfolio Management
An intermediate level course that teaches you how to take all the principles you’ve
learned and put them to work as you manage your positions and portfolio
THURSDAY 04/09/09: 9:00 am - 1:00 pm
Burbank Airport Marriott Hotel and Convention
2500 Hollywood Way
Burbank, CA 91505
(818) 843-6000
INVESTOOLS RENEWAL
Negotiable on renewal
$17 per month or lower.
Resigned because Investools helped me
save tens of thousands of dollars in 2008
with their 401k - 5 and 10 year chart idea
Daily Routine
Upside to User group
Nobody is trying to sell me anything
Looking for same thing on the web
Like minded, like us
People who want to increase trading skills
or even start to trade for a living
The training info is something we would have probably had
to buy in the past.
Now it is free – Available anytime
And it will only increase in the future
DAILY QUICK CHECKING
OVERALL MARKET
THE KIRK REPORT
CHARLES KIRK
http://www.thekirkreport.com/
Charles stays home and just trades for a living.
Wife is a teacher so that covers the medical insurance
Just a quick blog read
He is a voracious speed reader and spends a fair amount of his time
just reading and studying the markets and basic economic theories.
Originally studied to be a lawyer and branched into trading.
AIRELON
Daniel Shy Paul Young
AIRELON (Dan TV)
His daily blog is at http://investorandtrader.blogspot.com/
His whole series of Vlogs is at http://www.informedtrades.com
More on Informed Trades below
Daniel is another full time trader like Charles.
More philosophical and big picture.
Swing trader and Position trader
Also does a fair amount of futures trading
He started with Ken Robert also ..in 1996
Not as much into the details or step by step procedures on how to actually do trades.
CONDOR OPTIONS
http://www.condoroptions.com/
Site is pretty much dedicated to trading Condors
And you can pay to get actual Condor trades
They seem very intelligent .. maybe a tad pompous
1. excessively elevated or ornate
2. having or exhibiting self-importance : arrogant - a pompous politician
Then a Quick glance at all the headlines
–
http://finance.yahoo.com/marketupdate/overview
http://www.msnbc.msn.com/id/3032222/
http://money.aol.com/marketnews
http://moneycentral.msn.com/home.asp
http://online.wsj.com/public/us?refresh=on
http://finance.yahoo.com/
CHECK OPEN POSITIONS
(This is all for the TOS Condor strategy.
More details below in the detailed TOS Condor presentation)
Go to TOS and update my Excel position sheets
This is an education on how the market and underlying prices affect the option value and Greeks
Scan the short strikes.
See if any are getting cheap.
Buy back the verticals if can be bought for less than .10
Or just buy the shorts if they get less than .05..and leave the longs in place.
Seems like if watched daily, more likely to buy the verticals before one short leg.
Due to SPY at 73 now, I will probably be able to buy one of my April Call Verticals Monday morning for
less than .10 .
More details in the Condor presentation below
Recently I have been adding a 1 to 3 lot condors on a weekly basis
Manage inventory
Add positions over time
Add positions as price changes
Layer in trades
Try to jump in when the VIX is high.
Working to keep delta neutral
Don’t add positions during expiration week
After that, Start scanning to add positions for 2 months
forward after Expire week over
Enter trades MIN 30 day and MAX 70 days before
Expire
For example, Feb Expired last week, so now I am looking
to add APRIL Condors
Try to sell Condors when Vix is high.
Make money when VIX falls
So look to sell when the VIX jumps up one day
See Excel for more trade entry guidelines
SIDE NOTE: MONEY MANAGEMENT
AIRELON Dan does a whole video series on Money Management
TOS and Options Planet seminar probably covers same subject.
Surviving
Not blowing up your trading account
So that is why (for time being) I am still trading SPY instead of the RUT or SPX
Until I have more experience and consistent trading success with the Condor strategy.
SPY lets me keep trades smaller for time being
General money management ideas usually say
don’t trade more than say 3 to 5% of your trading account.
to reduce your risk of blowing up your account
So on a 10,000 trading account, that would be
10,000 x .05 = 500 per trade
10,000 x .02 = 200 per trade
DAILY - IF THERE IS MORE TIME
+ Investools - MARKET CAST –
15 minutes – but no Video – fair - kind of like CNBC radio –
http://online.investools.com/landing.iedu
WEEKLY
+ SHADOWTRADER.NET -
Every SUNDAY NIGHT or Monday Morning - 10 minutes - Good
Normally done by Brad Augunas
Mostly focused on the Shadow trader style which is day trading to swing trading
SHADOWTRADER.NET - click ARCHIVES, click VIDEO WEEKLIES
Link - http://www.shadowtrader.net/videoArchive.html
+ Options Action TV show –
30 minutes but ff through commercials
Set your computer Media Center or your DVR or watch
Different schedules but one is 8:30 to 9 pM on Fridays on CNBC
+ Mike Coval - http://incometraderblog.com/
Twice weekly, he will have market overview video
Normally just a 3 to 4 minute summary
OTHER EDUCATION LINKS :
1 hour long CHAT ARCHIVES
TOS and INVESTOOLS
Presenters include Tom Sosnoff , Ben Watson, David Johnson, Michael Turvey, Scott Sheridan,
Jeff Bierman
Some are at one or the other or both sites:
FOR TOS - Go to TOS – click SUPPORT – click OPTION
SCHOOL – click CHAT ARCHIVES
For INVESTOOLS - INVESTOOLS – OPEN HOUSE -
ARCHIVES – take your pick
ANYTIME
Trading Basics
VLOGS
AIRELON
Free education videos or VLOGS from DAN
Just got to http://www.informedtrades.com and
Then click FREE COURSES tab
Then look in the BEGINNER COURSES box.
Click Intro to Trading by Airelon
Then you can go through the whole series of Dan’s videos…about 60 videos … all 7 to
10 minutes each
Dan also works his own site per se at Investor and Trader.blogspot.com
http://investorandtrader.blogspot.com/
Daily Blog, or Vlogs or Dan TV per se at this site
Dan originally got into more advanced trading from KEN ROBERTS .. similar experience
in 1996
Graduated to reading Larry Williams - says that really helped him.
Especially on the Money management.
Dan is not specific enough in some areas for me but interesting big picture
INFORMED TRADES WEB SITE
If you have anyone who wants to learn how to trade, these videos might be a good
alternative from wading through some books.
Web site is INFORMED TRADES
http://www.informedtrades.com
DAVID WARING appears to have organized most of these videos
There are hundreds
Again, mostly , nice 5 to 10 minute Video mixed with Power Point
presentations
MORE EDUCATION LINKS :
Brian Cox web site –
Various user group , etc presentation
materials
http://xsprofits.com
Click PRESENTATIONS button to find
trader group presentations.
http://www.kirkreport.com/membersonly/2008/06/13/so-what-do-you-do-for-a-living-2/
• So, What Do You Do For A Living?
• “I buy things, and then I sell them.”
• “I manage investments for a private organization.”
• “I am self-employed in the field of risk management.”
• “I am a silent partner in different publicly traded companies.”
• “We have a family business that I’m involved with.”
• “I am a market economist.”
• “I am in investment manager.”
• “I do market research.”
• “I’m a supply/demand engineer.”
• “I work for my own consulting company.”
• “I am a money manager.”
• “I am a portfolio manger for private investors.”
• “I’m in the finance business - you know, stocks and
bonds and things like that.”
• “I am in investment business.”
• “I buy and sell companies that are undervalued.”
• “I am a probabilities analyst.”
• “I work in independent capital management.”
• “I manage private capital.”
• “I am an independent investment analyst.”
• “I am an investment manager for a private fund.”
• “I work in the investment business.”
• “I own my own business.”
• “I’m an inventory manager.”
• “I do stock market research.”
• “I’m a self-employed economic analyst.”
• “I run a small private financial company.”
• “I manage capital.”
• “I study the stock market.”
• “I do computer work.”
• “I own my own risk management business.”
• “I am presently between careers.”
• “I run a private hedge fund that is closed to individual
investors.”
• “I manage my real estate and brokerage accounts.”
That is all
Any Questions
stevefought@aol.com
Trading results
Trading Plan as of 2-22-09
One Version Of the
TOS Iron Condor
Trading Strategy
Steve Fought
stevefought@aol.com
File: Iron Condor Strategy 2-22-09
Account size Jan 12th, 2009 $4,882.00
Profits $688.00
Fees -$135.00
Less the recent April Option -$219.00
Account size now $5,216.00
INVEST PERIOD (Days since Jan 12th) 40
RECENT RETURN (Account ending / Account starting) 6.8%
SLICE (ONE YEAR 365 days / INVEST PERIOD days) 9.1
ANNUALIZED RETURN (SLICE X RECENT RETURN) 62.4%
BOOK
Option Strategies for Directionless Markets: Trading with
Butterflies,
Iron Butterflies,
and
Iron Condors
by Anthony J Saliba
Just one book reviewer’s viewpoint
“Those contemplating these types of directionless
strategies should not forget they might likely
experience long strings of small winners punctuated
by infrequent huge losses that can wipe them out.”
William Karnaze "Bill K" (Kansas City) -
TRADING PLAN
• Generally, I am sticking with the TOS Iron Condor strategy
– (Don Kaufman seminar strategy) -
• TOS plan details provided later in this report.
• Brian Cox has MP3 from seminar at XSPROFITS web site
• My only change (still testing) is to pull the plug when the trade starts to lose money
– i.e. after market passes the short strike.
• Exactly how much loss I take before pulling the plug is some math I am still working on.
• I believe TOS says statistically my idea won’t work
– but I am going to test it anyway.
• There might be periodic months of small loses
– but I want to take protective action in the future to prevent the big loses I took in Oct and Nov
Next 2 slides are some other places to get
general info on the TOS trading strategy
BEYOND THE BASICS WORKBOOK
The TOS SEMINARS WORKBOOK
If you email Don Kaufman after the seminar, he will help you with your question but he will oft
times also send you sections from this workbook as backup information. So this workbook is
more or less the written version of the TOS Iron Condor strategy along with other strategies
HERE ARE 2 WAYS TO GET YOUR OWN COPY OF THIS STUDY GUIDE:
1. Go to the educational classes on the TOS web site tabs
Go to SUPPORT – OPTION SCHOOL – CLASSES – then click ALL OPTION PLANET SEMINARS SEE THE SCHEDULE -
then click Complex Strategies for Traders
2. Just plug in this link http://www.optionplanet.com/assembled/complex_strategies.html
Then go down to the middle of the page and click OPTIONS FOR TRADERS WORKBOOKS
It might ask you to register or put in your email address
Then click BEYOND THE BASICS WORKBOOK and it will download same info in the COMPLEX strategies workbook
• Plus, Here is a relatively new Video
with Don Kaufman showing step by step instructions on one way to
enter an Iron Condor and then a little on Analyze tab.
• Go to TOS web site –
• click SUPPORT tab and you will see this new icon
Click this ICON
Then click TRADE tab and then pick IRON
CONDOR to watch Don Kaufman’s 6 minute
video on Irons plus Analyze tab
NOTE: This video does not describe well any Condor EXIT strategies.
See next slides
A Step by Step
Procedure for
Entering and Exiting
Iron Condors
(My version of Don’s TOS seminar ideas)
Click the TRADE tab
Enter your underlying here
(high liquidity , tight bid to ask , inexpensive for beginners
Pick your Month.
30 MIN = 70 MAX
40 to 50 probably better.
Don’t pick quarterlies
Right click in this box in the BID column
right at color break which is the strike
price closest to current underlying price.
Then click SELL .
Then click IRON CONDOR
Your initial defaulted set up will look something like this.
You want to adjust the position to get a 2 point different between the long
and short side of each vertical – i.e. a “2 wide” spread
(The logic is explained in the workbook)
Example – In this case short call (-) is 136 and long call + is 138
And the short put is 122 and long put is 120
An initial defaulted credit is generally not recommended (it this case it is .99 )
You need to adjust the distance between your verticals to get a better balance of Probability of
success verses risk .
See Excel for better explain of Probability
Shoot for .60 to .80 as PRICE
Credit of .60 = 70% success
Credit of .80 = 60% success
Here is the Credit after the distance between the call vertical and put vertical was adjusted.
I shoot for a price
of .73 to .78
This Mid price is a starting point for your sale price. Normally, I
adjust the distance between verticals until CREDIT PRICE is
around .73 to .77 . Computer will automatically price you at MID
price for starters. So I start off entering trade at MID price. Then
if it does not fill in 5 minutes, I will Right click the BLUE button,
and choose “cancel and create duplicate order” , then enter a
trade at 1 tick below mid which here would be .72. If that does
not fill in 5 minutes, I will try .71. Generally, I have never had to
go more than 3 ticks. You can get aggressive and drop in the
trade for .74 and just let it work all day but it might never fill
MID price
MID price
The BLUE button
Entering a more Delta Neutral position,
Example : Say the underlying is at 129 today,
To be more Delta or Market neutral, you what your short strikes to
be equal distance from 129 as the position below is set up.
i.e. The short strike for the Call is 136 or 7 points above SPY at 129.
The Short Put is 122 or 7 points below.
This is an Equal distance , more Delta or Market Neutral entry position
I use an Excel file to set up my initial trade numbers
Adjust your strikes up and down until you get a credit of .60 to .80
Use the Excel form to help pick
evenly spaced trades
Be as aggressive on price as you want. Some are real aggressive and enter this trade at say .75 and
just let it sit all day. Sometimes during or near the end of the day it might just fill. You want to enter when
volatility is high. See the Chart. If you haggle on a few cents , you might lose your volatility edge. So I
will normally start a mid. If it does not fill in say 5 minutes, I will click CANCEL and replace at say .72. Or
.71. Normally it fills fast at a click or two below mid price
Getting out of trades early
Plan A
This info is pretty much right from the workbook
TOS NOTE - If you can buy
back the shorts (-) for .05 or
less, TOS will not charge
commissions
Plan A - Watch your short ( - ) positions.
Buy them back if you can ever get them for
.10 or less. You can leave your longs (+)
in place incase the underlying takes off
Getting out of trades early
PLAN B
This info is pretty much right from the workbook
Plan B – As the market moves away from either you call or put vertical, their bid
prices will decrease. Watch them daily.
You can just close the whole vertical if you can buy it back for .10 or less
Generally speaking, it seems like recently for me, I have been buying back the
verticals if the market trends enough.
Because, it seems like the whole vertical get to .10 or less (buy back price)
before the short options get to .10 or less.
• HOW TO DOWNLOAD YOUR ACCOUNT
INFO INTO EXCEL
• For checking overall return, etc
• NOTE: This is only practical if you are familiar Excel spreadsheets,
1. Click ACCOUNT
STATEMENT
2. Enter up to 370 day back
370 is the max in TOS
3. Click Cash Balance 4. Click EXPORT-PRINT button
5. Choose EXPORT
Choose file type CSV and EXPORT
the file to the location of your choice
on your own hard drive.
STEPS TO TRACK
YOUR OVERALL
RETURN
6. Open Excel.
AND DOWNLOAD
Open the CSV file and
DATA INTO EXCEL then save it as an Excel
FILES file.
Again, If you are not familiar
with Excel, you might want to Then you can play with
take a class before the Excel file to get your
attempting this procedure
returns
Processing the download
• Go to Excel. Save the CSV file as an Excel file first
• Just keep the top of the file which is your changes to cash balances.
• Delete the bottom data
• Establish a starting point for your account balance.
– Do not add or subtract any cash to the account.
– The only changes after the starting point should be your trading activity.
– If you add or take out large chucks of cash from your trading account,
then the math for calculating return is beyond me.
– Maybe just take an average. Like my account started off x.
• Next , remove your current open Condors if they have not yet been
at least partially closed.
• See all the data in Excel file - Account Statement-2-22-09.xls
Account size Jan 12th, 2009 $4,882.00
Profits $688.00
Fees -$135.00
Less the recent April Option -$219.00
Account size now $5,216.00
INVEST PERIOD (Days since Jan 12th) 40
RECENT RETURN (Account ending / Account starting) 6.8%
SLICE (ONE YEAR 365 days / INVEST PERIOD days) 9.1
ANNUALIZED RETURN (SLICE X RECENT RETURN) 62.4%
• Switch over to Excel file to show account details
THE END
Any Questions ?
Thanks !!
stevefought@aol.com
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