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Page 1 @ Copyright 2013. All rights reserved. Sheridan Options Mentoring, Inc. www.SheridanMentoring.com Jun 29, 2013 Hoffman Estates Dan Sheridan
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Page 1: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

Page 1 @ Copyright 2013. All rights reserved.

Sheridan Options Mentoring, Inc. www.SheridanMentoring.com

Jun 29, 2013

Hoffman Estates

Dan Sheridan

Page 2: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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Options involve risk and are not suitable for all investors. Prior to buying or selling an

option, a person must receive a copy of Characteristics and Risks of Standardized

Options. Copies are available from your broker, by calling 1-888-OPTIONS, or from The

Options Clearing Corporation at www.theocc.com. The information in this presentation

is provided solely for general education and information purposes. Any strategies

discussed, including examples using actual securities and price data, are strictly for

illustrative and educational purposes. In order to simplify the computations,

commissions and other transaction costs have not been included in the examples used in

this presentation. Such costs will impact the outcome of the stock and options

transactions and should be considered. Multiple leg strategies involve multiple

commission charges. Investors should consult their tax advisor about any potential tax

consequences. No statement within the presentation should be construed as a

recommendation to buy or sell a security or to provide investment advice. Supporting

documentation for any claims, statistics, or other technical data is available from

Sheridan Options Mentoring at www.sheridanmentoring.com. Chicago Board Options

Exchange, Incorporated (CBOE) is not affiliated with Sheridan Options Mentoring or

OptionNet. This presentation should not be construed as an endorsement or an indication

by CBOE of the value of any non-CBOE product or service described in this

presentation.

Disclaimer

Page 3: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

Page 3 @ Copyright 2013. All rights reserved.

Dan Sheridan

+1-800-288-9341

[email protected]

Sheridan Options Mentoring, Inc.

http://www.SheridanMentoring.com/

Page 4: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

Page 4 @ Copyright 2013. All rights reserved.

Get the PowerPoint Slides Emailed to You

Send an Email to

[email protected]

Page 5: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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Directional or Non-Directional Trading?

Speculative

Strategies

Long Term

Strategies

Income

Strategies

Page 6: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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Directional or Non-Directional Trading?

Long Calls/Puts,

Diagonal Spreads

OTM Butterflies

Vertical Spreads

Directional Calendars

Long Straddles

Calendar Spreads

Double Calendar Spreads

Double Diagonals

ATM Butterflies

Condors

Collars

LEAPS

Covered Writes/Straddles

Long Stock

Long Term Calendars

Income

Strategies

Long Term

Strategies

Speculative

Strategies

Page 7: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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$30,000 Portfolio 8 Trades Per Month

$ 5,000 Speculative – 2 trades

$10,000 Long Term – 3 trades

$15,000 Monthly Income – 3 trades

Speculative

Strategies Long Term

Strategies

Income

Strategies

Page 8: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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What Type of Trading Account?

Retirement account

Regulation T (Cash Account)

Customer Portfolio Margin

– Risk Based Margin

– $100,000 minimum equity (FINRA requirement)

Brokers may have higher requirements:

$150K Broker W

$125K Broker X

$110K Broker Y

$100K Broker Z

Page 9: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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What is My Edge (Advantage) for this Business?

Time decay

Standard deviations

Page 10: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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Time Decay

Page 11: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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Using the Right Vehicles

Liquid stocks or indexes that you would own in your

retirement account

Over $70

Under 30% Implied Volatility

Lots of strikes

Lots of option liquidity

Page 12: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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What Brokerage Firm?

Commissions

Execution

Platform

Customer service

Page 13: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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Number of Trades Each Month? Sample Plan for a Newer Trader

Month Size

Live Trades

Per Month

Monthly

Profit

1-6 $10,000 3-4 Break even

7-12 $20,000 3-4 at least 3%

13-18 $40,000 3-4 4-5%

19-24 $80,000 3-4 4-7%

How many different strategies should I trade?

How many different vehicles should I trade?

Should I do the same trade every month?

How important is it WHEN you enter a trade?

Monthly Income part of portfolio

What’s the practical way to increase your capital?

Page 14: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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Yield Expectations Each Month?

What is the yield based on?

– Yield on entire trading account?

$50,000 Account

Which Yield do I use?

1-2 % per month?

5-8% per month?

Trade

Margin

Profit Yield on

Trade

Yield on

Account

$10,000 $1,000 +10% +2%

Page 15: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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Monthly Income Trade Examples

Page 16: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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GOOG Iron Condor

Page 17: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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GOOG Price Chart

Date: 6/25/2013 Price: $869.40

Page 18: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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GOOG Iron Condor Date: 6/25/2013 Price: $869.40

Options Price IV Delta Trade

990 Calls $2.50 23.0% 8.0 +1980 Calls $3.30 23.1% 10.1 -1770 Puts $5.40 27.9% -10.0 -1776 Puts $4.40 28.2% -8.2 +1

AUG(53)

Delta -0.3

Gamma -0.1

Theta 3.8

Vega -17.0

Credit 180

Margin 820

Page 19: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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GOOG Iron Condor Date: 6/25/2013 Price: $869.40

Page 20: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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GOOG Iron Condor Date: 6/28/2013 Price: $877.10

Options Price Entry Pr IV Delta Trade

990 Calls $2.80 $2.50 23.1% 8.7 +1980 Calls $3.60 $3.30 23.1% 11.0 -1770 Puts $4.40 $5.40 28.3% -8.2 -1776 Puts $3.60 $4.40 28.7% -6.7 +1

AUG(50)

Delta -0.3

Gamma -0.1

Theta 3.8

Vega -17.0

Profit 20 (+2.4%)

Credit 180

Margin 820

Starting Price: $869.40 Days in Trade: 3

Page 21: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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GOOG Iron Condor Date: 6/28/2013 Price: $877.10

Starting Price: $869.40 Days in Trade: 3

Page 22: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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IBM Iron Butterfly

Page 23: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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IBM Price Chart

Date: 6/25/2013 Price: $194.85

Page 24: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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IBM Iron Butterfly Date: 6/25/2013 Price: $194.85

Options Price IV Delta Trade

205 Calls $1.25 22.2% 20.5 +1195 Calls $5.00 24.3% 51.3 -1195 Puts $5.00 24.3% -48.7 -1185 Puts $1.75 26.6% -21.5 +1

JUL(25)

Delta -3.6

Gamma -1.8

Theta 5.6

Vega -11.2

Credit 700

Margin 300

Page 25: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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IBM Iron Butterfly Date: 6/25/2013 Price: $194.85

Page 26: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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IBM Iron Butterfly Date: 6/28/2013 Price: $195.65

Options Price Entry Pr IV Delta Trade

205 Calls $1.12 $1.25 22.2% 20.5 +1195 Calls $4.95 $5.00 24.3% 51.3 -1195 Puts $4.20 $5.00 24.3% -48.7 -1185 Puts $1.31 $1.75 26.6% -21.5 +1

JUL(22)

Delta -3.6

Gamma -1.8

Theta 5.6

Vega -11.2

Profit 28 (+9.3%)

Credit 700

Margin 300

Starting Price: $194.85 Days in Trade: 3

Page 27: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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IBM Iron Butterfly Date: 6/28/2013 Price: $195.65

Starting Price: $194.85 Days in Trade: 3

Page 28: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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RUT 10-Day Calendar

Page 29: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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RUT Price Chart

Date: 6/25/2013 Price: $956.60

Page 30: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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RUT 10-Day Calendar Date: 6/25/2013 Price: $956.60

Options Price IV Delta Trade Price IV Delta Trade

960 Puts $15.00 21.0% -51.1 -1 $22.50 21.0% -48.9 +1

WEEKLY(10) JUL(24)

Delta 2.2

Gamma -0.5

Theta 24.7

Vega 34.8

Debit 750

Page 31: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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RUT 10-Day Calendar Date: 6/25/2013 Price: $956.60

Page 32: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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RUT 10-Day Calendar – 2 Days in Trade Date: 6/27/2013 Price: $974.20

Delta -7.0

Gamma -0.5

Theta 20.0

Vega 40.1

Loss 40 (-5.3%)

Debit 750

Starting Price: $956.60 Days in Trade: 2

Options Price Entry Pr IV Trade Price Entry Pr IV Trade

960 Puts $5.40 $15.00 18.5% -1 $12.50 $22.50 19.2% +1

WEEKLY(8) JUL(22)

Orig IV: 21.0% Orig IV: 21.0%

Page 33: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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RUT 10-Day Calendar – 2 Days in Trade Date: 6/27/2013 Price: $974.20

Starting Price: $956.60 Days in Trade: 2

Page 34: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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RUT 10-Day Calendar – Add 2nd Calendar Date: 6/27/2013 Price: $974.20

Starting Price: $956.60 Days in Trade: 2

Options Price Exist Adjust New Price Exist Adjust New

980 Calls $6.20 -1 -1 $12.90 +1 +1960 Puts $5.40 -1 -1 $12.50 +1 +1

WEEKLY(8) JUL(22)

Delta -7.0

Gamma -0.5

Theta 20.0

Vega 40.1

Loss 40 (-5.3%)

Debit 750

Delta -1.4

Gamma -1.2

Theta 41.1

Vega 79.3

Loss 40 (-2.8%)

Debit 1,450

Before Adjusting After Adjusting

Page 35: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

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RUT 10-Day Calendar – Add 2nd Calendar Date: 6/27/2013 Price: $974.20

Starting Price: $956.60 Days in Trade: 2

Page 36: Hoffman Estates - Meetupfiles.meetup.com/1621769/20130629-Hoffman-Estates.pdf · 6/29/2013  · Options involve risk and are not suitable for all investors. Prior to buying or selling

Page 36 @ Copyright 2013. All rights reserved.

Dan Sheridan

+1-800-288-9341

[email protected]

Sheridan Options Mentoring, Inc.

http://www.SheridanMentoring.com/