Kirk DuPlessis - OptionAlpha - The Ultimate Options Strategy Guide

The “Ultimate” Options Strategy Guide Use paragraph styles in Pages to create stunning digital books

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Table of Contents Why Trade Options vs. Stocks? ................. ................................... ................................... .................... ... 5 How To Find The Absolute Best Options Strategy .......................8 #1 - Make A Directional Market Assumption .............................12 #2 - Find Implied Volatility's Relative Ranking ........................20 #3 - Targeting The Best Options Strategy for You ....................37 Option Payoff Diagrams ................. .................................. ................................... ............................... ............. 41 Terms & Definitions ................. .................................. ................................... ................................... .................... ... 42 Put Credit Spread ................. .................................. ................................... ................................... ........................ ....... 45 Short Naked Put ................ ................................. ................................... ................................... ............................ ........... 47 Put Broken Wing Butterfly ............... ................................. ................................... ........................... .......... 49 Custom Naked Put .................. ................................... .................................. ................................... ....................... ..... 51 Call Debit Spread ................ ................................. .................................. ................................... ........................... ......... 54 Call Calendar Spread ................ ................................. ................................... ................................... ................... .. 56 Call (Ratio) Backspread ................. .................................. ................................... ................................. ............... 58 Put Diagonal Spread ............... ................................. ................................... .................................. ..................... .... 60 Short Straddle ................ .................................. ................................... ................................... ............................... ............. 63 Short Strangle ................. ................................... ................................... ................................... .............................. ............ 65 3

Short Iron Condor ............................................................................ 67 Short Iron Butterfly ........................................................................ 69 Call Credit Spread ............................................................................ 73 Short Naked Call ............................................................................... 75 Call Broken Wing Butterfly ............................................................ 77 Custom Naked Call .......................................................................... 79 Put Debit Spread .............................................................................. 82 Put Calendar Spread ....................................................................... 84 Put (Ratio) Backspread ................................................................... 86 Call Diagonal Spread....................................................................... 88 About the Author ............................................................................ 90

4

Introduction

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7

Option Strategy Process

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10

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11

Step One of Three

#1 - Make A Directional Market Assumption And Why Portfolio Balance Matters More S*. A%1-$ -$.# $& A%'3%'2 $*. 1%2*$ &#$%&'- -$1+$.20 %- $& 4+5. + 3%1./$%&'+) +--?4#$%&' &' B*.1. 0&? 7.)%.C. $*. -$&/5 4%2*$ 2& %' $*. 6?$?1.= <+4.)08 $*%- 4.+'- +-5%'2 0&?1-.)68 n(4 J 7.+1%-*8 7?))%-*8 &1 '.?$1+) &' $*%- -$&/5en W&? /+' +11%C. +$ 0&?1 *0#&$*.-%- *&B.C.1 0&? )%5.8 ?-%'2 $./*'%/+) +'+)0-%-8 6?'3+4.'$+) +'+)0-%-8 /*+1$ #+$$.1'-8 .$/= 7?$ 0&?cC. 2&$ $& #%/5 + 3%1./$%&'= nQ+-%.1 -+%3 $*+' 3&'. ;%15mn 0&? 4%2*$ 7. -+0%'2= ^.))8 WQM8 %$ %- + C.10 .+-0 #+1$ 7./+?-. %$ 61+'5)0 3&.-'c$ 4+$$.1= I&))&B 4. &' $*%- 7./+?-. %$c- 2&%'2 $& /*+'2. 0&?1 .'$%1. &?$)&&5 &' $*. -$&/5 4+15.$ +'3 #%/5%'2 3%1./$%&'- 6&1.C.1=== S& -&4. $1+3.1-8 #%/5%'2 $*. 3%1./$%&' %- $*. *+13.-$ #+1$ &6 $1+3%'28 7?$ $*&-. +1. $*. #.&#). B*& 3&'c$ ?'3.1-$+'3 *&B *%2* #1&7+7%)%$0 &#$%&'- $1+3%'2 B&15-= W&? *+C. $& 1.4.47.1 $*+$ $*. 4+15.$ %- 6+%1 +'3 .6A%/%.'$ +'3 $*.1. *+- $& 7. + 7+)+'/. &6 1%-5 +'3 1.B+13 &' .+/* -%3.= M&8 B*.' 0&? B.1. P?-$ + -$&/5 $1+3.18 0&? ?-.3 $& $1+3. B%$* + ugp /*+'/. &6 -?//.-- 7?0%'2 &1 -.))%'2 -$&/5 -*+1.-= <&B8 *&B #1&A%$+7). +1. 0&? )%5.)0 $& 7. B*.' 0&?1 7.-$ &##&1$?'%$0 6&1 4+5%'2 4&'.0 /&4.- 61&4 + n/&%' A)%#n 2+4. &6 /*+'/.= S& #1&C. $*%- /&'/.#$ +'3 1.+))0 -&)%3%60 $*. #&%'$8 &' $*. '.N$ #+2. 0&?R)) A%'3 + 21+#* $*+$ $1+/5.3 $*. 3+%)0 p 4&C.- ?# +'3 $*. 3+%)0 p 4&C.- 3&B' %' $*. >&B b&'.- J'3?-$1%+) (C.1+2. 2&%'2 7+/5 $& hrrg= (*.48 $*+$c- '.+1)0 fj 0.+1- &6 3+$+ P?-$ %' /+-. 0&? 3%3'c$ 3& $*. 4+$*t

12

^*+$ 0&?c)) /).+1)0 '&$%/.8 1.2+13).-- &6 B*+$ 0&? 4+0 1.+3 61&4 &$*.1 -&?1/.-8 %?'3.'%+7). #1&&6 $*+$ 4+15.$- 4&C. %' + '&14+)%d.3 +'3 -$+'3+13 3%-$1%7?$%&' &C.1 $%4.= Q4#%1%/+))08 $*. >&B A)?/$?+$.3 7.$B..' + fp )&-- +'3 fp 2+%' rip &6 $*. $%4. +'3 7.$B..' Hg=jp +'3 sg=jp kip &6 $*. $%4. &' + 3+%)0 7+-%-= J6 0&?R1. + 4+$* P?'5%. )%5. 4. 0&?R)) 5'&B *&B #&B.16?) $*%- &'. /*+1$ %- 6&1 #1&C%'2 &?1 #&%'$= <&B8 $*%- 3&.-'c$ 4.+' $*+$ 0&? /+'c$ *+C. .N$.'3.3 1?'- ?# &1 3&B'8 0&? /+' +'3 $*.1. &6$.' +1.8 7?$ $*. #&%'$ *.1. %- $*+$ $*.1. %- '& /&'-%-$.'$ #+$$.1'- &1 #1.3%/$+7). /0/).- &' + )&'2H$.14 7+-%-= S*.1. %- +' .U?+) +'3 .C.' '?47.1 &6 3+0- B*.' $*. 4+15.$ 4&C.3 ?# hp +- %$ 4&C.3 3&B' hp= [.1.%' )%.- $*. vh 1.+-&' B*0 $1+3%$%&'+) -$&/5 #%/5%'2 %- -& *+13t

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S*. 7.+?$0 &6 $1+3%'2 &#$%&'-8 &' $*. &$*.1 *+'38 %- $*+$ 0&? /+' /*&&-. $& $+12.$ +'0 #1&7+7%)%$0 &6 -?//.-- 0&? B+'$= ^+'$ $& B%' jgp8 ogp &1 rgp &6 $*. $%4. &' 0&?1 $1+3.)&'2H$.14= W&?cC. 2&$ %$T 0&? /+' ).+1' $& 7?%)3 -$1+$.2%.- $*+$ B%' +$ $*.-. *%2* ).C.)/&'-%-$.'$)0 70 ?-%'2 &#$%&' -.))%'2 -$1+$.2%.- B%$* -$1%5. #1%/.- 6+1 &?$H&6H$*.H4&'.0=

V1%.A)0 )&&5%'2 +$ $*. &#$%&'- #1%/%'2 $+7). +7&C. 6&1 M@W 0&?R)) '&$%/. $*+$ $*. #1&7+7%)%$0 &6 M@W '.C.1 2&%'2 *%2*.1 wfhl &1 wfhj 61&4 B*.1. %$ %- /?11.'$)0 +$ wfgr=ug %- jh=ggp +'3 rg=gfp8 1.-#./$%C.)0= S*%- 4.+'- $*+$ %6 0&? -&)3 $*. wfhl -$1%5. /+)) &#$%&'- 0&?R3 *+C. 1&?2*)0 + jgp /*+'/. &6 B%''%'2= M.)) $*. wfhj -$1%5. /+)) &#$%&'-8 B*%/* +1. + )%$$). 6?1$*.1 +B+0 61&4 $*. /?11.'$ 4+15.$ #1%/. +'3 0&?RC. 2&$ 1&?2*)0 + rgp /*+'/. &6 B%''%'2 &' $*. $1+3.= S&& 2&&3 $& 7. $1?.e J$R- '&$ H J P?-$ -*&B.3 0&? +' .N+4#).= J$c- )%5. $1+3%'2 -$&/5- 3%1./$%&'+))0 7?$ %'-$.+3 &6 4+5%'2 + ugOug 7.$ &'. B+0 &1 $*. &$*.18 0&?cC. 2&$ $*%- *?2. 4+12%' 6&1 .11&1= W&? /+' 7. /&4#).$.)0 B1&'2 %' 0&?1 3%1./$%&'+) 14

+--?4#$%&' &6 B*.1. $*. -$&/5 B%)) 2& %' $*. 6?$?1. +'3 -$%)) 4+5. 4&'.0= M.1%&?-)08 *&B 4+'0 %'C.-$4.'$- /+' 0&? -+0 $*+$ +7&?$e

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15

(- -*&B' %' $*. $+7). 7.)&B8 /&'-%-$.'$)0 -.))%'2 -*&1$ '+5.3 /+)) &#$%&'-8 +2+%'-$ $*. #1.C+%)%'2 7?)) 4+15.$8 1.2%-$.1.3 h8ogu $1+3.- B%$* + jh=rp B%' 1+$. &C.1+))= K.4.47.1 $*.-. $1+3.- B.1. .+/* #)+/.3 .C.10 lg 3+0- $+12.$%'2 + jgp B%' 1+$. +$ $*. &'-.$ +'3 .C.' $*&?2* 0&? B&?)3 *+C. 7..' hggp B1&'2 %' #%/5%'2 $*. 4+15.$ 3%1./$%&'8 $*. &#$%&' #1&7+7%)%$%.- B.1. -& .6A%/%.'$ $*+$ 0&? -$%)) B&' jh=rp &6 $*. $%4.=

Sell 1 CALL @70% Probability Level Every Month

<&B $& 7. 6+%18 -.))%'2 /+))- +2+%'-$ $*%- oH0.+1 7?)) 4+15.$ B+-'c$ #1&A%$+7). +- + -$+'3H +)&'. -$1+$.20 +'3 1%2*$6?))0 -&= W&? 3%3'c$ )&-. + )&$ &6 4&'.08 7?$ 0&? 3%3'c$ 4+5. 4&'.0 .%$*.1= M$%))8 $*. &#$%&' #1&7+7%)%$%.- *.)3 $1?. &C.1 $%4.= M.))%'2 -*&1$ /+))-8 B*%/* %- + 7.+1%-* -$1+$.208 -$%)) *+3 jh=rp B%''%'2 $1+3.- .C.' $*&?2* 0&?1 3%1./$%&'+) +--?4#$%&' B&?)3 *+C. 7..' 3.+3 B1&'2 4&'$* +6$.1 4&'$*= <+$?1+))0 0&?R3 .N#./$ $*+$ $+5%'2 $*. &$*.1 -%3.8 %=.= -.))%'2 #?$- 3?1%'2 + 1+2%'2 7?)) 4+15.$ B&?)3 #1&C. $& 7. C.10 #1&A%$+7). H +'3 $*+$ B+- .N+/$)0 $*. /+-.= :&'-%-$.'$)0 -.))%'2 -*&1$ '+5.3 #?$ &#$%&'-8 -*&B' %' $*. $+7). &' $*. '.N$ #+2.8 1.2%-$.1.3 $*. -+4. h8ogu $1+3.- B%$* +' oo=lp B%' 1+$. &C.1+))= <& 7%2 -?1#1%-. 7./+?-. &6 $*. *?2. 7?)) 4+15.$ 1%2*$e S*. -$1+$.20 B&' 4&1. $%4.- $*+' .N#./$.38 B.))8 7./+?-. 16

$*. 4+15.$ P?-$ /&'$%'?.3 $& 4+1/* *%2*.1 +'3 *%2*.1= >&.- %$ 4.+' %$c)) +)B+0- 7. $*%B+0e "6 /&?1-. '&$=

Sell 1 PUT @70% Probability Level Every Month

^*+$R- $*. 7%2 $+5.+B+0 &1 ).--&' B. /+' ).+1' +6$.1 +'+)0d%'2 $*.-. $B& #&B.16?) 7+/5$.-$%'2 -$?3%.-t

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Sell 1 CALL & Sell 1 PUT (Short Strangle) at the Combined 70% Probability Level Every Month

"33)0 .'&?2*8 M*&1$ M$1+'2).- +1. &'. &6 $*. 4&-$ #1&A%$+7). -$1+$.2%.- 0&? /+' $1+3. +-*&B' %' 40 #.1-&'+) 1.+)H$%4. #.16&14+'/. #+2. *.1.= ('3 %$c- 7./+?-. J 1./&2'%d.3 )&'2 +2& $*+$ -.))%'2 &#$%&'- +'3 1.4+%'%'2 3%1./$%&'+))0 '.?$1+) %- + 1.)%+7). 61+4.B&15 6&1 2.'.1+$%'2 )&'2H$.14 %'/&4.= S*. #&%'$ $*+$ Jc4 $10%'2 $& 4+5. %- $*+$ 0&? *+C. $& $10 $& +)B+0- 7. +- 7+)+'/.3 +'3 '.?$1+) +- 0&? /+' B%$* 0&?1 #&1$6&)%&= >&.- $*%- 4.+' $*+$ .C.10 $1+3. *+- $& 7. + '.?$1+) $1+3. -?/* +- + M$1+'2). &1 J1&' :&'3&1e <& H &6 /&?1-. '&$= J$ 4.+'- $*+$ %6 0&? $1+3. A%C. -$&/5- 3%1./$%&'+))0 *%2*.1 &1 7?))%-*8 $10 $& 7?%)3 A%C. 3%66.1.'$ #&-%$%&'- %' A%C. 3%66.1.'$ -$&/5- $*+$ 0&? #)+0 3%1./$%&'+))0 )&B.1 &1 7.+1%-*= >&'c$ 4+5. $*. -+4. 3%1./$%&'+) 7.$ &C.1 +'3 &C.1 +2+%'= J' .--.'/.8 0&? '..3 $& -$&# $*%'5%'2 )%5. .C.10 &$*.1 -$&/5 $1+3.1 &?$ $*.1.= M#1.+3 0&?1 1%-5 &?$ +/1&-- 3%66.1.'$ -$&/5-8 +'3 3%1./$%&'+) #)+0- +- 4?/* +- 0&? /+'= ($ $*. .'3 &6 $*. 3+08 0&?c)) -$%)) B%' jgp &6 $*. $%4. &C.1+))8 &1 B*+$.C.1 #1&7+7%)%$0 ).C.) 0&? $+12.$8 B*%/* %- B*+$ 0&?c1. +6$.1 %' $*. A%1-$ #)+/.=

18

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19

Step Two of Three

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20

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22

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23

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24

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26

(--?4. $*+$ + -$&/5 %- $1+3%'2 +$ wugO-*+1. 1%2*$ '&B= W&? +1. 2%C.' $*. /*&%/. $& #?1/*+-. + wjg -$1%5. /+)) &#$%&' $*+$ .N#%1.- &'. 0.+1 61&4 $&3+0= ($ $*. .'3 &6 $*. 0.+18 %6 $*. #1%/. &6 $*. -$&/5 %- +7&C. 0&?1 -$1%5. #1%/. &6 wjg $*.' 0&? /&?)3 4+5. 4&'.0= M&8 $*. U?.-$%&' 7./&4.-T *&B 4?/* B&?)3 0&? #+0 6&1 $*%- wjg -$1%5. /+)) &#$%&' /&'$1+/$e S&?2* U?.-$%&' 1%2*$e <&B ).$c- %'$1&3?/. $B& 3%66.1.'$ C&)+$%)%$0 -/.'+1%&-= J' $*. A%1-$ -/.'+1%&8 ).$c- +--?4. $*+$ $*%- -$&/5 %- +' +C.1+2. 4&C.1 *%-$&1%/+))08 4&C%'2 4+07. fgp #.1 0.+1 &' +C.1+2.= J6 $*%- B.1. $*. /+-. 4&C%'2 6&1B+138 4+07. $*. 4&-$ 4+15.$ #+1$%/%#+'$- B&?)3 .N#./$ $*. -$&/5 $& 4&C. %' $*. '.N$ 0.+1 B&?)3 7. $*. -+4. fgp= S*+$c- +' .N#./$.3 1+'2. &6 +7&?$ whg ?# &1 3&B' .+/* 0.+1 kop &6 $*. $%4. +- -*&B' %' $*. 21+#* $& $*. 1%2*$= [&B C+)?+7). %- $*. wjg -$1%5. /+)) &#$%&' $& 0&? '&Be @1&7+7)0 '&$ B&1$* +'0$*%'2 +$ +)) 7./+?-. $*. )%5.)%*&&3 &6 +/$?+))0 -..%'2 + #1&A%$ %%'/1.3%7)0 -4+))= J6 $*. #1&7+7%)%$0 &6 P?-$ 2.$$%'2 +7&C. wkg %- hkp $*.' $*. #1&7+7%)%$0 &6 4&C%'2 fY $*. '&14+) whg 4&C. %- )%5.)0 4?/* )&B.18 4+07. P?-$ +' op /*+'/. &6 1.+/*%'2 $*. wjg #1%/. ).C.) %' $*. '.N$ 0.+1= :&'-%3.1 $*%- $*. n)&$$.10 $%/5.$n .N+4#). 7./+?-. P?-$ +- + )&$$.10 $%/5.$c- #1%/. 4%2*$ 7. /*.+#8 $*. #1&7+7%)%$0 &6 B%''%'2 %- .N$1.4.)0 )&B= J' $*. -+4. B+08 $*%- &#$%&' /&'$1+/$ 4%2*$ /&-$ + -4+)) +4&?'$ $& #?1/*+-. $*. /&'$1+/$8 4+07. wg=hg &1 ).--8 7?$ $*. 1.-?)$%'2 #1&7+7%)%$0 &6 -?//.-- %- #&&1= M*%6$%'2 2.+1-8 %' $*. -./&'3 C&)+$%)%$0 -/.'+1%&8 ).$c- '&B +--?4. $*+$ $*%- -$&/5 %- + -4+)) $./*'&)&20 /&4#+'08 4&C%'2 +- 4?/* +- ogp #.1 0.+1= J' $*%- /+-.8 7./+?-. $*. 4+15.$ 4%2*$ .N#./$ $*. -+4. $0#. &6 C&)+$%)%$0 %' $*. 6?$?1.8 $*. '.B .N#./$.3 1+'2. &C.1 $*. '.N$ 0.+1 %- '&B wig ?# &1 3&B'= S*+$ 4.+'- $*.1. %- + kop /*+'/. $*. -$&/5 $1+3.- 7.$B..' whg +'3 wrg 7.6&1. 0&?1 /+)) &#$%&' /&'$1+/$ 1.+/*.- %$- .N#%1+$%&' 3+$.=

27

[&B C+)?+7). %- $*. wjg -$1%5. /+)) &#$%&' $& 0&? ?'3.1 $*%- -./&'3 -/.'+1%&e 9%5.)0 4?/* *%2*.1 7./+?-. $*. -$&/5 *+- + 21.+$.1 #&$.'$%+) $& 4&C. %'$& + #1&A%$+7). d&'. +$ .N#%1+$%&'= <+$?1+))08 %6 $*. -$&/5 %- .N#./$.3 $& -B%'2 B%)3)0 %' $*. 6?$?1. $*+' $*. C+)?. &6 &#$%&'- &' 7&$* -%3.-8 /+))- +'3 #?$-8 B&?)3 7. *%2*.1 7./+?-. $1+3.1- .N#./$ + *%2*.1 /*+'/. &6 4+5%'2 4&'.0= [.'/.8 $*. 1.)+$%&'-*%# 7.$B..' %4#)%.3 C&)+$%)%$0 +'3 +' &#$%&'c- #1%/. /+' 7. -?44+1%d.3 +- $*. 6&))&B%'2` 012 3456 789:75; <=:>?7:7?@ =A 8>AB5? 5C95D?>?7=6E 76DA5>E5F >6 =9?7=6GE 9A7D5 76DA5>E5E >E H5:: I >:: 5:E5 J576K 5LM>:N 0O2 3456 789:75; <=:>?7:7?@ =A 8>AB5? 5C95D?>?7=6E ;5DA5>E5F >6 =9?7=6GE 9A7D5 ;5DA5>E5E >E H5:: I >:: 5:E5 J576K 5LM>:N

<&$%/.8 $*+$ %$c- '&$ &'.H-%3.3 *.1. 4.+'%'2 +)) &#$%&' C+)?.- %'/1.+-.8 &' 7&$* -%3.- 6&1 /+))- +'3 #?$-8 B%$* *%2*.1 %4#)%.3 C&)+$%)%$0 )%5. + $%3. 1+%-%'2 +)) -*%#- +$ -.+= ('38 4+15.$ .N#./$+$%&'- &6 %4#)%.3 C&)+$%)%$0 /*+'2. 3+0 70 3+0 +- '.B %'6&14+$%&' +7&?$ $*. /&4#+'08 $*.%1 %'3?-$108 $*. ./&'&408 .$/= /&4.- &?$ +'3 %- 4+3. #?7)%/= QC.10$*%'2 $*+$ %5'&B' &1 +--?4.3 %- #1%/.3 %'$& $*. 6?$?1. %4#)%.3 C&)+$%)%$0 .-$%4+$.= ^%$* 4. -& 6+1e J$c- #1.$$0 )&2%/+) *&B &#$%&' #1%/%'2 B&15- B*.' 0&? 71.+5 %$ 3&B' )%5. $*%- *?*e V?$ $*.1.c- &'. 5.0 #&%'$ B. *+C.'c$ 3.A%'.38 ?'$%) '&B8 +'3 $*+$c- &?1 n.32.n=

Over-Expectation of Implied Volatility JcC. )%5.)0 /&'C%'/.3 0&? 70 '&B &6 $B& %4#&1$+'$ $1?$*- B*.' %$ /&4.- $& &#$%&'- $1+3%'2= <.%$*.1 #&%'$ /+' 7. +12?.3 7./+?-. $*. 3+$+ -?##&1$- 7&$* /+-.-= I%1-$8 A%'+'/%+) 4+15.$+1. .6A%/%.'$8 %' $*. -.'-. $*+$ $*.1. %- '& n.32.n 0&? /+' 2+%' #%/5%'2 -$&/5- 3%1./$%&'+))0= M./&'38 $*+$ %4#)%.3 C&)+$%)%$08 %=.= $*. 4+15.$c- .N#./$.3 6?$?1. 4&C.8 *+- + 31+4+$%/ %4#+/$ &' $*. C+)?. +'3 #1%/. &6 +' &#$%&' /&'$1+/$= J6 7&$* &6 $*.-. -$+$.4.'$- +1. $1?.8 $*.' $*. '.N$ 1.+-&'+7). U?.-$%&' $& +-5 %-8 nJ6 $*. 4+15.$- +1. .6A%/%.'$ +'3 %4#)%.3 C&)+$%)%$0 %'A)?.'/.- &#$%&' #1%/%'28 $*.' *&B /+' B. 2+%' +' c.32.c $1+3%'2 &#$%&'-en [.1.c- $*. )&'2 +B+%$.3 +'-B.1=== 28

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:S( @(ZQ

Does Your Watch List Tell You Which Options Strategy To Use?

The Option Alpha Watch List Helps You Find The Best Trades!

“I use the watch list every single day…” 30

S*. -+4. /&'/.#$ &6 &C.1H.N#./$+$%&' *&)3- $1?. %' $*. &#$%&'- 4+15.$= J4#)%.3 C&)+$%)%$0 /&44&')0 #1%/.- %' + 4&1. C&)+$%). 4&C. %' $*. ?'3.1)0%'2 -$&/5 $*+' +/$?+))0 &//?1-= S*.1.6&1.8 $*. C+)?. &6 &#$%&' /&'$1+/$-8 7&$* /+))- +'3 #?$-8 +$ $*. 7.2%''%'2 &6 +' .N#%1+$%&' /0/). +1. +)B+0- -)%2*$)0 *%2* 1.)+$%C. $& B*+$ %$ .'3- ?# 7.%'2 B*.' $*. ?'3.1)0%'2 -$&/5 4&C.- #)+0 &?$= "?1 n.32.n $*.1.6&1.8 %- 3./%-%C.)0 %' -.))%'2 $*.-. &C.1H#1%/.3 &#$%&'-T 4?/* )%5. +' %'-?1+'/. /&4#+'0 -.))%'2 )%6. %'-?1+'/.= QN/.#$8 B.))8 B. /+' 4+5. 4&'.0 B%$*&?$ *+C%'2 $& .'-?1. -&4.&'.c- 3.+$*= J' $0#%/+) 6+-*%&'8 J 3&'c$ P?-$ B+'$ $& -#&?$ &66 $*.&10= J B+'$ $& #1&C. $*+$ $*%- &C.1H .N#./$+$%&' /+?-.3 70 %4#)%.3 C&)+$%)%$0 %- + 1.+)%$0 -& $*+$ 0&? 7./&4. .C.' 4&1. /&'A%3.'$ %' 0&?1 +7%)%$0 $& $1+3. &#$%&'- -?//.--6?))0 6&1 0.+1-=

Implied Volatility vs. Actual Volatility (DIA)

"' $*. /*+1$ +7&C. 0&?c)) -.. $*+$ B. $1+/5.3 C&)+$%)%$0 6&1 >J(8 + 4+P&1 4+15.$ QSI 6&1 $*. >&B b&'.-8 +)) $*. B+0 7+/5 $& fggl= S*. 7)?. &1 $.+) /&)&1.3 )%'. -*&B- $*. 4&'$*)0 %4#)%.3 C&)+$%)%$0 1.+3%'2 .+/* 3+0= S*. )%2*$.1 21..' )%'. -*&B- $*. +/$?+) &1 1.+)%d.3 C&)+$%)%$0 lg 3+0- 61&4 $*. 3+$. &6 4.+-?1.4.'$ 6&1 .+/* #.1%&3= M&8 B+- $*. >&B b&'.- ).-- C&)+$%). $*+' $*. 4+15.$ .N#./$.3 %$ $& 7.e W.#m "' +C.1+2.8 $*. >J( .N#./$.3 $*. 4+15.$ $& *+C. + -)%2*$)0 4&1. C&)+$%). .'C%1&'4.'$ $*+' *+3 7..' 1.+)%d.3 &C.1 $*. )+-$ hl 0.+1-= S*. +C.1+2. 3%66.1.'/. 7.$B..' $*. >J(c- %4#)%.3 C&)+$%)%$0 +'3 +/$?+) C&)+$%)%$0 3?1%'2 $*%- #.1%&3 B+- +##1&N= k=fup= S*%- %'3%/+$.- $*+$ $*. &#$%&'4+15.$ /&'-%-$.'$)0 .N#./$.3 >J( $& 4&C. &' +C.1+2. k=fup 4&1. $*+' %$ +/$?+))0 3%3= 31

K./+)) $*+$ %6 +' &#$%&'- &')0 ?'5'&B' 6+/$&1 %' #1%/%'2 %- 3.$.14%'.3 70 %4#)%.3 C&)+$%)%$0 &1 6?$?1. .N#./$.3 4&C.-8 +'3 $*+$ 6?$?1. 4&C. $?1'- &?$ $& 7. ).-- C&)+$%). $*+' +'$%/%#+$.38 $*.' $*. &#$%&' %- $*.&1.$%/+))0 &C.1#1%/.3= M& %6 0&?1 &#$%&' /&'$1+/$ %- #1%/.3 +--?4%'2 + fup 4&C. +'3 $*. -$&/5 &')0 4&C.3 fgp8 0&? #+%3 $&& 4?/* 4&'.0 6&1 $*+$ &#$%&' /&'$1+/$=

!:#$%0 -./50.% *#$ /.0 '0- $,-&$' %0440.% 6$.0 $3-0' -#/' '0- $,-&$' ?210.% #/E0 / 50M&'057 6/-#06/-&+/4 05(0 0E0' &' /' 03M&+&0'- 6/.A0-;< J' $*. /+-. &6 >J( +7&C.8 0&?cC. 2&$ ?'3.'%+7). #1&&6 $*+$ )&'2H$.14 &#$%&' #1%/%'2 3?1%'2 $*%- hl 0.+1 #.1%&3 B+- &C.1#1%/.38 4.+'%'2 $*+$ &#$%&' -.)).1-8 '&$ 7?0.1-8 B.1. $*. 1.+) B%''.1- *.1.= M?1. $*.1. B.1. $%4.- B*.' C&)+$%)%$0 B+- 71%.A)0 21.+$.1 $*+' .N#./$.38 '+4.)0 %' fggr8 7?$ $*. )&'2H$.14 3+$+ %- /&'-%-$.'$ B%$* $*%- %4#)%.3 C&)+$%)%$0 &C.1H .N#./$+$%&' $*+$ B.cC. 3%-/?--.3= 9.$c- )&&5 +$ -&4. 4&1. .N+4#).-t

Implied Volatility vs. Actual Volatility (GLD)

J' $*. /*+1$ +7&C.8 0&?c)) A%'3 $*. -+4. C&)+$%)%$0 3+$+ /&4#+1%-&' 6&1 Z9>8 +' QSI $*+$ $1+/5- $*. #1%/. &6 Z&)3 2&%'2 7+/5 $& fggr= (2+%' 0&?c)) '&$%/. $*+$ +/$?+) C&)+$%)%$0 B+4?/* ).-- $*+' $*. 4+15.$c- %4#)%.3 C&)+$%)%$0= S*. -#1.+3 6&1 Z9> 7.$B..' +/$?+) +'3 %4#)%.3 3?1%'2 $*%- #.1%&3 B+- u=fgp= 32

I%'+))08 7.)&B 0&?c)) -.. C&)+$%)%$0 3+$+ 6&1 S9S8 +' QSI $1+/5%'2 fgs 0.+1 4+$?1%$0 7&'3- +)) $*. B+0 7+/5 $& fggi= W.$ +2+%'8 %4#)%.3 C&)+$%)%$0 .N+22.1+$.3 $*. +/$?+) 4&C. %' S9S 70 u=kjp &' +C.1+2. 3?1%'2 $*. hf 0.+1 #.1%&3=

Implied Volatility vs. Actual Volatility (TLT)

S*.1. 0&? *+C. %$8 $*1.. %'/1.3%7)0 )%U?%3 +'3 #&#?)+1 4+15.$ QSI- $1+/5%'2 -$&/5-8 #1./%&?- 4.$+)-8 +'3 7&'3-T +)) &6 B*%/* -*&B $*. -+4. %4#)%.3 C&)+$%)%$0 &C.1H.N#./$+$%&'= &C.1H.N#./$+$%&'= :&'21+$?)+$%&'-8 0&?cC. '&B 3%-/&C.1.3 $*. n.32.n 0&? *+C. +- +' &#$%&'- $1+3.1T /&'-%-$.'$)0 -.))%'2 &#$%&'- 3?. $& $*. &C.1H.N#./$+$%&' &6 %4#)%.3 C&)+$%)%$0 C&)+$%)%$0== I..)- 2&&3 1%2*$e W&? 7.$ %$ 3&.-m

Determining Implied Volatility's Ranking ;'&B $*+$ 0&? 5'&B B*+$ &?1 n.32.n %- $1+3%'28 0&? /+' +7-&)?$.)0 -.)) &#$%&'- &' + /&'-%-$.'$ 7+-%- +'3 4+5. 4&'.0 )&'2H$.14= V?$ B*+$ %6 0&? B+'$ $& 31+4+$%/+))0 %'/1.+-. 0&?1 B%' 1+$.8 #1&7+7%)%$0 &6 -?//.-- +'3 #1&A%$- B*%). $1+3%'2 ).-- &6$.'e ^.))8 0&? /+' 70 6&/?-%'2 &' -.))%'2 &#$%&'- B*.' %4#)%.3 C&)+$%)%$0 1.+3%'2- +1. *%2*.1 $*+' +C.1+2.8 +'3 &?1 n.32.n %- 4+N%4%d.3= J 1.)+$. $*%- $& #%/5%'2 +##).- 61&4 + $1..= W&?c1. 61.. $& #%/5 +)) $*. +##).- 0&? B+'$8 +'3 $*.0c1. +)) 1%#. +'3 $+-$. 21.+$8 7?$ %$c- $*. )&B *+'2%'2 61?%$ $*+$ %- .+-%.-$ $& #%/5=

33

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34

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35

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36

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37

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39

:S( @(ZQ

“It’s like having a really smart friend…”

“I freaking love this podcast!”

“Informative, interesting and entertaining…”

Quick Review

Option Payoff Diagrams Correctly Reading The Strategy P&L Charts

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41

Quick Review

Terms & Definitions Understanding Options Trading “Lingo” P=6K y ^*.' $+)5%'2 +7&?$ &#$%&'- +'3 -$&/5-8 E)&'2F %4#)%.- + #&-%$%&' &6 &B'.1-*%#=

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42

$M?I=SI&45I"=65@ 0$&"2 y I&1 /+)) &#$%&'-8 $*%- 4.+'- $*. -$&/5 #1%/. %- 7.)&B $*.

-$1%5. #1%/.= I&1 #?$ &#$%&'-8 $*%- 4.+'- $*. -$&/5 #1%/. %- +7&C. $*. -$1%5. #1%/.= S*. #1%/. &6 &?$H&6H$*.H4&'.0 &#$%&'- /&'-%-$- .'$%1.)0 &6 E$%4. C+)?.=F '?I&45I"=65@ 0'&"2 y (' &#$%&' %- E+$H$*.H4&'.0F B*.' $*. -$&/5 #1%/. %- .U?+) $& $*.

-$1%5. #1%/.= M%'/. $*. $B& C+)?.- +1. 1+1.)0 .N+/$)0 .U?+)8 B*.' #?1/*+-%'2 &#$%&'- $*. -$1%5. #1%/. /)&-.-$ $& $*. -$&/5 #1%/. %- $0#%/+))0 /+)).3 $*. E(S\ -$1%5.=F !6?A76E7D .>:M5 y S*. 3&))+1 +4&?'$ $*+$ +' &#$%&' %- %'H$*.H4&'.0= ( /+)) &#$%&' B%$* +

-$1%5. #1%/. &6 wug +'3 $*. -$&/5 %- $1+3%'2 +$ wuu B&?)3 *+C. %'$1%'-%/ C+)?. &6 wu= ( #?$ &#$%&' B%$* + -$1%5. #1%/. &6 wkg +'3 $*. -$&/5 $1+3%'2 +$ wug B&?)3 *+C. %'$1%'-%/ C+)?. &6 whg= "7C%&?-)08 &')0 %'H$*.H4&'.0 &#$%&'- *+C. %'$1%'-%/ C+)?.= &785 0*C?A76E7D2 .>:M5 y S*. #+1$ &6 +' &#$%&' #1%/. $*+$ %- 7+-.3 &' %$- $%4. $&

.N#%1+$%&' +'3 %4#)%.3 C&)+$%)%$0= J6 0&? -?7$1+/$ $*. +4&?'$ &6 %'$1%'-%/ C+)?. 61&4 +' &#$%&' #1%/.8 0&?R1. ).6$ B%$* $*. &#$%&'R- $%4. &1 .N$1%'-%/ C+)?.= J6 +' &#$%&' *+- '& %'$1%'-%/ C+)?. D%=.=8 %$R- &?$H&6H$*.H4&'.0G %$- .'$%1. B&1$* %- 7+-.3 &' $%4. C+)?.= &45?> T5D>@ y ( $.14 ?-.3 $& 3.-/1%7. *&B $*. $%4. C+)?. &6 +' &#$%&' /+' E3./+0F &1

1.3?/. B%$* $*. #+--+2. &6 $%4.= "'. &6 $*. 6&?1 4+P&1 "#$%&' Z1..5-= .=:>?7:7?@ y ( 4.+-?1. &6 $*. A)?/$?+$%&' %' $*. 4+15.$ #1%/. &6 $*. ?'3.1)0%'2 -./?1%$0=

\+$*.4+$%/+))08 C&)+$%)%$0 %- $*. +''?+)%d.3 -$+'3+13 3.C%+$%&' &6 1.$?1'-= *C5AD7E5 y S*%- &//?1- B*.' $*. &B'.1 &6 +' &#$%&' %'C&5.- $*. 1%2*$ $& 7?0 &1 -.))

?'3.1)0%'2 -$&/5 %' $*. &#$%&' /&'$1+/$= J' Q'2)%-*8 %$ 4.+'- $*. &#$%&' &B'.1 7?0- &1 -.))$*. ?'3.1)0%'2 -$&/5 +$ $*. -$1%5. #1%/.8 +'3 1.U?%1.- $*. &#$%&' -.)).1 $& $+5. $*. &$*.1 -%3. &6 $*. $1+3.= 'EE7K6856? y ^*.' +' &#$%&' &B'.1 .N.1/%-.- $*. &#$%&'8 +' &#$%&' -.)).1 D&1 EB1%$.1FG

%- +--%2'.3 +'3 4?-$ 4+5. 2&&3 &' *%- &1 *.1 &7)%2+$%&'= S*+$ 4.+'- *. &1 -*. %- 1.U?%1.3 $& 7?0 &1 -.)) $*. ?'3.1)0%'2 -$&/5 +$ $*. -$1%5. #1%/.= S*.0 /+' *&B.C.1 %44.3%+$.)0 /)&-. &1 1.C.1-. $*. #&-%$%&' %6 $*.0 /*&&-. '&$ $& *&)3 $*. -$&/5=

43

High IV Bullish Options Strategies If you are bullish on the underlying direction of the stock and implied volatility is over the 50th percentile you’ll choose from the following options strategies…

Option Strategy

Put Credit Spread Bullish Outlook & High Volatility…

V?)) #?$ /1.3%$ -#1.+3- +1. -$1+$.2%.- $*+$ +1. 3.-%2'.3 $& #1&A%$ 61&4 7&$* + &'.HB+0 3%1./$%&'+) 4&C. ?# %' $*. ?'3.1)0%'2 -$&/5 +'3 + 31&# %' $*. ?'3.1)0%'2 %4#)%.3 C&)+$%)%$0= S*.-. +1. *%2* #1&7+7%)%$0 -$1+$.2%.- B*.1. 0&? +1. + '.$ + -.)).1 &6 &#$%&'- 7.)&B $*. -$&/5 #1%/.8 +'3 0&? +1. )&&5%'2 6&1 $*&-. &#$%&'- $& 3./+0 %' C+)?. +'3 7./&4. B&1$*).-+$ .N#%1+$%&'=

45

Put Credit Spread Options Strategy

The Trade Setup M.)) h "S\ @?$T V?0 h "S\ @?$ +$ 9&B.1 M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ &C.1+)) /1.3%$=

Optimal Timeline Q'$.1%'2 $*.-. $1+3.- lgHkg 3+0- ?'$%) .N#%1+$%&' %- #1.6.11.3 +'3 -*&?)3 +))&B 0&? $& /&))./$ .'&?2* #1.4%?4 +6$.1 /&44%--%&' /&-$- $& 4+5. $*. $1+3. B&1$* #)+/%'2=

Volatility Impact M%'/. B. +1. '.$ -.)).1- &6 &#$%&'-8 0&? -*&?)3 7. .'$.1%'2 $*%- $1+3. &')0 B*.' J_ K+'5 %- +7&C. ug= ()) .)-. 7.%'2 .U?+)8 6+))%'2 J_ B%)) 2.'.1+))0 *.)# $*%- #&-%$%&' B*%). 1%-%'2 J_ B%)) 2.'.1+))0 *?1$ $*%- #&-%$%&'=

Time Decay S%4. 3./+0 &1 S*.$+ B&15- #&-%$%C.)0 6&1 ?- +- #+1$ &6 $*%- #&-%$%&'= (- '.$ -.)).1- B. .N#./$ +)) &1 #+1$ &6 $*. $1+3. $& .N#%1. B&1$*).-- +$ .N#%1+$%&'=

Risk Management "#$%4+) #&-%$%&' -%d%'2 6&1 &#$%&' -.))%'2 -$1+$.2%.- )%5. $*%- /+' 7. -/+).3 ?# -)%2*$)0 7.$B..' lHup &6 0&?1 .U?%$0 7+)+'/. #.1 $1+3. &6 '&$%&'+) 1%-5=

Profit Targets J6 0&?1 #&-%$%&' -*&B- + #1&A%$ '.+1 ugp &6 $*. 4+N #&$.'$%+) 2+%'8 0&? -*&?)3 )&&5 $& /)&-. $*. #&-%$%&' .+1)0 +'3 )&/5 %' #1&A%$-=

Break-Even Point(s) M*&1$ #?$ -$1%5. 4%'?- '.$ /1.3%$= 46

Option Strategy

Short Naked Put Bullish Outlook & High Volatility…

( -*&1$ #?$ %- +' ?'3.A%'.3 1%-5 $1+3. B*.1. 0&? +1. -.))%'2 &#$%&'- 7.)&B $*. /?11.'$ 4+15.$ #1%/. &6 $*. -$&/5 +'$%/%#+$%'2 7&$* + 31&# %' J_ &1 $*. -$&/5 $& 1.4+%' +7&C. 0&?1 -$1%5. #1%/. +$ .N#%1+$%&'= S*%- %- &'. &6 $*. 5.0 7?%)3%'2 7)&/5- 6&1 %'/&4. +'3 #1.4%?4 -.))%'2 -$1+$.2%.- 7./+?-. 0&? /&))./$ + /1.3%$ 6&1 .'$.1%'2 $*. $1+3. +'3 $0#%/+))0 *+C. + C.10 *%2* #1&7+7%)%$0 &6 -?//.-- &C.1+))=

47

Short Naked Put Options Strategy

The Trade Setup M.)) h "S\ @?$ 7.)&B $*. 4+15.$ 6&1 + /1.3%$=




Risk Management ^%$* ?'3.A%'.3 1%-5 -$1+$.2%.-8 0&? B+'$ $& 7. + )%$$). 4&1. /+?$%&?-= ())&/+$. 7.$B..' hHfp &6 .U?%$0 #.1 $1+3. 7+-.3 &' %'%$%+) 4+12%' 1.U?%1.4.'$-=


Break-Even Point(s) M$1%5. #1%/. 4%'?- /1.3%$ 1./.%C.3= 48

Option Strategy

Put Broken Wing Butterfly Bullish Outlook & High Volatility…

( #?$ 71&5.'HB%'2 -#1.+3 %- +' +3C+'/.3 -$1+$.20 B*.1.70 0&? $+5. + $1+3%$%&'+) 7?$$.1A)0 -#1.+3 7.)&B $*. 4+15.$ +'3 -5%# h -$1%5. $& /1.+$. +' ?'7+)+'/.3 -#1.+3= S*.-. -$1+$.2%.- +1. $0#%/+))0 3&'. 6&1 + '.$ /1.3%$ B%$* $*. 2&+) &6 *+C%'2 '& 1%-5 $& $*. ?#-%3.= M5%##%'2 + -$1%5. +))&B- 0&? 3& $& $*%- 7./+?-. 0&? 7?0 + 6?1$*.1 "S\ #?$ &#$%&' +$ + /*.+#.1 #1%/. B*%/* 1.3?/.- $*. &C.1+)) /&-$ &6 $*. -$1+$.20=

49

Put Broken Wing Butterfly Options Strategy

The Trade Setup V?0 h JS\ @?$T M.)) f "S\ @?$- '.+1 $*. (S\ &#$%&'-T M5%# M$1%5. +'3 V?0 h "S\ @?$= J6 #&--%7). $*. $1+3. %- 3&'. 6&1 + '.$ /1.3%$=





Profit Targets J6 0&?1 #&-%$%&' -*&B- + #1&A%$ '.+1 jup &6 $*. 4+N #&$.'$%+) 2+%'8 0&? -*&?)3 )&&5 $& /)&-. $*. #&-%$%&' .+1)0 +'3 )&/5 %' #1&A%$-=

Break-Even Point(s) SB& VQ@-= hG [%2*.1 )&'2 #?$ -$1%5. 4%'?- '.$ 3.7%$ #+%3 fG 9&B.1 )&'2 #?$ -$1%5. #)?- '.$ 3.7%$ #+%3= K.C.1-. %6 .'$.1.3 6&1 + '.$ /1.3%$= 50

Option Strategy

Custom Naked Put Bullish Outlook & High Volatility…

( /?-$&4 '+5.3 #?$ %- +' +3C+'/.3 -$1+$.20 /1.+$.3 70 /&47%'%'2 + -*&1$ /1.3%$ /+)) -#1.+3 +7&C. $*. 4+15.$ B%$* + -*&1$ '+5.3 #?$ 7.)&B $*. 4+15.$= S*.-. -$1+$.2%.- #1&A%$ 61&4 6+))%'2 J_ +'3 + 7?))%-*H'.?$1+) &?$)&&5 &' $*. -$&/5= S*. -*&1$ /1.3%$ /+)) -#1.+3 %- +33.3 $& %'/1.+-. $*. &C.1+)) /1.3%$ 1./.%C.3 &' $*. .'$%1. -$1+$.208 +'3 B*.' 3&'. 6&1 + /1.3%$ 21.+$.1 $*+' $*. B%3$* &6 $*. /1.3%$ /+)) -#1.+3 -$1%5. #1%/.-8 0&? B&?)3 *+C. '& 1%-5 $& $*. ?#-%3.=

51

Custom Naked Put Options Strategy

The Trade Setup M.)) h "S\ @?$T M.)) h "S\ :+))T V?0 h "S\ :+)) +$ [%2*.1 M$1%5. @1%/.= J6 #&--%7). $*. $1+3. %- 3&'. 6&1 + '.$ /1.3%$ B%3.1 $*+' /+)) -#1.+3 B%3$*=






Break-Even Point(s) M*&1$ #?$ -$1%5. #1%/. 4%'?- '.$ /1.3%$ 1./.%C.3= 52

Low IV Bullish Options Strategies If you are bullish on the underlying direction of the stock but implied volatility is under the 50th percentile you’ll choose from the following options strategies…

Option Strategy

Call Debit Spread Bullish Outlook & Low Volatility…

V?)) /+)) 3.7%$ -#1.+3- +1. -$1+$.2%.- $*+$ +1. 3.-%2'.3 $& #1&A%$ 61&4 + &'.HB+0 3%1./$%&'+) 4&C. %' $*. ?'3.1)0%'2 -$&/5 *%2*.1= S*.0 +)-& 4%2*$ #1&A%$ D$*&?2* %- '&$ +- )%5.)0G 61&4 %'/1.+-%'2 %4#)%.3 C&)+$%)%$0= S*.-. +1. 2.'.1+))0 )&B #1&7+7%)%$0 $1+3.- 7./+?-. $*+$ .'3 ?# 7.%'2 ugHug 7.$- &' $*. ?'3.1)0%'2 3%1./$%&'= (- + 1.-?)$ B. 3& '&$ $1+3. $*.-. $0#.- &6 -$1+$.2%.- &6$.' %' &?1 #&1$6&)%& +'3 B%)) &//+-%&'+))0 ?-. $*.4 6&1 1.7+)+'/%'2 #?1#&-.-=

54

Call Debit Spread Options Strategy

The Trade Setup V?0 h JS\ :+))T M.)) h "S\ :+)) +$ [%2*.1 M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ 3.7%$=

Optimal Timeline Q'$.1%'2 $*.-. $1+3.- kgHrg 3+0- ?'$%) .N#%1+$%&' %- #1.6.11.3= M%'/. &#$%&' #1%/%'2 %- 2.'.1+))0 7. )&B8 0&?R)) B+'$ $& %'/1.+-. $*. $1+3. 3?1+$%&' +'3 2%C. 0&?1-.)6 +4#). $%4. 6&1 $*. -$&/5 $& 4&C. %'$& + #1&A%$+7). d&'.=

Volatility Impact M%'/. B. +1. '.$ 7?0.1- &6 &#$%&'-8 0&? -*&?)3 7. .'$.1%'2 $*%- $1+3. &')0 B*.' J_ K+'5 %- 7.)&B ug= ()) .)-. 7.%'2 .U?+)8 1+%-%'2 J_ B%)) 2.'.1+))0 *.)# $*%- #&-%$%&' B*%). 6+))%'2 J_ B%)) 2.'.1+))0 *?1$ $*%- #&-%$%&'=

Time Decay S%4. 3./+0 &1 S*.$+ B&15- '.2+$%C.)0 +2+%'-$ ?- +- #+1$ &6 $*%- #&-%$%&'= ('.$ 7?0.1-8 %6 $*. -$1+$.20 %- '&$ JS\ +$ .N#%1+$%&' %$ .N#%1.- B&1$*).--=

Risk Management "#$%4+) #&-%$%&' -%d%'2 6&1 &#$%&' 7?0%'2 -$1+$.2%.- )%5. $*%- -*&?)3 7. /&'-%3.1+7)0 -4+)) +$ ).-- $*+' hp &6 0&?1 #&1$6&)%& .U?%$0 7+)+'/.=

Profit Targets Z%C.' $*. )&B #1&7+7%)%$0 '+$?1. &6 $*%- #&-%$%&'8 .+1)%.1 #1&A%$ $+5%'2 -*&?)3 7. 3&'. 7.$B..' fuHugp &6 $*. 4+N #&$.'$%+) 2+%'=

Break-Even Point(s) 9&'2 /+)) -$1%5. #)?- '.$ 3.7%$ #+%3= 55

Option Strategy

Call Calendar Spread Bullish Outlook & Low Volatility…

9&'2 /+)) /+).'3+1 -#1.+3- #1&A%$ 61&4 + -)%2*$)0 *%2*.1 4&C. ?# %' $*. ?'3.1)0%'2 -$&/5 %' + 2%C.' 1+'2.= :+).'3+1 -#1.+3- )&-. %6 $*. ?'3.1)0%'2 4&C.- $&& 6+1 %' .%$*.1 3%1./$%&'= S*. 4+N%4?4 )&-- %- $*. 3.7%$ #+%38 ?# ?'$%) $*. 61&'$H4&'$* &#$%&' 0&? -&)3 .N#%1.-= S*%- $1+3. %- 7.-$ ?-.3 B*.' %4#)%.3 C&)+$%)%$0 %- )&B +'3 B*.' $*.1. %- %4#)%.3 C&)+$%)%$0 n-5.Bn 7.$B..' $*. 4&'$*- ?-.38 -#./%A%/+))0 B*.' $*. '.+1H4&'$* -&)3 *+- + *%2*.1 %4#)%.3 C&)+$%)%$0 $*+' $*. )+$.1H4&'$* 7&?2*$=

56

Call Calendar Spread Options Strategy

The Trade Setup M.)) h "S\ :+)) %' $*. I1&'$ \&'$*T V?0 h "S\ :+)) %' $*. V+/5 \&'$* +$ $*. M+4. M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ 3.7%$=

Optimal Timeline W&? -*&?)3 )&&5 $& $+12.$ $*. 61&'$ 4&'$* &#$%&'- +$ ).+-$ fgs 3+0- &?$ $& 2%C. 0&?1-.)6 .'&?2* 1&&4 6&1 #1.4%?4 3./+0= ('0$*%'2 -*&1$.1 $*+' fg 3+0- %' $*. 61&'$ 4&'$* &1 )&'2.1 $*+' iu 3+0- -*&?)3 7. +C&%3.3=


Time Decay S%4. 3./+0 &1 S*.$+ B&15- #&-%$%C.)0 6&1 ?- +- #+1$ &6 $*%- #&-%$%&' +- )&'2 +$*. -$&/5 1.4+%'- 1+'2. 7&?'3 B*%/* 4+N%4%d.- $*. 4&'$*)0 /&'$1+/$ -5.B=



Break-Even Point(s) _+1%.- 3.#.'3%'2 &' -$1%5. #1%/.- +'3 C&)+$%)%$0= 57

Option Strategy

Call (Ratio) Backspread Bullish Outlook & Low Volatility…

( V?)) :+)) V+/5-#1.+3 %- -%4%)+1 $& + )&'2 /+)) &#$%&' +- 6+1 +- 0&?1 &?$)&&5 &' $*. ?'3.1)0%'2 -$&/5 7?$ 0&? ?-. $*. -+). +'3 #?1/*+-. &6 3%66.1.'$ 1+$%&- &6 &#$%&'- $& #1&$./$ +2+%'-$ + #&--%7). 4&C. )&B.1 %' $*. -$&/5 #1%/.= S*.-. +1. &6$.' 1.6.11.3 $& +- E1+$%& -#1.+3-F 7./+?-. 0&? +1. 7?0%'2 +'3 -.))%'2 &#$%&'- +$ %'$.1C+)- &6 h`f &1 f`l .$/= ^%$* $*%- #+1$%/?)+1 -$1+$.20 0&? B&?)3 -.)) + /+)) &#$%&' +'3 $*.' 7?0 f *%2*.1 -$1%5. /+))- 4+5%'2 0&? -$%)) + '.$ 7?0.1 &6 &#$%&'- +$ + 1+$%& &6 h`f=

58

Call (Ratio) Backspread Options Strategy

The Trade Setup M.)) h (S\ :+))T V?0 f "S\ :+))- +$ [%2*.1 M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ 3.7%$=





Profit Targets Z%C.' $*. )&B #1&7+7%)%$0 '+$?1. &6 $*%- #&-%$%&'8 .+1)%.1 #1&A%$ $+5%'2 -*&?)3 7. 3&'. 7.$B..' fup &6 $*. 4+N #&$.'$%+) 2+%'=

Break-Even Point(s) SB& VQ@-= hG M*&1$ /+)) -$1%5. #)?- '.$ 3.7%$ #+%3 fG 9&'2 /+)) -$1%5. #)?- $*. 3%66.1.'/. 7.$B..' $*. )&'2 /+)) -$1%5. +'3 -*&1$ /+)) -$1%5. #)?- '.$ 3.7%$= 59

Option Strategy

Put Diagonal Spread Bullish Outlook & Low Volatility…

9&'2 #?$ 3%+2&'+) -#1.+3- #1&A%$ 61&4 + *%2*.1 4&C. ?# %' $*. ?'3.1)0%'2 -$&/5 %' + 2%C.' 1+'2.= >%+2&'+) -#1.+3- /&47%'. $*. 3%1./$%&'+) '+$?1. &6 #?$ /1.3%$ -#1.+3 B%$* $*. C&)+$%)%$0 %4#+/$ &6 + /+).'3+1 -#1.+3= J6 .-$+7)%-*.3 6&1 + '.$ 3.7%$8 1%-5 %- )%4%$.3 $& $*. 3%66.1.'/. 7.$B..' $*. -$1%5. #1%/.-8 #)?- $*. '.$ 3.7%$ #+%3= S*%- $1+3. %- 7.-$ ?-.3 B*.' %4#)%.3 C&)+$%)%$0 %- )&B +'3 B*.' $*.1. %- %4#)%.3 C&)+$%)%$0 n-5.Bn 7.$B..' $*. 4&'$*- ?-.38 -#./%A%/+))0 B*.' $*. '.+1H4&'$* -&)3 *+- + *%2*.1 %4#)%.3 C&)+$%)%$0 $*+' $*. )+$.1H4&'$* 7&?2*$=

60

Put Diagonal Spread Options Strategy

The Trade Setup M.)) h "S\ @?$ %' $*. I1&'$ \&'$*T V?0 h "S\ @?$ %' $*. V+/5 \&'$* +$ + 9&B.1 M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ 3.7%$=







High IV Neutral Options Strategies If you are neutral on the underlying direction of the stock and implied volatility is over the 50th percentile you’ll choose from the following options strategies…

Option Strategy

Short Straddle Neutral Outlook & High Volatility…

M*&1$ -$1+33).- +1. +221.--%C. #1.4%?4 -.))%'2 -$1+$.2%.- $*+$ 4+N%4%d.- $*. /1.3%$ 1./.%C.3 +'3 %- 7.-$ ?-.3 B%$* ?)$1+H*%2* %4#)%.3 C&)+$%)%$0 1+'5%'2 -$&/5-= V./+?-. &6 $*. ?'3.A%'.3 1%-5 '+$?1. &6 $*%- -$1+$.20 %$R- 7.-$ $& ?-. $*%- -#+1%'2)0 D+2+%' &')0 B%$* 21.+$ -.$?#-G= ^. B%)) $0#%/+))0 &')0 $1+3. h $& f -$1+33).- %' &?1 #&1$6&)%& +$ + $%4. $& /&'-.1C. $*. *%2* 4+12%' ?-.3 70 $*.-. $1+3.-=

63

Short Straddle Options Strategy

The Trade Setup M.)) h (S\ @?$T M.)) h (S\ :+)) +$ M+4. M$1%5. @1%/.= S*. 1.-?)$ &6 7&$* -+).- %+ '.$ /1.3%$=





Profit Targets J6 0&?1 #&-%$%&' -*&B- + #1&A%$ '.+1 fup &6 $*. 4+N #&$.'$%+) 2+%'8 0&? -*&?)3 )&&5 $& /)&-. $*. #&-%$%&' .+1)0 +'3 )&/5 %' #1&A%$-=

Break-Even Point(s) SB& VQ@-= hG M*&1$ -$1%5. #)?- '.$ /1.3%$= fG M*&1$ -$1%5. 4%'?- '.$ /1.3%$= 64

Option Strategy

Short Strangle Neutral Outlook & High Volatility…

S*. -*&1$ -$1+'2). /&?)3 #&--%7)0 7. $*. ?)$%4+$. -$1+$.20 6&1 &#$%&'- $1+3.1-= S*&?2* %$ 1.U?%1.- 4&1. /+#%$+) %' $*. 6&14 &6 4+12%' B%$* '+5.3 &#$%&'- &' .%$*.1 -%3.8 $*.-.-$1+$.2%.- &66.1 $*. *%2*.-$ #1&7+7%)%$0 &6 -?//.-- &6 +'0 $1+3. +'3 2.'.1+))0 $*. *%2*.-$ @q9 )&'2 $.14= S*%- $1+3. %- 7.-$ ?-.3 B*.' %4#)%.3 C&)+$%)%$0 %- *%2* +'3 B*.' 0&? +1. )&&5%'2 6&1 $*. -$&/5 $& 4&C. %' + 3.A%'.3 1+'2. &C.1 $*. $1+3%'2 $%4.)%'.= ^. /+' 2.'.1+))0 #)+/. $*.-. $1+3. B%$* 4&1. $*+' + jgp /*+'/. &6 -?//.-- .+/* 4&'$*=

65

Short Strangle Options Strategy

The Trade Setup M.)) h "S\ @?$T M.)) h "S\ :+)) +$ I+1 "?$ M$1%5. @1%/.-= S*. 1.-?)$ &6 7&$* -+).- %- + '.$ /1.3%$==




Risk Management ^%$* ?'3.A%'.3 1%-5 -$1+$.2%.-8 0&? B+'$ $& 7. + )%$$). 4&1. /+?$%&?-= ())&/+$. 7.$B..' hHfp &6 .U?%$0 #.1 $1+3. 7+-.3 &' %'%$%+) 4+12%' 1.U?%1.4.'$-


Break-Even Point(s) SB& VQ@-= hG M*&1$ /+)) -$1%5. #)?- '.$ /1.3%$= fG M*&1$ #?$ -$1%5. 4%'?- '.$ /1.3%$= 66

Option Strategy

Short Iron Condor Neutral Outlook & High Volatility…

J1&' /&'3&1- +1. &'. &6 &?1 4&-$ 1.)%+7). +'3 6+C&1%$. &#$%&'- -$1+$.2%.-= ( /&47%'+$%&' &6 -.))%'2 + /1.3%$ #?$ -#1.+3 +'3 /1.3%$ /+)) -#1.+3 $*.-. 7%13- #1&A%$ 61&4 $*. -$&/5 1.4+%'%'2 1+'2. 7&?'3 +'3 + 31&# %' %4#)%.3 C&)+$%)%$0= J' &13.1 $& 4+5. $*.-. *%2* #1&7+7%)%$0 $1+3.- B&15 B. -?22.-$ -.))%'2 $*. -*&1$ -$1%5.- &' .%$*.1 -%3. +$ $*. h M> ).C.) D&1 hup #1&7= JS\ ).C.)G= S*%- B%)) /1.+$. +##1&N%4+$.)0 + jgp /*+'/. &6 -?//.-- )&'2H$.14=

67

Short Iron Condor Options Strategy

The Trade Setup M.)) h "S\ @?$T V?0 h "S\ @?$ +$ 9&B.1 M$1%5.T M.)) h "S\ :+))T V?0 h "S\ :+)) +$ [%2*.1 M$1%5.= S*. /&47%'+$%&' -*&?)3 0%.)3 + '.$ /1.3%$=






Break-Even Point(s) SB& VQ@-= hG M*&1$ /+)) -$1%5. #)?- '.$ /1.3%$= fG M*&1$ #?$ -$1%5. 4%'?- '.$ /1.3%$= 68

Option Strategy

Short Iron Butterfly Neutral Outlook & High Volatility…

J1&' 7?$$.1A)%.- +1. $*. 1%-5H3.A%'.3 /&?-%'- &6 -*&1$ -$1+'2).- +'3 + #&#?)+1 +)$.1'+$%C. -$1+$.20 6&1 JK( +//&?'$-= ( /&47%'+$%&' &6 -.))%'2 (S\ #?$- +'3 /+)) B%$* B%3.1 &#$%&'7&?2*$ +$ "S\ -$1%5.- 6&1 #1&$./$%&'8 $*.-. 7%13- #1&A%$ 61&4 $*. -$&/5 1.4+%'%'2 1+'2. 7&?'3 +'3 + 31&# %' %4#)%.3 C&)+$%)%$0= J' &13.1 $& 4+5. $*.-. *%2* #1&7+7%)%$0 $1+3. B&15 B. -?22.-$ 7?0%'2 $*. )&'2 -$1%5.- D&1 B%'2-G +$ $*. h M> ).C.) D&1 hup #1&7= JS\ ).C.)G &1 6?1$*.1 &?$ %6 #&--%7).= S*%- B%)) /1.+$. +##1&N%4+$.)0 + jgp /*+'/. &6 -?//.-- )&'2H$.14=

69

Short Iron Butterfly Options Strategy

The Trade Setup M.)) h (S\ @?$T V?0 h "S\ @?$ +$ 9&B.1 M$1%5.T M.)) h (S\ :+))T V?0 h "S\ :+)) +$ [%2*.1 M$1%5.= S*. /&47%'+$%&' -*&?)3 0%.)3 + '.$ /1.3%$=





Profit Targets J6 0&?1 #&-%$%&' -*&B- + #1&A%$ '.+1 fup &6 $*. 4+N #&$.'$%+) 2+%'8 0&? -*&?)3 )&&5 $& /)&-. $*. #&-%$%&' .+1)0 +'3 )&/5 %' #1&A%$-=

Break-Even Point(s) SB& VQ@-= hG M*&1$ -$1%5. #)?- '.$ /1.3%$= fG M*&1$ -$1%5. 4%'?- '.$ /1.3%$= 70

Low IV & Neutral? PASS On The Trade! If you are neutral on the underlying direction of the stock and implied volatility is below the 50th percentile, the best trade is actually NOT make any trade at all. Since you have very little edge with respect to implied volatility and no assumption on the underlying direction, skip the setup and find something else - don’t force it.

High IV Bearish Options Strategies If you are bearish on the underlying direction of the stock and implied volatility is over the 50th percentile you’ll choose from the following options strategies…

Option Strategy

Call Credit Spread Bearish Outlook & High Volatility…

V.+1 /+)) /1.3%$ -#1.+3- +1. -$1+$.2%.- $*+$ +1. 3.-%2'.3 $& #1&A%$ 61&4 7&$* + &'.HB+0 3%1./$%&'+) 4&C. 3&B' %' $*. ?'3.1)0%'2 -$&/5 +'3 + 31&# %' $*. ?'3.1)0%'2 %4#)%.3 C&)+$%)%$0= S*.-. +1. *%2* #1&7+7%)%$0 -$1+$.2%.- B*.1. 0&? +1. + '.$ -.)).1 &6 &#$%&'- +7&C. 4+15.$ #1%/. +'3 0&? +1. )&&5%'2 6&1 $*&-. &#$%&'- $& 3./+0 %' C+)?. +'3 7./&4. B&1$*).-- +$ .N#%1+$%&'8 +))&B%'2 0&? $& 5..# $*. 6?)) #1.4%?4 +- #1&A%$=

73

Call Credit Spread Options Strategy

The Trade Setup M.)) h "S\ :+))T V?0 h "S\ :+)) +$ [%2*.1 M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ &C.1+)) /1.3%$=






Break-Even Point(s) M*&1$ /+)) -$1%5. #)?- '.$ /1.3%$= 74

Option Strategy

Short Naked Call Bearish Outlook & High Volatility…

( -*&1$ /+)) %- +' ?'3.A%'.3 1%-5 $1+3. B*.1. 0&? +1. -.))%'2 &#$%&'- +7&C. $*. /?11.'$ 4+15.$ #1%/. &6 $*. -$&/5 +'$%/%#+$%'2 7&$* + 31&# %' %4#)%.3 C&)+$%)%$0 &1 $*. -$&/5 $& 1.4+%' 7.)&B 0&?1 -$1%5. #1%/.= S*%- %- &'. &6 $*. 5.0 7?%)3%'2 7)&/5- 6&1 %'/&4. +'3 #1.4%?4 -.))%'2 -$1+$.2%.- 7./+?-. 0&? /&))./$ + /1.3%$ 6&1 .'$.1%'2 $*. $1+3. +'3 $0#%/+))0 *+C. + C.10 *%2* #1&7+7%)%$0 &6 -?//.-- +$ .N#%1+$%&'=

75

Short Naked Call Options Strategy

The Trade Setup M.)) h "S\ :+)) +7&C. $*. 4+15.$ 6&1 + /1.3%$=






Break-Even Point(s) M$1%5. #1%/. #)?- /1.3%$ 1./.%C.3= 76

Option Strategy

Call Broken Wing Butterfly Bearish Outlook & High Volatility…

( /+)) V^V -#1.+3 %- +' +3C+'/.3 -$1+$.20 B*.1.70 0&? $+5. + $1+3%$%&'+) 7?$$.1A)0 -#1.+3 +7&C. $*. 4+15.$ +'3 -5%# h -$1%5. $& /1.+$. +' ?'7+)+'/.3 -#1.+3= S*.-. -$1+$.2%.- +1. $0#%/+))0 3&'. 6&1 + '.$ /1.3%$ B%$* $*. 2&+) &6 *+C%'2 '& 1%-5 $& $*. 3&B'-%3. -*&?)3 $*. -$&/5 5..# 6+))%'2= M5%##%'2 + -$1%5. +))&B- 0&? 3& $& $*%- 7./+?-. 0&? 7?0 + 6?1$*.1 "S\ /+)) &#$%&' +$ + /*.+#.1 #1%/. B*%/* 1.3?/.- $*. &C.1+)) /&-$ &6 $*. -$1+$.20=

77

Call Broken Wing Butterfly Options Strategy

The Trade Setup V?0 h JS\ :+))T M.)) f "S\ :+))- '.+1 $*. (S\ &#$%&'-T M5%# M$1%5. +'3 V?0 h "S\ :+))= J6 #&--%7). $*. $1+3. %- 3&'. 6&1 + '.$ /1.3%$=





Profit Targets J6 0&?1 #&-%$%&' -*&B- + #1&A%$ '.+1 jup &6 $*. 4+N #&$.'$%+) 2+%'8 0&? -*&?)3 )&&5 $& /)&-. $*. #&-%$%&' .+1)0 +'3 )&/5 %' #1&A%$-=

Break-Even Point(s) SB& VQ@-= hG 9&B.1 )&'2 /+)) -$1%5. #)?- '.$ 3.7%$ #+%3 fG [%2*.1 )&'2 /+)) -$1%5. 4%'?- '.$ 3.7%$ #+%3= K.C.1-. %6 .'$.1.3 6&1 + '.$ /1.3%$= 78

Option Strategy

Custom Naked Call Bearish Outlook & High Volatility…

( /?-$&4 '+5.3 /+)) %- +' +3C+'/.3 -$1+$.20 /1.+$.3 70 /&47%'%'2 + -*&1$ /1.3%$ #?$ -#1.+3 7.)&B $*. 4+15.$ B%$* + -*&1$ '+5.3 /+)) +7&C. $*. 4+15.$= S*.-. -$1+$.2%.- #1&A%$ 61&4 6+))%'2 J_ +'3 + 7.+1%-*H'.?$1+) &?$)&&5 &' $*. -$&/5= S*. -*&1$ /1.3%$ #?$ -#1.+3 %- +33.3 $& %'/1.+-. $*. &C.1+)) /1.3%$ 1./.%C.3 &' $*. .'$%1. -$1+$.208 +'3 B*.' 3&'. 6&1 + /1.3%$ 21.+$.1 $*+' $*. B%3$* &6 $*. /1.3%$ #?$ -#1.+3 -$1%5. #1%/.-8 0&? B&?)3 *+C. '& 1%-5 $& $*. 3&B'-%3.=

79

Custom Naked Call Options Strategy

The Trade Setup M.)) h "S\ :+))T M.)) h "S\ @?$T V?0 h "S\ @?$ +$ 9&B.1 M$1%5. @1%/.= J6 #&--%7). $*. $1+3. %- 3&'. 6&1 + '.$ /1.3%$ B%3.1 $*+' /+)) -#1.+3 B%3$*=






Break-Even Point(s) M*&1$ /+)) -$1%5. #1%/. #)?- '.$ /1.3%$ 1./.%C.3= 80

Low IV Bearish Options Strategies If you are bearish on the underlying direction of the stock but implied volatility is below the 50th percentile you’ll choose from the following options strategies…

Option Strategy

Put Debit Spread Bearish Outlook & Low Volatility…

V.+1 #?$ 3.7%$ -#1.+3- +1. -$1+$.2%.- $*+$ +1. 3.-%2'.3 $& #1&A%$ 61&4 + &'.HB+0 3%1./$%&'+) 4&C. %' $*. ?'3.1)0%'2 -$&/5 )&B.1= S*.0 +)-& 4%2*$ #1&A%$ D$*&?2* '&$ +- )%5.)0G 61&4 %'/1.+-%'2 %4#)%.3 C&)+$%)%$0 7./+?-. 0&? +1. + '.$ 7?0.1 &6 &#$%&'-= S*.-. +1. 2.'.1+))0 )&B #1&7+7%)%$0 $1+3.- 7./+?-. $*+$ .'3 ?# 7.%'2 ugHug 7.$- &' $*. ?'3.1)0%'2 3%1./$%&'= (- + 1.-?)$ B. 3& '&$ $1+3. $*.-. $0#.- &6 -$1+$.2%.- &6$.' %' &?1 #&1$6&)%& 7?$ B%)) &//+-%&'+))0 ?-. $*.4 6&1 1.7+)+'/%'2 #?1#&-.- +'3 +- *.32.- 6&1 &$*.1 #&-%$%&'-=

82

Put Debit Spread Options Strategy

The Trade Setup V?0 h JS\ @?$T M.)) h "S\ @?$ +$ 9&B.1 M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ 3.7%$=






Break-Even Point(s) 9&'2 #?$ -$1%5. 4%'?- '.$ 3.7%$ #+%3= 83

Option Strategy

Put Calendar Spread Bearish Outlook & Low Volatility…

9&'2 #?$ /+).'3+1 -#1.+3- #1&A%$ 61&4 + -)%2*$)0 )&B.1 4&C. 3&B' %' $*. ?'3.1)0%'2 -$&/5 %' + 2%C.' 1+'2.= :+).'3+1 -#1.+3- )&-. %6 $*. ?'3.1)0%'2 4&C.- $&& 6+1 %' .%$*.1 3%1./$%&'= S*. 4+N%4?4 )&-- %- $*. 3.7%$ #+%38 ?# ?'$%) $*. &#$%&' 0&? -&)3 .N#%1.-= S*%- $1+3. %- 7.-$ ?-.3 B*.' %4#)%.3 C&)+$%)%$0 %- )&B +'3 B*.' $*.1. %- %4#)%.3 C&)+$%)%$0 n-5.Bn 7.$B..' $*. 4&'$*- ?-.38 -#./%A%/+))0 B*.' $*. '.+1H4&'$* -&)3 *+- + *%2*.1 %4#)%.3 C&)+$%)%$0 $*+' $*. )+$.1H4&'$* 7&?2*$=

84

Put Calendar Spread Options Strategy

The Trade Setup M.)) h "S\ @?$ %' $*. I1&'$ \&'$*T V?0 h "S\ @?$ %' $*. V+/5 \&'$* +$ $*. M+4. M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ 3.7%$=







Option Strategy

Put (Ratio) Backspread Bearish Outlook & Low Volatility…

( V.+1 @?$ V+/5-#1.+3 %- -%4%)+1 $& + )&'2 #?$ &#$%&' +- 6+1 +- 0&?1 &?$)&&5 &' $*. ?'3.1)0%'2 -$&/5 7?$ 0&? ?-. $*. -+). +'3 #?1/*+-. &6 3%66.1.'$ 1+$%&- &6 &#$%&'- $& #1&$./$ +2+%'-$ + #&--%7). 4&C. *%2*.1 %' $*. -$&/5 +2+%'-$ 0&?= S*.-. +1. &6$.' 1.6.11.3 $& +- E1+$%& -#1.+3-F 7./+?-. 0&? +1. 7?0%'2 +'3 -.))%'2 &#$%&'- +$ %'$.1C+)- &6 h`f &1 f`l .$/= ^%$* $*%- #+1$%/?)+1 -$1+$.20 0&? B&?)3 -.)) + #?$ &#$%&' +'3 $*.' 7?0 f )&B.1 -$1%5. #?$- 4+5%'2 0&? -$%)) + '.$ 7?0.1 &6 &#$%&'- +$ + 1+$%& &6 h`f=

86

Put (Ratio) Backspread Options Strategy

The Trade Setup M.)) h (S\ @?$T V?0 f "S\ @?$- +$ 9&B.1 M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ 3.7%$=





Profit Targets Z%C.' $*. )&B #1&7+7%)%$0 '+$?1. &6 $*%- #&-%$%&'8 .+1)%.1 #1&A%$ $+5%'2 -*&?)3 7. 3&'. 7.$B..' fup &6 $*. 4+N #&$.'$%+) 2+%'=

Break-Even Point(s) SB& VQ@-= hG M*&1$ #?$ -$1%5. 4%'?- '.$ 3.7%$ #+%3 fG 9&'2 #?$ -$1%5. 4%'?$*. 3%66.1.'/. 7.$B..' $*. )&'2 /+)) -$1%5. +'3 -*&1$ /+)) -$1%5. ).-- '.$ 3.7%$= 87

Option Strategy

Call Diagonal Spread Bearish Outlook & Low Volatility…

9&'2 /+)) 3%+2&'+) -#1.+3- #1&A%$ 61&4 + )&B.1 4&C. ?# %' $*. ?'3.1)0%'2 -$&/5 %' + 2%C.' 1+'2.= >%+2&'+) -#1.+3- /&47%'. $*. 3%1./$%&'+) '+$?1. &6 /+)) /1.3%$ -#1.+3 B%$* $*. C&)+$%)%$0 %4#+/$ &6 + /+).'3+1 -#1.+3= J6 .-$+7)%-*.3 6&1 + '.$ 3.7%$8 1%-5 %- )%4%$.3 $& $*. 3%66.1.'/. 7.$B..' $*. -$1%5. #1%/.-8 #)?- $*. '.$ 3.7%$ #+%3= S*%- $1+3. %- 7.-$ ?-.3 B*.' %4#)%.3 C&)+$%)%$0 %- )&B +'3 B*.' $*.1. %- %4#)%.3 C&)+$%)%$0 n-5.Bn 7.$B..' $*. 4&'$*- ?-.38 -#./%A%/+))0 B*.' $*. '.+1H4&'$* -&)3 *+- + *%2*.1 %4#)%.3 C&)+$%)%$0 $*+' $*. )+$.1H4&'$* 7&?2*$=

88

Call Diagonal Spread Options Strategy

The Trade Setup M.)) h "S\ :+)) %' $*. I1&'$ \&'$*T V?0 h "S\ :+)) %' $*. V+/5 \&'$* +$ + [%2*.1 M$1%5. @1%/.= S*. /&47%'+$%&' &6 &#$%&'- -*&?)3 1.-?)$ %' + '.$ 3.7%$=







Kirk DuPlessis - OptionAlpha - The Ultimate Options Strategy Guide

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