2018 04-15 Meetup Slides
Download as PPTX, PDF0 likes60 views
This document provides an agenda for an upcoming meetup on disciplined trading. It begins with an introduction that discusses who the presenters are and what disciplined trading involves. It then outlines the topics that will be covered, including what equity options are, why one might trade them, and how to execute a practice disciplined trade. The agenda concludes by providing links to related videos and websites for additional resources. The overall summary is that the meetup will educate attendees on the concepts of disciplined trading and how to execute an options strategy called the iron condor through practice trades and supplemental video materials.
2018 04-15 Meetup Slides
- 2. 1. Who are we? 2. What is Disciplined Trading? 3. A Practice Disciplined Trade 4. Videos for the week Meetup Agenda
- 3. This is a presentation prepared for Education purposes only. Neither Vancouver Disciplined Trading Hub (VDTH), Round Table Educators (RTE) or Prosperis Passive Income Strategies (PPIS) nor any of its personnel are registered broker-dealers or investment advisors. We may mention that we consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. This does not mean that we are telling you to trade these exact strategies or securities. Keep in mind that we are not providing you with any specific recommendations or personalized advice about your own trading activities. The information we are providing is not tailored to any particular individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security, or a suggestion that it is suitable for any specific person. Trading ALWAYS involves a risk of loss, even if we are discussing strategies that are intended to limit risk. VDTH, RTE and PPIS are not subject to trading restrictions. We could have a position in a security or initiate a position in a security we mention at any time. Disclaimer
- 4. Who are We? FRIDAY 6:00PM 5th FLOOR, SFU SURREY SUNDAY 6:00PM CEDAR COTTAGE PUB, VANCOUVER www.meetup.com/vdthub www.slideshare.net/vdth Educating Since Jan 2017
- 5. Who are We? Karim Adatia, CPA Tax Auditor (2008 – 2016) Full-time Stock Options Trader (2016 - Present) Financial Educator (2016 - Present) www.ppis.ca TRADING INC. Canada Revenue Agency
- 6. What is Disciplined Trading? Trade based on: 1) CONVICTION (based on what is PERCEIVED in any given moment.) 2) CATALYST (A fundamental or technical reason/opinion) 3) COMPLACENCY (Eg. Wait for a bull market to return Convert a trade to an investing position) What a Disciplined Retail Trader will Do … 1) PREDEFINE their risk BEFORE taking a trade 2) CUT THEIR LOSSES without hesitation (when the catalyst fails) 3) MANAGE using a SYSTEMATIC and CONSISTENT money management plan What Most Retail Traders Do…
- 7. 1. Who are we? 2. What is Disciplined Trading? 3. A Practice Disciplined Trade 4. Videos for the week Meetup Agenda
- 8. What are Equity Options? An option is a contract that to buy or sell a certain amount of stock. allows you BUYING an option gives the owner a RIGHT SELLING an option gives the seller an OBLIGATION RIGHT or OBLIGATION
- 9. Why trade Equity Options? Leverage. An option contract controls 100 shares of the underlying stock but costs a lot less! Bullish Stock Trader Apple Inc. (AAPL) costs $100.00/share 100 shares would cost = $10,000. Apple Inc. share goes to $105.00/share Stock Trader makes $500 or 5% profit. Bullish Options Trader Apple Inc. (AAPL) costs $100.00/share 1 contract costs $5.00, so trader pays $500. Apple Inc. share goes to $105.00/share The Option contract goes to $6.80. Options Trader makes $180 or 36% profit.
- 10. SELLBUY (SHORT/WRITE)(LONG) THE RIGHT TO: THE RIGHT TO: THE OBLIGATION TO: THE OBLIGATION TO: Buy Stock Sell Stock Sell Stock Buy Stock PUTCALL WHEN WE DO ALL FOUR – WE ARE NON-DIRECTIONAL!
- 11. Non-Directional Trade No opinion on whether market goes up or down.
- 12. The Iron Condor Options Strategy 2555 2655 2755
- 13. Iron Condor Trade Characteristics 1. Option Writing Write: To Sell an Option 2. Range-bound Confidence Interval: 95% 3. Index-linked Ticker: SPX 4. Out-The-Money No Intrinsic Value, Only Time Value 5. Average Return Goal of 8% in 3 weeks 6. 25-day Timeframe Guaranteed Time Decay
- 14. The Guarantee with Options – Time will Decay $$$ Time Remaining Until Expiration Date (Days) Option Time Value ($) SELL BUY BACK 90 60 30 0
- 15. SPX (S&P 500) SHORT CALL: = 2755 2655 27552555 95% CONFIDENCE INTERVAL : Under Normal Volatility Conditions TRADING RANGE: 2555 – 2755 SHORT PUT: = 2555 LONG PUT as protection 5 points away LONG CALL as protection 5 points away 27602550
- 16. THE VOLATILITY INDEX – TICKER: VIX 18
- 17. Practice Trade WEEK OF: JAN 2 - 6 2017 STEP 1: INFORMATION -105.00 -100.00 (SPX VALUE) +100.00 +105.00 Long Put Short Put Short Call Long Call STEP 2: TRADE Watch Video: STEP 3: MANAGEMENT Watch Video: CALL ALERT: SPX Value + 65= PUT ALERT: SPX Value - 65= YOUR PRACTICE TRADE Get spreadsheet from www.ppis.ca/Meetup
- 18. WORST DAY FOR THE S&P 500 IN 2017 2400 24652335 2.6% away (Put Alert) Index Value (Call Alert) 2.6% away
- 19. WORST DAY FOR THE S&P 500 IN 2018 2740 28052675 2.4% away (Put Alert) Index Value (Call Alert) 2.4% away
- 20. Our Track Record www.meetup.com/VDTHub *Average Invested = $5,000/week
- 21. Determining Expectancy Steps for calculation expectancy: 1. Calculate your win and loss ratio 2. Calculate your reward to risk ratio 3. Combine those two ratios into an expectancy ratio SPX Trade Expectancy 1. Win and loss ratio: 58 trades. 54 wins. Win ratio = 93%, Loss ratio = 7% 2. Reward to risk ratio: Winner size (Avg) = $264.81. Loser size (Avg) = $1,437.50. Reward-Risk Ratio = 0.1842 3. Expectancy ratio: (Reward to Risk ratio x Win ratio) – Loss ratio = (0.1842 x 93% ) - 7% = + 0.1025
- 22. How much does the SPX Move on a Daily Basis? www.investing.com/indices/us-spx-500-historical-data+32
- 23. How much does the SPX Move on a Daily Basis? www.investing.com/indices/us-spx-500-historical-data+170
- 24. How much does the SPX Move on a Daily Basis? www.investing.com/indices/us-spx-500-historical-data- 140
- 25. How much does the SPX Move on a Daily Basis? www.investing.com/indices/us-spx-500-historical-data- 27
- 26. How much does the SPX Move on a Daily Basis? www.investing.com/indices/us-spx-500-historical-data+ 75
- 27. The Volatility Factor Trading Range = 2270-2030 = 240 Distance on either side = 120/2150 = 5.58% 2030 2150 2270 1990 2150 2300 Trading Range = 2300-1990 = 310 Distance on either side = 155/2150 = 7.21% 1 2 The Volatility is Higher
- 28. Apply with caution Disciplined Traders … 1) Predefine their risk before taking a trade 2) Cut their losses without hesitation 3) Use a systematic money management plan to make consistent profits. This Strategy… 1) Predefines your risk 2) Has an adjustment plan 3) Can be systematic / automatic with trade alerts Has positive expectancy (is therefore consistent)
- 29. Takeaways!! 1) Be Disciplined! Whether you are trading stocks, options, currency or futures. 2) You Can Make Money by being Non-Directional! 3) Equity Options give you leverage that stocks can’t! 4) If you are interested in this particular strategy, (1) Come to VDTH Meetups each week or (2) Follow the Practice Trades on Discussion Board. and only then…
- 30. Full Workshop Every 3rd Wednesday of the Month SFU Harbour Centre (Downtown) Register at : www.ppis.ca Workshop (2.5 hours) + Workbook + 1-1 Coaching (1 hour) Next Workshop: April 18, 2018 Methodology Adjustment Rules Risk management When is the right time?
- 31. US ON FACEBOOK www.facebook.com/ppistrategies If you Liked the Presentation, Write us a review! www.ppis.ca
- 32. 1. Who are we? 2. What is Disciplined Trading? 3. A Practice Disciplined Trade 4. Videos for the week Meetup Agenda
- 33. Videos
- 34. karim@ppis.ca
- 35. Backup Slides
- 37. NON- DIRECTIONAL TRADES Stocks and Equity Options 3-month Program US$799 DIRECTIONAL TRADES FOR VIDEO ABOUT MMT PROGRAM: www.youtube.com/watch?v=hzhJBdGNwyo $200 off for VDTH Meetup Members (Contact us for details) FB PAGE: www.facebook.com/MasterMindTraders.official/ www.mastermindtraders.com/freevideos
- 38. OUTCOMES WHEN TRADING OPTIONS If you believe a stock will go UP: BUY A CALL • You are betting the price of the stock will go UP • The person you sell the call to is betting the price will go DOWN or STAY THE SAME When you buy a call, you can win 1 out of 3 ways When you sell a call, you can win 2 out of 3 ways YOU WIN 1 NEUTRAL 2 YOU LOSE 3 YOU LOSE
- 39. OUTCOMES WHEN TRADING OPTIONS If you believe a stock will go UP: SELL A PUT • You are betting the price of the stock will go UP or STAY THE SAME • The person you sell the put to is betting the price will go DOWN When you sell a put, you can win 2 out of 3 ways When you buy a put, you can win 1 out of 3 ways YOU WIN 1 NEUTRAL 2 YOU WIN 3 YOU LOSE … Maybe
- 40. OUTCOMES WHEN TRADING OPTIONS If you believe a stock will go DOWN: BUY A PUT • You are betting the price of the stock will go DOWN • The person you sell the put to is betting the price will go UP or STAY THE SAME When you buy a put, you can win 1 out of 3 ways When you sell a put, you can win 2 out of 3 ways YOU WIN 1 3 YOU LOSE NEUTRAL 2 YOU LOSE
- 41. OUTCOMES WHEN TRADING OPTIONS If you believe a stock will go DOWN: SELL A CALL • You are betting the price of the stock will go DOWN or STAY THE SAME • The person you sell the put to is betting the price will go UP When you sell a call, you can win 2 out of 3 ways When you buy a call, you can win 1 out of 3 ways NEUTRAL 2 YOU WINYOU WIN 1 3 YOU LOSE … Maybe
- 42. VIX During the 2008 Financial Crisis Takeaway: When VIX is > 18, Don’t Trade This Strategy!