Start Small and Retire Early With Weekly Options Welcome to the Start Small and Retire Early With Weekly Options Webinar/Video Series

My 27% Weekly Option Strategy

As With Most Weekly Strategies that Provide the Best Probabilities of Success, this Strategy is Based on the Warped Rate of Time Decay That Exists in Weekly Options

This is a Super Powerful Strategy as Long as the Opportunities Exist

If You Have Not Watched my Video Entitled “Power of PPD” You Need to Stop This Video and Watch That Video First.

The Basis for Any Efficient Option Strategy is to Buy Cheap PPD Options and Sell Expensive PPD Options

Chart of PPD of 7-Day Option Verses a 14-Day Option Over the Next 7-Days

My 27% Weekly Option Strategy is a Type of What is Known as a Diagonal Spread

A Diagonal Spread is an Option Spread Where The Strike and the Expiration are Different in the Buy and Sell Leg of the Spread

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 Placed on January 8th With SPY at 205.90 This is an ITM Debit Diagonal Spread

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 (SPY Trading at 205.90) Both the Buy Leg and the Sell Leg are “In the Money”

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 Let’s Take a Quick Look at the PPD Values

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 (SPY Trading at 205.90) The 207 Put is 1.10 In the Money. Therefore, we Subtract 1.10 From the Option Price to Come up With 1.15.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40(SPY Trading at 205.90) There are 8-Days Left on the Jan 16th Option. Divide the Time Value (1.15) by the Days Left and You Come Up with 0.14 PPD

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40(SPY Trading at 205.90) The 210.00 Put is In the Money by 4.10. Therefore, Subtract this from 4.65 and What Remains is 0.55 of Time Value in the Long Option.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 (SPY Trading at 205.90) There are 15-Days Left on the Jan 23rd Option. Divide the Time Value (0.55) by the Days Left and You Come Up with 0.04 PPD

We are Buying a 0.04 PPD Option and Selling a 0.14 PPD Option Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 (SPY Trading at 205.90) We are Buying a 0.04 PPD Option and Selling a 0.14 PPD Option

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 What Else Might Stand Out About This Spread?

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 The Strike Difference is 3.00 Points While the Debit on the Trade is Only at 2.40

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 This Means That if SPY Closes at 207.00 or Lower on January 16th, The Spread MUST be at a Minimum of 3.00.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 If We Buy the Spread at 2.40 and on the Short Expiration the Spread HAS to be at 3.00 or Higher if SPY Closes at 207.00 or Lower, Then...

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 We are Guaranteed to Make at Least 0.60 on the Trade at 207.00 or Lower. That Means the Market can Tank and We Will Make 0.60.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 Why is That? Because on the Short Expiration, There Will be NO Time Value on the Short Option.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 If SPY is Trading at 207.00 and There is No Time Value on the Short Option, it is at 0.00. Meanwhile, the 210.00 Put MUST be at Least 3.00 (And will Often be More)

SPY Stays the Same and We Make 0.60+ Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 (SPY Trading at 205.50) SPY Tanks and We Make 0.60+ SPY Stays the Same and We Make 0.60+ SPY Moves Higher to 207.00 and We Make 0.60+

SPY Closed at 201.75 on January 16th Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 SPY Closed at 201.75 on January 16th The 207 Closed at 5.25 for a 3.00 Loss on That Leg of the Trade.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 The Buy Leg is 8.25 In the Money, Meaning it Has to be Worth at Least 8.25 for a 3.60 Gain on That Leg. Accordingly, the Net Gain on This Trade Was 0.60.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 In This Example, We Lost All of the Time Value on Both Legs of the Trade. However, Because the Long Leg Had Less Time Value, We Profited the Difference

Short Leg Time Value = 1.15 Long Leg Time Value = 0.55 Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 Short Leg Time Value = 1.15 Long Leg Time Value = 0.55 Difference is 0.60 The Profit is In the Warped Time Value

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 At a Close of 207.00 or Below, This is the Minimum Profit We Will Make. But We Can Often Make More Than the Minimum Profit

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 For Example, if SPY Closed at 207.00 on January 16th, There Would Still be 1-Week of Time Value in the Long Option. The Current 1-Week Put Option That is 3.00 Points in the Money is Trading at 3.40

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 This Means That Our Short Option Would Expire Worthless for a Gain of 2.25 and the Long Option Would Exit at 3.40 for a Loss of 1.25, for a Total Gain of 1.00, Not 0.60.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 What are the Risks?

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 Technically, the Maximum Risk is the Debit, or 2.40 ($240 on a 1-Lot). However, I Say Technical Because SPY Would Have to Move Dramatically Higher in a Very Short Period of Time for That Risk to be Realized.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 The Worst That Can Happen is Both Option Are Worthless When You Exit the Position. For the Long Option to be Worthless With 1-Week Left, SPY Would Have to Be Trading About 12.00 Points Above the Long Option, or in this Case, Around 222.00!

That Would be a Move Higher of About 8% in Just 1-Week! Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 That Would be a Move Higher of About 8% in Just 1-Week!

What are the Realistic Risks? Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 What are the Realistic Risks?

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 In My “Power of PPD” Video, I Show You How the Most Time Value is Going to Exist in the “At the Money” Options. So as SPY is Moving Higher Toward 210, it is Actually Gaining in Time Value

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 Spy is Trading at 205.90 When the Trade is Placed. If SPY Moves to 210.00 on the Short Option Expiration, The 210.00 Put Would be Worth Approximately 1.50 (Range is Normally 1.25 – 1.75)

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 In This Scenario, We Would Exit the Long Option at 1.50 and That Would be Our Debit. We Bought at a Spread Debit of 2.40 and Exit at a Spread Debit of 1.50 for a Net Loss of 0.90 on the Trade

This Would Occur at a 2% Move Higher From Friday to Friday. Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 In Other Words, the Increasing Time Value in the Long Option is Acting as a Buffer to Our Loss. This Would Occur at a 2% Move Higher From Friday to Friday.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 My 27% Weekly Option Strategy is What I Consider to be a Semi Non-Directional Strategy.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 The Market Can Move Down and I’m Guaranteed a Profit. The Market can Stay the Same and I’m Guaranteed a Profit. The Market can Move Higher to a Limited Degree, and I am Guaranteed to Make a Profit.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 Only if the Market Moves up by a Certain Amount Within a Short Period of Time is There Risk With This Strategy.

(Every Trade is Different) Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 The Question is, How Much Higher Does the Market Have to Move to Reach my Breakeven Point? (Every Trade is Different)

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 I am Mathematically Guaranteed a Profit at the Long Strike Minus the Debit. In This Case it is: 210 – 2.40 = 207.60

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 SPY Closed at 205.90 at the Time of the Trade. I Cannot Lose Money as Long as SPY Closes at 207.60 or Below on the Short Option Expiration

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 But the Actual Breakeven is Higher Than This. In Order for This to be the Actual Breakeven, There has to be NO Time Value Left on the Long Option.

So the Breakeven Level Must Be Greater Than 207.60. Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 So the Breakeven Level Must Be Greater Than 207.60.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 For Example, a 1-Week Put Option That is 2.00 Points in the Money is Currently Trading at 2.60. This Means I would Lose 2.05 on the Long Leg and Gain the Entire 2.25 on the Short Leg, for a Net Profit of 0.20 if SPY Closed at 208.00 (In This Example).

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 In Other Words, the Actual Price of the Long Put Option Must Drop Below 2.40 to Lose Money. That is Usually Going to Occur Around 1.50 Below the Long Put Strike, or 208.50ish

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 In This Example, My Actual Breakeven is Calculated at Around 208.50. That Would be a Move of About 1.3% in the Next Week to Reach Breakeven.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 At 209.00, the Long Put Would be Worth Approximately 1.90, Which Would be My Debit on the Spread for a Loss of 0.50.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 The Market Has to Move Higher by 2.50 Points Before I Lose the Same Amount That I am Guaranteed to Make if the Market Stays the Same, Moves Down, or Even Moves Higher by About 2.00 Points.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 To Help Increase the Odds of Overall Success, There Are Several Guidelines You Can Follow. The Trade Above Was Placed Because SPY Just Made a 3.50 Point Move Higher in One Day.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 When SPY is Making a Move to the Upside, I am a Little More Aggressive and Place Trades That are Closer to the Money.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 However, if SPY is Making a Move Down, I am a Little More Conservative and Place a Limit Order a Little Higher Than I Would Otherwise.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 A Good Rule of Thumb is to Assume a Breakeven Level 1.50 Points Above the Short Strike, and Make That at Least 2% Away From Where the Market is Trading One Week Prior to the Short Expiration

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 If SPY is Trading at 200.00 One Week Prior to Expiration, Then 204.00 Would be a 2% Move. I Would Then Structure My Order so That I Sell at 202.50 Put and Buy a 205.50 Put

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 The Market Will Usually Have to Move Higher for This to Get Hit, But it Puts a Majority of Your Trades Will Make Money Since the Market Does Not Move Higher by More Than 2% Weekly Often

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 If the Market has Moved Down, Then You Might Want to Wait for a Bounce of Perhaps 0.5% - 1% and Then do the Calculation and Place the Order.

Long Jan 23rd 210 Put From 4.65 Short Jan 16th 207 Put From 2.25 For a Debit of 2.40 The Third Thing is You Want to Make Sure You Get Your Price. 2.40 is About as High of a Debit as I am Willing to Go. Otherwise the Profit/Risk Ratio Starts to Become a Little More Skewed. Sometimes This is Not Available, Which Means You Won’t Have a Trade That Week.

Long 1/2/14 Exp 210 Put From 3.80 Short 12/26/14 Exp 207 Put From 1.40 For a Exit Debit of 2.40 SPY Was Trading at 206.50 It Doesn’t Always Work Out Here, SPY Had Been Moving Higher, so I Was Slightly More Aggressive and Placed this Trade with the Short Option Only Being 0.50 In the Money. I Was Able to Get My Debit of 2.40, But Here is What Happened:

Long 1/2/14 Exp 210 Put From 3.80 Short 12/26/14 Exp 207 Put From 1.40 For a Exit Debit of 2.40 SPY Was Trading at 206.50 On 12/26/14 SPY Closed at 208.44. The 207 Put Expired Worthless for a 1.40 Gain While the 210 Put Exited at 1.90 for a Loss of 1.90, for a Net Loss on the Trade of 0.50.

Long 1/2/14 Exp 210 Put From 3.80 Short 12/26/14 Exp 207 Put From 1.40 For a Exit Debit of 2.40 SPY Was Trading at 206.50 Had I Waited and Put the 207.50/210.50 on, I Would Have Made About 0.50 on the Trade

Long 1/9/15 Exp 211. 50 Put From 3. 30 Short 1/2/15 Exp 208 Long 1/9/15 Exp 211.50 Put From 3.30 Short 1/2/15 Exp 208.50 Put From 1.05 For a Exit Debit of 2.25 SPY Was Trading at 208.44 The Following Week I Was Even More Aggressive Placing the Short Option Leg “At the Money”. You’ll Notice I Was Able to Get a Cheaper Debit on the Trade Because of That

Long 1/9/15 Exp 211. 50 Put From 3. 30 Short 1/2/15 Exp 208 Long 1/9/15 Exp 211.50 Put From 3.30 Short 1/2/15 Exp 208.50 Put From 1.05 For a Exit Debit of 2.25 SPY Was Trading at 208.44 On 1/2/15 SPY Closed at 205.43. The 208.50 Put Exited at 3.07 for a Loss of 1.95. Meanwhile the 211.50 Put Was at 6.50 for a Gain of 3.20 for a Total Gain of 1.25.

Long 10/31/14 Exp 191. 50 Put From 4. 10 Short 10/24/14 Exp 188 Long 10/31/14 Exp 191.50 Put From 4.10 Short 10/24/14 Exp 188.50 Put From 2.10 For a Exit Debit of 2.00 SPY Was Trading at 188.50 on 10/17 Here is the Worst Trade of the Year Last Year. SPY Had Moved Down About 8% the Previous 7 – 10 Trading Days. It Then Bounced From a Low of 182.50 to 188.50 in Just 2-Days. I Decided to be Aggressive Because I Could Get a 2.00 Debit on an “At the Money” Short Option Spread.

Long 10/31/14 Exp 191. 50 Put From 4. 10 Short 10/24/14 Exp 188 Long 10/31/14 Exp 191.50 Put From 4.10 Short 10/24/14 Exp 188.50 Put From 2.10 For a Exit Debit of 2.00 SPY Was Trading at 188.50 on 10/17 On 10/24 SPY Closed at 196.43, Moving Higher by About 8.00 Points, or 4.2%. My Max Loss Was Only 2.00, but it Had Moved So High That I Could Only Get 0.27 Out of My Long Put Giving Me a Total Net Loss of 1.73

+$4,022 in 64-Trades Here Are Some Interesting Facts to Keep in Mind: Weekly Movement in SPY From July 2013 – November 2014: 12 Times Down > 1% for Minimum Avg Profit of $70. +$972 35 Times Within 1% Higher or Lower for Avg Profit of $95 +$3,230 12 Times Between 1% - 2% Higher for Avg Profit of $35 +420 6 Times Up > 2% for an Avg Loss of $100 ($600) +$4,022 in 64-Trades

$63 Per Trade Risking an Average of $230. Here Are Some Interesting Facts to Keep in Mind: +$4,022 in 64-Trades $63 Per Trade Risking an Average of $230. That Comes to a Gain of 27% Weekly Gain During Weeks Trade is Available

This is Based on the Assumption That You Follow the Guidelines: Make Breakeven at 2% Move Higher in 1-Week Place the Order for a Minimum 2.40 Debit Don’t Take Trades After Significant Down move

“Start Small and Retire Early With Weekly Options” There Are Ways to Dramatically Diminish the Risks Associated With This Strategy, and There are Also Other Strategies That Can be Implemented in Conjunction With This Strategy to Also Dramatically Diminish The Risks. I Would Strongly Encourage You to Purchase the Entire Weekly Option Package Entitled: “Start Small and Retire Early With Weekly Options”