1. Web’s Weekly Roundup & How I learned to love the CLRR August 22, 2015 Presenter: Web Begole

2. Day trading, short term trading, options trading, and futures trading are extremely risky undertakings. They generally are not appropriate for someone with limited capital, little or no trading experience, and/ or a low tolerance for risk. Never execute a trade unless you can afford to and are prepared to lose your entire investment. All trading operations involve serious risks, and you can lose your entire investment. No trades are recommendations or advice and we cannot be sued for losses of capital. All trades are for educational purposes only. Contact your broker or RIA for execution, margin, and other capital requirements. Everyone watching presentation adheres to ALL disclaimers on www.optionhacker.com and www.keeneonthemarket.com RISK DISCLAIMER

3. Web’s Weekly Roundup Analysis of /ES (S&P 500 Futures) and forecast (BEARISH TO I-HAVE-NO-IDEA) Analysis of /CL (Crude Futures) and forecast (BEARISH TO I-HAVE-NO-IDEA) The Calendared Limited Risk Reversal (CLRR) and why I’m using it to build my swing portfolio.

4. /ES Futures (S&P 500) YTD 2015 4 Opening Price: 2038.25 Current Price: 1968.25 High: 2126.25 Low: 1953.5 O/C Change: -70.00pts (-3.43%) H/L Range: 171.50 Notable Pattern: Through August we touched the bottom of value twice and tried to return to the POC twice but only managed to once without ever closing above it. Now we’ve broken below significantly. Forecast: The million dollar question is how low do we go, but given that we have closed at the top of value for the year and we are very close to a venom line for the month, I do expect somewhat of a bounce… but can we break back above 2002? In the short term I don’t believe so. 1903 is next support below us.

5. /CL Futures (Crude) YTD 2015 5 Opening Price: 59.81 Current Price: 40.29 High: 64.23 Low: 39.86 O/C Change: -19.52 (-32.64%) H/L Range: 24.37 Notable Pattern: We’ve now spent two months below value and are nearing the absolute low tick from 2009 ($38.91) Market participants are flat to long /CL yet despite their efforts the price continues to decline… Forecast: I believe 38.91 is absolutely in the cards early next week. If we break that level, bets are off… 35.63 next support.

6. Looking Ahead Overall: Well that bear hat I said two weeks ago was firmly stapled to my forehead has paid off…. Crude hit my prediction and kept going…. Honestly I’m keeping my opinions/predictions light today because the move in the markets was a little too fast for my own confidence in knowing what’s coming. I do expect a bit of a bounce as everyone digests things over the weekend and may look to buy the dip yet again… the market may be front-running the disaster scenario as I don’t believe there’s firm evidence we’re there yet. Given the devaluation of the Yuan since we last spoke, I firmly believe the FOMC will *NOT* raise rates in September but may continue to reserve the right to do so by December. I believe we’ll see a volatile market for the rest of the year and would not be surprised (but not predicting!) to see a new all time high before 2016.

7. The CLRR Trade The Virtues of Calendared Limited Risk Reversals 7

8. The CLRR Trade Long term stock replacement strategy using Limited Risk Reversal combined with Calendar. 8 Credit Vertical Long OptionLimited Risk Reversal (LRR) Near Term Short Option (The Calendar-izing Aspect: Rolled every 30 days) Calendared Limited Risk Reversal (CLRR)

9. The CLRR Trade Long term stock replacement strategy using Limited Risk Reversal combined with Calendar. Criteria: – Not looking to risk any more than $500 on a trade – Want to have as much exposure to desired direction as possible (ie: 2x or more long options, if possible) – Looking to close trade at Price Target of underlying – not option position Method: For Bullish Stocks: In option chain 4-6 months out in time, selling a 5pt-wide put spread and buying a multiple of calls at or just under the target price. In option chain 40-55 days to expiration (dte) looking to sell calls at the same strike as the long calls. For Bearish Stocks: In option chain 4-6 months out in time, selling a 5pt-wide call spread and buying a multiple of puts at or just over the target price. In option chain 40-55 days to expiration (dte) looking to sell puts at the same strike as the long puts. Why this method? – Buying/Shorting stock costs a lot of capital or margin. In addition, the maximum capture of the trade is the percentage move between entry and the target price – Using options we can limit the capital outlay ($500 max) as well as the maximum risk ($500 max) and in addition achieve a multiple of profits over the stock movement – It is also a safer method than shorting stock as gaps/stops are not a worry. 9

10. The CLRR Trade A quick lesson on the mechanics of the CLRR: Say in January have this Bullish LRR position: 2x 100 Calls (Delta +0.30) – I’m long so I have +0.60 100 Puts (Delta -0.70) – I’m short so I have +0.70 95 Puts (Delta -0.50) – I’m long so I have -0.50 My net deltas are +0.80 As the stock moves in my direction the following happens: 2x 100 Calls (Delta +0.40) – I’m long so I have +0.80 100 Puts (Delta -0.60) – I’m short so I have +0.60 95 Puts (Delta -0.20) – I’m long so I have -0.20 My net deltas are +1.20 Say the stock moves so my long calls are in the money: 2x 100 Calls (Delta +0.70) – I’m long so I have +1.40 100 Puts (Delta -0.30) – I’m short so I have +0.30 95 Puts (Delta -0.05) – I’m long so I have -0.05 My net deltas are +1.65 We can see the deltas get multiplied as the stock moves in the right direction. 10 Adding the Calendar January Bullish LRR position: 2x 100 Calls (Delta +0.30) – I’m long so I have +0.60 100 Puts (Delta -0.70) – I’m short so I have +0.70 95 Puts (Delta -0.50) – I’m long so I have -0.50 2x October 100 Calls (Delta +0.20) – I’m short so I have -0.40 My net deltas are +0.40 As the stock moves in my direction the following happens: 2x 100 Calls (Delta +0.40) – I’m long so I have +0.80 100 Puts (Delta -0.60) – I’m short so I have +0.60 95 Puts (Delta -0.20) – I’m long so I have -0.20 2x October 100 Calls (Delta +0.35) – I’m short so I have -0.70 My net deltas are +0.50 Say the stock moves so my long calls are in the money: 2x 100 Calls (Delta +0.70) – I’m long so I have +1.40 100 Puts (Delta -0.30) – I’m short so I have +0.30 95 Puts (Delta -0.05) – I’m long so I have -0.05 2x October 100 Calls (Delta +0.85) – I’m short so I have -1.70 My net deltas are -0.05

11. The CLRR Trade So why Calendarize them then???? Let’s watch the opposite direction: Say in January have this Bullish LRR position: 2x 100 Calls (Delta +0.30) – I’m long so I have +0.60 100 Puts (Delta -0.70) – I’m short so I have +0.70 95 Puts (Delta -0.50) – I’m long so I have -0.50 My net deltas are +0.80 As the stock moves away from me the following happens: 2x 100 Calls (Delta +0.20) – I’m long so I have +0.40 100 Puts (Delta -0.80) – I’m short so I have +0.80 95 Puts (Delta -0.50) – I’m long so I have -0.50 My net deltas are +0.70 Say the stock moves really far away: 2x 100 Calls (Delta +0.05) – I’m long so I have +0.10 100 Puts (Delta -0.95) – I’m short so I have +0.95 95 Puts (Delta -0.85) – I’m long so I have -0.85 My net deltas are +0.25 We can see the deltas get diminished as the stock moves in the wrong direction, eventually reaching zero as I can’t lose any more. 11 Adding the Calendar January Bullish LRR position: 2x 100 Calls (Delta +0.30) – I’m long so I have +0.60 100 Puts (Delta -0.70) – I’m short so I have +0.70 95 Puts (Delta -0.50) – I’m long so I have -0.50 2x October 100 Calls (Delta +0.20) – I’m short so I have -0.40 My net deltas are +0.40 As the stock moves away from me the following happens: 2x 100 Calls (Delta +0.20) – I’m long so I have +0.40 100 Puts (Delta -0.80) – I’m short so I have +0.80 95 Puts (Delta -0.50) – I’m long so I have -0.50 2x October 100 Calls (Delta +0.05) – I’m short so I have -0.10 My net deltas are +0.60 Say the stock moves really far away: 2x 100 Calls (Delta +0.05) – I’m long so I have +0.10 100 Puts (Delta -0.95) – I’m short so I have +0.95 95 Puts (Delta -0.85) – I’m long so I have -0.85 2x October 100 Calls (Delta +0.01) – I’m short so I have -0.02 My net deltas are +0.18

12. The CLRR Trade While it’s hard to illustrate here there’s some key elements to keep in mind about calendarizing: If the stock moves in my direction too quickly, yes, I’m capping my gains to potentially nothing more than the remaining premium difference between the option chains – no fun. But because I am short the nearer month option, theta decay will devalue it quicker than the LRR is devalued, allowing the negative delta exposure to diminish with the passage of time. I also have the ability to roll this short option over time and take in credit, reducing my risk. The optimal situation is for a stock to slowly grind higher – the LRR is not really effected by theta decay, so I just want to be in the position as long as possible. Being able to sell options against it allows me to do that. So let’s look through some examples and comparisons 12

13. The CLRR Trade Comparison of XOM trade. (Closed on 8/21/15 with XOM at $72.13) On July 17 th with XOM closing at $82.61, I downgraded XOM to a Sell with a PT of $75.80. At the end of the day July 20 th, XOM is trading at $81.76 and these are the options: My options for trading this short: Short the Stock – I’m looking for ~8% return or about $7/share Buy Jan 75 Puts for $1.85/1lot Buy Jan 75 Puts, Sell Aug 75 Puts for $1.58/1lot with the plan to roll the puts each month until target reached Sell Jan 75/80 Call Spread, Buy 2x Jan 75 Puts for $0.27/1lot Sell Jan 75/80 Call Spread, Buy 2x Jan 75 Puts, Sell 2x Aug 75 Puts for $0.29credit/1lot with plan to roll short near-month puts until target reached 13

14. The CLRR Trade Comparison of XOM trade. (Closed on 8/21/15 with XOM at $72.13) On July 17 th with XOM closing at $82.61, I downgraded XOM to a Sell with a PT of $75.80. At the end of the day July 20 th, XOM is trading at $81.76 Let’s start with Short Stock For the purpose of consistency we’ll look at controlling 200 shares short (as we’ll be long 2x puts in the LRR positions) Short 200 shares at $81.76 costs me $16,352. Because I only want to risk $500 in the trade, I will have my stop at $84.26 My price target is $75.80 so my expected maximum reward will be $1,352. There’s not much else to say here, but we’ll keep this for reference as we continue. It’s worth noting that a stop on a short stock position could get blown out if the stock were to open one day above $84.26 I would be buying back the stock at wherever it opens… if XOM comes out with a miracle cure for oil (??) I could lose more than $500 on the trade. But regardless, it’s most important to note that I need to be able to margin $16,352.00 in my account to simply short the stock…. 14 Stock PriceShort Stock P&L $ 86.00 $ (500.00) $ 85.00 $ (500.00) $ 84.00 $ (448.00) $ 83.00 $ (248.00) $ 82.00 $ (48.00) $ 81.00 $ 152.00 $ 80.00 $ 352.00 $ 79.00 $ 552.00 $ 78.00 $ 752.00 $ 77.00 $ 952.00 $ 76.00 $ 1,152.00 $ 75.00 $ 1,352.00

15. The CLRR Trade Comparison of XOM trade. (Closed on 8/21/15 with XOM at $72.13) On July 17 th with XOM closing at $82.61, I downgraded XOM to a Sell with a PT of $75.80. At the end of the day July 20 th, XOM is trading at $81.76 Now let’s look at simply buying the Jan $75 Puts We’ll buy 2x for consistency EOD July 20 th : Buying 2x Jan $75 Puts costs me $3.70. My risk is now $370 on the trade with unlimited profit potential to the downside. My price target is $75.80 but my expected return on the trade is dependent on when. I have no idea when XOM will hit my downside price target. If XOM expires at $75 mid January 2016 my puts are worth $0 and I’ve lost on the trade. So, yes I’ve risked less on the trade, but the unknown variable at time means I really can’t even provide a reasonable P&L chart on this trade. If XOM takes until January to reach my target my puts will be worth $0.00 and I will be at a loss of $370. 15 Stock PriceShort 200 Shares P&L Long 2x Jan 75 Put $ 86.00 $ (500.00)+? – ($370) $ 85.00 $ (500.00)+? – ($370) $ 84.00 $ (448.00)+? – ($370) $ 83.00 $ (248.00)+? – ($370) $ 82.00 $ (48.00)+? – ($370) $ 81.00 $ 152.00+? – ($370) $ 80.00 $ 352.00+? – ($370) $ 79.00 $ 552.00+? – ($370) $ 78.00 $ 752.00+? – ($370) $ 77.00 $ 952.00+? – ($370) $ 76.00 $ 1,152.00+? – ($370) $ 75.00 $ 1,352.00+? – ($370)

16. The CLRR Trade Comparison of XOM trade. (Closed on 8/21/15 with XOM at $72.13) On July 17 th with XOM closing at $82.61, I downgraded XOM to a Sell with a PT of $75.80. At the end of the day July 20 th, XOM is trading at $81.76 Now let’s look at a Calendar We’ll buy 2x Jan 75 Puts for consistency And we’ll sell 2x Aug 75 Puts Buying this calendar costs me $3.16. My risk is now $316 on the trade with somewhat limited profit potential to the downside. My price target is $75.80 but my expected return on the trade is dependent on when. Because I know XOM was not at the target by August 3 rd, I will also include a roll here. On August 3 rd with XOM trading at $78.06, I buy back the 2x August 75 Puts, and sell 2x September 75 Puts This nets me a credit of $0.69/1lot or $1.38 total My risk in the trade is now $178 Again it comes down to timing as far as the profits here… If XOM continues to expire above $75 I can continue to roll the puts and reduce risk…. 16 Stock PriceShort 200 Shares P&L Long 2x Jan 75 Put 2x Rolled Calendar Aug- Sep & Long Jan 75 Puts $ 86.00 $ (500.00)+? – ($370)+? – ($178) $ 85.00 $ (500.00)+? – ($370)+? – ($178) $ 84.00 $ (448.00)+? – ($370)+? – ($178) $ 83.00 $ (248.00)+? – ($370)+? – ($178) $ 82.00 $ (48.00)+? – ($370)+? – ($178) $ 81.00 $ 152.00+? – ($370)+? – ($178) $ 80.00 $ 352.00+? – ($370)+? – ($178) $ 79.00 $ 552.00+? – ($370)+? – ($178) $ 78.00 $ 752.00+? – ($370)+? – ($178) $ 77.00 $ 952.00+? – ($370)+? – ($178) $ 76.00 $ 1,152.00+? – ($370)+? – ($178) $ 75.00 $ 1,352.00+? – ($370)+? – ($178)

17. The CLRR Trade Comparison of XOM trade. (Closed on 8/21/15 with XOM at $72.13) On July 17 th with XOM closing at $82.61, I downgraded XOM to a Sell with a PT of $75.80. At the end of the day July 20 th, XOM is trading at $81.76 Now let’s look at a Limited Risk Reversal We’ll sell the Jan 75/80 Call Spread for a credit of $3.43 And we’ll buy 2x Jan 75 Puts for a net debit of $3.70 Trade costs a net of $0.27 My risk on the trade is $527 on expiration As we approach the target, the risk on the trade is diminished, On expiration if we expire at $75 I have lost $27. I can’t lose any more than $527 on the positon. But really I’ve only spent $27 on the position…. 17 Stock PriceShort 200 Shares P&L Long 2x Jan 75 Put 2x Rolled Calendar Aug-Sep & Long Jan 75 Puts Jan Bearish LRR $ 86.00 $ (500.00)+? – ($370)+? – ($178)+? – ($527) $ 85.00 $ (500.00)+? – ($370)+? – ($178)+? – ($527) $ 84.00 $ (448.00)+? – ($370)+? – ($178)+? – ($527) $ 83.00 $ (248.00)+? – ($370)+? – ($178)+? – ($527) $ 82.00 $ (48.00)+? – ($370)+? – ($178)+? – ($527) $ 81.00 $ 152.00+? – ($370)+? – ($178)+? – ($527) $ 80.00 $ 352.00+? – ($370)+? – ($178)+? – ($527) $ 79.00 $ 552.00+? – ($370)+? – ($178)+? – ($427) $ 78.00 $ 752.00+? – ($370)+? – ($178)+? – ($327) $ 77.00 $ 952.00+? – ($370)+? – ($178)+? – ($227) $ 76.00 $ 1,152.00+? – ($370)+? – ($178)+? – ($127) $ 75.00 $ 1,352.00+? – ($370)+? – ($178)+? – ($27)

18. The CLRR Trade Comparison of XOM trade. (Closed on 8/21/15 with XOM at $72.13) On July 17 th with XOM closing at $82.61, I downgraded XOM to a Sell with a PT of $75.80. At the end of the day July 20 th, XOM is trading at $81.76 So what if we did the Limited Risk Reversal combined with the Calendar? We’ll sell the Jan 75/80 Call Spread for a credit of $3.43 And we’ll buy 2x Jan 75 Puts for a net debit of $3.70 Trade costs a net of $0.27 And we’ll sell 2x August 75 Puts for a net credit of $0.56 I can establish the whole position for a net credit of $0.29 My risk on the trade is $471 on expiration In addition we have that roll from Aug to September at the beginning of August… I buy back the 2x August 75 Puts, and sell 2x September 75 Puts This nets me a credit of $0.69/1lot or $1.38 total My risk in the trade is now $333 Lots and lots of numbers here, but we can see how calendar-izing the long-dated LRR reduces risk and increases profits even at expiration…. So now that we have all of that… let’s look at how these performed from opening to closing. 18 Stock Price Short 200 Shares P&L Long 2x Jan 75 Put 2x Rolled Calendar Aug-Sep & Long Jan 75 Puts Jan Bearish LRR Jan Bearish LRR with Rolled Calendar $ 86.00 $ (500.00)+? – ($370)+? – ($178)+? – ($527)+? – ($333) $ 85.00 $ (500.00)+? – ($370)+? – ($178)+? – ($527)+? – ($333) $ 84.00 $ (448.00)+? – ($370)+? – ($178)+? – ($527)+? – ($333) $ 83.00 $ (248.00)+? – ($370)+? – ($178)+? – ($527)+? – ($333) $ 82.00 $ (48.00)+? – ($370)+? – ($178)+? – ($527)+? – ($333) $ 81.00 $ 152.00+? – ($370)+? – ($178)+? – ($527)+? – ($333) $ 80.00 $ 352.00+? – ($370)+? – ($178)+? – ($527)+? – ($333) $ 79.00 $ 552.00+? – ($370)+? – ($178)+? – ($427)+? – ($233) $ 78.00 $ 752.00+? – ($370)+? – ($178)+? – ($327)+? – ($133) $ 77.00 $ 952.00+? – ($370)+? – ($178)+? – ($227)+? – ($33) $ 76.00 $ 1,152.00+? – ($370)+? – ($178)+? – ($127)+? + $33 $ 75.00 $ 1,352.00+? – ($370)+? – ($178)+? – ($27)+? + $133

19. The CLRR Trade Comparison of XOM trade. (Closed on 8/21/15 with XOM at $72.13) On July 17 th with XOM closing at $82.61, I downgraded XOM to a Sell with a PT of $75.80. At the end of the day July 20 th, XOM is trading at $81.76 So now that we have all of that… let’s look at how these performed from opening to closing. 19 Date Stock Price Short 200 SharesLong 2x Jan 75 Put 2x Rolled Calendar Aug-Sep & Long Jan 75 Puts Jan Bearish LRRJan Bearish LRR with Rolled Calendar ValueRiskNetValueRiskNetValueRiskNetValueRisk Worst Case Risk NetValueRisk Worst Case Risk Net 7/20/15$81.76 $ (16,352.00) 0370 0316 027 5270-29 4710 7/24/15$79.94 $ (15,988.00) $ (16,352.00) 3645463701764043168822427527197102-29471131 7/31/15$79.21 $ (15,842.00) $ (16,352.00) 51059037022047631616030327527276189-29471218 8/3/15$78.06 $ (15,612.00) $ (16,352.00) 74070637033641617823844627527419156-167333323 8/7/15$76.83 $ (15,366.00) $ (16,352.00) 98680037043047017829256227527535232-167333399 8/10/15$78.75 $ (15,750.00) $ (16,352.00) 602 37023242617824832327527296147-167333314 8/14/15$78.36 $ (15,672.00) $ (16,352.00) 68057437020441417823629127527264131-167333298 8/17/15$78.77 $ (15,754.00) $ (16,352.00) 59853237016240217822424227527215112-167333279 8/21/15$72.13 $ (14,426.00) $ (16,352.00) 1,9266453702752551787780627527779416-167333583

20. The CLRR Trade 20 XOM Strategies – Comparison of P&L

21. The CLRR Trade 21 XOM Strategies – Comparison of Return on Risk % (ROR%)

22. The CLRR Trade Another example. Say on Feb 10 th, as AAPL broke out to close at 122.02, say I set a price target of $134. Let’s compare the same methods to get long. 22 Date Stock Price Long StockLong May 130 Call Calendar May 130 (Mar 130/Apr 130/May 135) Bull LRR in May 125/130 Put Spread, 1x 130 Call May Bull LRR Calendared ValueRiskNetValueRiskNetValueRiskNetValueRisk Worst Case Risk NetValueRisk Worst Case Risk Net 2/10/15122.011220112,2010338 0238 015 5150-86 4140 2/13/15127.081270812,201507538338200300238622761551526138-86414124 2/20/15129.51295012,201749620338282327238893881551537395-86414181 2/23/151331330012,2011,0998383385003252388764815515633135-86414221 2/27/15128.461284612,201645606338268336238983581551534388-86414174 *3/2/2015129.091290912,2017086153382771836911437215515357-60-255245195 3/6/15126.61266012,2014595153381771926912324315515228-80-255245175 3/13/15123.591235912,201158345338719269123321551517-121-255245134 3/20/15125.91259012,201389385338472366916711815515103-31-255245224 3/27/15123.251232512,201124290338-4821269143-2515515-40-103-255245152 *4/1/2015124.251242512,201224287338-51129-29158-2615515-41-184-353147169 4/6/15127.351273512,20153436833830167-291961101551595-91-353147262 4/10/15127.11271012,20150935333815162-29191911551576-100-353147253 4/17/15124.751247512,201274243338-95122-29151-5715515-72-178-353147175 4/24/15130.281302812,20182743333895214-292432301551521511-353147364 4/27/15132.651326512,2011,064555338217245-292744021551538792-353147445 5/1/15128.951289512,201694170338-16868-2997-3815515-53-81-353147272 5/8/15127.621276212,20156148338-29043-2972-18515515-200-190-353147163 5/15/15128.771287712,2016760338-3380-2929-12515515-140-125-353147228

23. The CLRR Trade 23 AAPL Strategies – Comparison of P&L

24. The CLRR Trade 24 AAPL Strategies – Comparison of Return on Risk % (ROR%)

25. The CLRR Trade What happens if things go south? On May 22 nd AAPL closes at 132.54 and I put a price target at $156. Let’s see how this works 25 Date Stock Price Long 300 SharesLong 3x Oct 155 Call Rolled Calendar Oct 155C (Jul 155/Aug 155/Sept 155) Oct Bull LRR 150/155/(3x)155COct Bull LRR Calendared ValueRiskNetValueRiskNetValueRiskNetValueRisk Worst Risk NetValueRisk Worst Risk Net 5/22/15132.5439762 0420 0387 0885080-25 4750 5/29/15130.283908439762-678327420-93309387-78-1138508-121-131-25475-106 6/5/15128.653859539762-1,167258420-162246387-141-1948508-202-206-25475-181 6/12/15127.113813339762-1,629174420-246165387-222-2918508-299-300-25475-275 6/19/15126.63798039762-1,782111420-309102387-285-3648508-372-373-25475-348 6/26/15126.753802539762-1,737105420-31596387-291-3728508-380-381-25475-356 *7/1/15126.63798039762-1,78293420-32772372-300-3878508-395-408-40460-368 7/6/151263780039762-1,96272420-34857372-315-4108508-418-425-40460-385 7/10/15123.283698439762-2,77866420-35454372-318-4198508-427-431-40460-391 7/17/15129.623888639762-876138420-282111372-261-3358508-343-362-40460-322 7/24/15124.53735039762-2,41269420-35163372-309-4188508-426-424-40460-384 7/31/15121.33639039762-3,37239420-38133372-339-4668508-474-472-40460-432 *8/3/15118.443553239762-4,23039420-38130363-333-4568508-464-465-49451-416 8/7/15115.523465639762-5,10627420-39318363-345-4708508-478-479-49451-430 8/14/15115.963478839762-4,97412420-4089363-354-4888508-496-491-49451-442 8/20/15115.963478839762-4,97412420-4089363-354-4888508-496-491-49451-442

26. The CLRR Trade 26 AAPL Strategies – Comparison of Return on Risk % (ROR%)

27. The CLRR Trade 27 AAPL Strategies – Comparison of P&L

28. The CLRR Trade Take aways: While long/short stock can be lucrative, the requirement of capital is not only limiting it actually diminishes the ROR% of the trade. Not to mention it can be much more costly if the trade goes the wrong way. Using long options alone are too sensitive to theta decay to be a go-to strategy all the time in the long run. Certainly if a stock runs in the proper direction quickly they can be lucrative, but notice that the LRR strategy continues to beat them even in those cases. Calendarizing the LRR can maintain the virtues of the LRR over time while reducing risk as well. I have also tried to illustrate here how the calendar aspect also is able to lock in gains and continue to allow participation over time with volatility of the underlying. One final note on the calendar aspect – I have employed my own rule to say that if the trade is bearish I will not calendarize right away because stocks have a tendency to fall faster than they rise, and a calendar may limit near term gains. But if the trade is bullish I will calendarize on establishment. 28

29. Q & A With Web