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CST Report May 2016

The document outlines a strategy for generating weekly income through limited-risk options trades, specifically by selling time premium in options. It introduces the Credit Spread Trader (CST) program, which utilizes high-probability trading techniques to capture time decay and offers a systematic approach for active investors. The program boasts a high success rate and aims for consistent returns with minimal risk, making it accessible even for those without advanced options trading knowledge.

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Daniel Agbunu
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0% found this document useful (0 votes)
18 views8 pages

CST Report May 2016

The document outlines a strategy for generating weekly income through limited-risk options trades, specifically by selling time premium in options. It introduces the Credit Spread Trader (CST) program, which utilizes high-probability trading techniques to capture time decay and offers a systematic approach for active investors. The program boasts a high success rate and aims for consistent returns with minimal risk, making it accessible even for those without advanced options trading knowledge.

Uploaded by

Daniel Agbunu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Your Weekly Options Paycheck

Generating High-Probability Weekly Income


with Limited-Risk Options Trades

 1) Time Premium and Options

 2) High-Probability Advanced Trading Techniques

 3) Systemized, Tested, Professional Approach

Interest rates are near all-time lows. Bank savings accounts pay 1% or less, yet
inflation is rising at a rate faster than that.

Today’s active investor must utilize advanced techniques to garner returns and
income in an outperforming manner.
1) Time Premium and Options

One of the best methods to garner investment income is through selling the time
premium inherent in options in a risk-controlled environment.

Remember that the price of an option is comprised of both intrinsic value and
extrinsic value … another term for extrinsic value is time premium. Time premium
in an option is primarily composed of Implied Volatility (Option Greek Vega) and
Time Decay (Option Greek Theta) and it is time Decay (Theta) where we find the
“sweet spot” of option pricing for steady income generation.

The advent of Weekly Options (and the many strike prices available on all the
option expirations) has provided a new, under-exploited niche in the world of
investing … regulated, listed options that expire every week.

Weekly Options primarily exist for 8 calendar days typically, yet contain the
normal leverage (with small cash outlay) of any other option. And they have time
premium in them THAT MUST go to ZERO by the time they expire.

So our primary edge that we’ve designed and optimized for active investors
seeking more regular income via stock options selected by BigTrends is:

Capturing the time premium of short-term options in such a manner that it


becomes a steady income-generating source.

3 more key points:

* All of the trades are limited-risk and can be traded in any brokerage
options account, including retirement brokerage accounts!

* The Credit Spread Trader recommendations can be auto-traded for you at no


additional cost by brokers such as thinkorswim!

* We walk you step-by-step through each trade, specifically on entries and exits.
No advanced knowledge of options trading is required to participate!
2) High Probability Advanced Trading Techniques

So how do we go about reaping the gains from option Theta (time decay) in a
consistent way?

Our preferred technique is time-tested, offers a high probability of success, and is


not direction-dependant - it is selling “Credit Spreads” on the options for
underlying stocks with very active and liquid Weekly Options.

The way our Credit Spread Trader (CST) trades work is that you receive a credit
(cash deposited into your account) when the limited-risk trade is placed, then a
few days later if/when the Credit Spread expires worthless, the entire options
position is removed from your account and you keep the credit received!

What is a Credit Spread?

Also known as Bull Put Spreads or Bear Call Spreads, a credit spread is limited risk
trade such as selling an Out-of-the-Money (OTM) option and buying another
option with the same underlying security, same expiration date but a different
strike price.

A Bullish Credit Spread is used when our indicators and system show the stock will
be up or flat for the very short-term time period of trade. This involves selling an
OTM Put and buying a further down OTM Put in a limited-risk manner.

A Bearish Credit Spread is used when our indicators and system show the stock
will be down or flat for the very short-term time period of trade. This is selling an
OTM Call and buying a further out OTM Call in a limited-risk manner.

This is a simple 2-legged trade, which can be done in any broker account with
options approval (including self-directed IRAs and other retirement brokerage
accounts).

The reason why our CST credit spread trades can be done in retirement
accounts is because they are all limited-risk and require no additional margin
other than cash required up front to cover the maximum potential risk.
(If you are not already approved for options trading such as Credit Spreads in your
retirement or brokerage account, simply ask your broker to approve you for
trading those strategies.)

Here are theoretical examples and Profit/Loss graphs of what a Put Credit Spread
and a Call Credit Spread look like:

We are bullish/neutral in the short-term on XYZ stock. XYZ stock is at 47 so we


sell a short-term 45/40 Put Spread for $2. Maximum risk is $3 ($5 point spread
minus the $2 credit received). If the stock goes out at 45 or higher on expiration,
you keep the $2 ($200) per Credit Spread and the position is removed from
accounts without any commissions on the exit when both sides expire with no
value, allowing us to keep the full initial credit received.
Alternatively, say we are bearish/neutral in the short-term on ABC shares. ABC is
at 33.50 so we sell a short-term 35/40 Put Spread for $2. Max risk is $3 ($5 point
spread minus the $2 credit received). If the ETF goes out at 35 or lower on
expiration, you keep the $2 ($200) per Credit Spread and the full position is
removed from accounts.
3) Systemized Tested Professional Approach

The BigTrends research team, led by CEO/Founder Price Headley, has designed
the optimal income generating system.

We’ve disclosed with you the basics of the “how and why” behind the Credit
Spread Trader (CST) program – targeting weekly 25% to 35% gains on risk with a
very high anticipated probability of success per trade of 70% to 90%.

This will create a steady stream of time decay income for you and diversify your
investing and trading portfolio with a limited-risk method for selling options and
volatility.

The final step is the expertise and testing that Price and his BigTrends research
team have done to perfect this program to its optimal status in 2016.

As a Hall-of-Fame trader, Price Headley has been a leader in the option education
and trading industry since founding BigTrends in 1999, and even before then was
successfully creating and implementing option income generating strategies
throughout the 1990s. Working with his BigTrends research team, they’ve
designed a scientific, tested approach to systematically take income profits out of
the market over a short time frame.

How do we find the optimal Credit Spreads to profit with a high success rate and
healthy profits over such a short time frame?

We’ve designed, back-tested, live-tested and implemented a formula that lets us


find the best trade recommendations for quick income generation.

We utilize Volatility (both implied and historical), Acceleration Bands,


Support/Resistance and Donchian Channels in our BigTrends Credit Spread Trader
system. We use Screens, Daily Charts and Intraday Charts. The exact formula we
utilize is unique and proprietary.

And the results speak for themselves … below are the time-stamped results of our
real trade recommendations over the past 2 months. We’ve shown the specific
option trades to allow you to verify the accuracy of these signals for yourself.

On average, there will be up to 16 income generating option trade


recommendations per month – with a maximum holding period of 2-5 calendar
days. The profit targets are generally in the 25% to 35% gain on risk, and the
probability of success is anticipated to be in the 70% to 90% range.

Real Trade Results of the Credit Spread Trader (CST) newsletter:


What does this data show?

 22 of 30 trades closed for maximum profits (expired worthless, which also


means no commission to exit them, only 5 net losing trades out of 30) =
83.3% Winning Trades
 Winning trades range from 25% to 39% = 28.5% Average Profit
 Average holding period for trades = 4 Calendar Days

So you can see why we’re so excited to unveil Credit Spread Trader to you in 2016
… we are achieving the stated goal of providing quick, income-generating, high-
probability trades to active investors.

Get the steady stream of time premium decay going in YOUR favor based on a
tested trading system from the experienced BigTrends team.

To start taking advantage of the real-time signals in the Credit Spread Trader,
please call 1-800-BIG-TRENDS (1-800-244-8736).

Thank you,

Price Headley
CEO & Portfolio Manager, Credit Spread Trader
BigTrends.com

Credit Spread Trader (CST)


High Probability Weekly Option Trades To Generate Income

[Past performance is no guarantee of future performance and


there is risk of loss in any options trade]

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