Using Street Smarts
To Beat the Options Game
Presented by Rick Ackerman
of
Rick’s Picks
November 14, 2009
www.rickackerman.com
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The early days…
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…and let’s not forget
Patrick McDonald
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Rick’s Counterintuitive Rules
Buy out-of-the-moneys
Stick with the nearest expiration
Trade the openings (when rape is legal)
Cut your profits short
Never pay the offer
Buy premium when it’s sky-high
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Buy Out-of-the-Moneys
Easy to quadruple your stake
50 of them cost bupkus
Explosive short-squeeze potential
Scale-out exits are a breeze
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Stick with nearest month
Plenty of liquidity
Time works against premium buyers
Paying for time shows lack of confidence
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Trade the Openings
Best price of day if you’re with DaBoyz
Panics are meant to be enjoyed
Better to be raper than rapee
Later in the day only gets tougher
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Cut your profits short
Four-day streaks are extremely rare
Enjoy playing with the house’s money
Savor your reduced costs basis
Purge greed from your list of shortcomings
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Never pay the offer
Nickels and dimes separate out winners
There will always be another opportunity
Risk:reward ratio is always paramount
Self-esteem!
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Jump on sky-high premiums
THEY really DO know something
Short sellers are trapped
Opens up great spreading opportunities
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Setting up a trade
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…begins with a stock,
a price target
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…and a technical system:
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Here’s a day-trade in the QQQQs
that starts with a bearish bias
and a precise price target…
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1. Determine implied volatility
of the option you plan to buy…
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2. Reconcile implied
and real volatilities
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3. Raise volatility so that option
price matches real-time bid
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4. Finally, determine option price
with stock trading at target
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Here’s a longer-term play
in a mining stock, Silver Wheaton…
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Step 1: Buy calls at right moment
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Step 2: Take partial profits early
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Step 3: Spread off remaining calls
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Featured at Rick’s Picks
Daily touts for futures, options and stocks
24/7 chat room for traders around the world
Hidden Pivot webinar each month online
Weekly online tutorial sessions in real time
Trade with Duke
www.rickackerman.com
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