The Master Strategist Options Webinar Course Content

Module 1: Essential Options Characteristics and Concepts - The module begins by reviewing all the necessary parts of the options story. Most traders already have a fairly good understanding of basic options concepts, but a fresh review and professional perspective on important areas -- such as time value (extrinsic value), intrinsic value, expiration, exercise and assignments, and pricing specs -- helps to focus attention on what's important in relation to strategies to follow in subsequent modules. In this module, data is presented showing why options selling (writing) makes more sense than buying options as a strategic approach. Highlights from two reports on options expiration patterns and open and closing trades are shared with students, and discussed. "Is there an advantage to selling options?" is a key question that is explored in light of the efficient markets hypothesis argument. Put/call ratios are looked at to help answer the question, in addition to data from the two reports. Finally, differences between futures and equity options are explained, and how these two worlds of option trading don't have the same margin rules. Different margin systems are explained, with an emphasis on advantages offered by SPAN margin rules used with futures options. Index options, ETF options markets are also part of the discussion. At the end of this module, students have all the prerequisites to move into strategy implementation. Back

The Master Strategist Options Webinar Course Content

Module 2: Options Writing with Diagonal Put Time Spreads - This module begins with a quick review of options spreads concepts (vertical,horizontal and diagonal) and then lays out the rules for applying diagonal put time spreads on the S&P 500 index  (extendable to other markets). The module walks you through the important dimensions of the strategy in its two basic forms (debit and credit spreads). Generally, the diagonal spread can make a potential profit from time value decay, but directional moves of the underlying and positive changes in implied volatility can add significant potential gains. Due to its time spread nature, the process of Delta and Vega inversion (a process brought about by Theta) are the real potential profit engines, demonstrated in this module. The module provides the setup steps and then a careful look at the profit/loss impact resulting from changes in key variables (volatility, price change, and time value decay). Simulations are executed to bring to live the essential characteristics of the diagonal strategy. The module teaches you the methodology for selection of strikes and how to set up balanced and unbalanced Greeks, as well as when to apply this strategy with the correct position Greeks, and in what position sizes relative to available risk capital. You are also taught how to prepare and apply defensive actions and other types of follow-up interventions to mitigate risk and preserve potential for profit through examination of a number of case studies. By the end of the module, students have a solid feel for applying this strategy. Back

Module 3: Options Writing with Vertical Call Ratio Spreads - This module presents a stand alone strategy(and one that can be combined with vertical or diagonal put spreads). This spreading approach takes advantage of option implied volatility in equity index options markets that moves inversely with the underlying, and therefore provides a cushion against adverse moves. Established for a small credit, the rules and market conditions for setting up these standard and ratio credit spreads are taught and how to adjust the initial positions if and when the underlying moves too much against the position. Precise adjustment techniques are presented, along with the implications any follow-up action will have on profit/loss parameters. This trade has some key advantages, such as being able to potentially make money in up, down and sideways markets, and the ability to make a potential profit greater than the initial credit (for ratio versions). There are many ways to do ratio spreads, but not all are worth the risk. The call ratio spread approach can be applied to commodity markets, but is best restricted to stock market index options, namely the "big" S&P 500 options on futures and S&P e-mini options, where the best risk/reward conditions can be found due to relatively lower underlying volatility conditions historically and genetic nature of bullish markets. 
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Module 4: "Risk-Less" Collars I: Vertical Collars - Vertical collars occupy a special place in the world of options trading -- namely they are arbitrage type trades that have large profit potential built into them by adjusting vertically the standard conversion structure. The module teaches you how to apply the setup using limit orders so that positions are never entered into that are not priced correctly. The strategy is applied primarily to equity options and ETFs, but it is possible to roll this approach out to other markets, such as FOREX options and futures options. The standard collar (conversion) trade is first presented and then the rules for modifying the structure are revealed that allows for transforming the traditional collar approach into a potentially big gainer -- with no volatility, directional or time value decay risk. Dividends play  a key role in creating the proper pricing and profit parameters, a topic that is fully explained. The at-expiration profit/loss parameters are examined as well as the intervening time frame Greeks, particularly Delta and Vega. Several trades will be setup, and some case studies will be presented. Finally, the module explores ways to find the right stocks to apply vertical collars to in order to increase the probability of success. This trading strategy can also be adapted for portfolio hedging, which is explained in finishing this module.  Back

Module 5: "Risk-Less" Collars II: Horizontal Collars - Another risk-free setup, the horizontal collar takes advantage of extremely low implied volatility conditions found in some equity options, particularly ones that have been in long bullish trends and may be topping. The module begins by deconstructing the horizontal collar into two parts, and then explaining the setup rules for applying it with risk free pricing - such as correct strike price selection and size of net time premium credit. After looking at several case studies, the module concludes with a discussion of possible alternative uses for this setup, plus creative ways to apply money management using this trading strategy. Back

Module 6: Low-Risk Time Spreads: Horizontal In-The-Money Calls Spreads - This module presents the standard horizontal time spread -- but moves it in the money to capture large moves of the underlying with defined limited risk. Unlike the traditional at the money time (a.k.a. calendar spread) found in most options books, this one is applied deep in the money to take advantage of special option pricing found in some equity options. After explaining implied volatility skews and how that impacts pricing of options across different expiration months, the strategy is explained and illustrated using a number of case studies. This is a low-risk, low capital intensive strategy that can produce a large potential return on capital if applied correctly to a diverse number of equity options displaying the necessary skew pricing to make it work. The module concludes by showing traders how to apply this same strategy as a hedge tool to protect against market declines and any long Delta exposure traders may have elsewhere in their portfolios. Perfect for the buy and hold portfolio holder looking for cheap hedging techniques and for the trader looking to play explosive moves in bio techs and other tech stocks with a defined
risk strategy. Back