Trading In A Higher Volatility Market!

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Audra Harper
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1 Trading In A Higher Volatility Market!

2 Disclaimers Investing Risks: The risk of loss from investing in securities (stocks, ETFs, mutual funds, etc.), bonds, options, futures, and forex or related products, can be substantial. Investors must consider all relevant risk factors, including their own personal financial situation, before investing. Investments in bonds and fixed income products are subject to various risks (including liquidity, interest rate, financial, and inflation risks) and special tax liabilities. Options Risks: Options involve risk and are not suitable for everyone. Options Trading privileges are granted at the account level by your custodial broker and are subject to review and approval. Not all accountholders will qualify. Before trading options, a person must receive a copy of Characteristics and Risks of Standardized Options. Individuals should not enter into options transactions until they have read and understood the risk disclosure document, Characteristics and Risks of Standardized Options, which can be found on our website Copies may be obtained by contacting your broker or the Options Clearing Corporation. Spreads, Straddles, Strangles, and other multi-leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return. These are advance option strategies and often involve greater risk, and more complex risk than basic options trades.

3 Disclaimers General Disclosures: Any strategies discussed in this presentation, including examples using actual securities and price data, are strictly for illustrative and educational purposes only and are not to be construed as an endorsement, recommendation, or solicitation to buy or sell specific securities or strategies. Investors should carefully consider the investment objectives, risks, charges, and expenses before investing in any investment product. To obtain a prospectus containing this type of information as well as other important information, contact your custodial broker. Please read the prospectus carefully before investing. You should discuss any/all implications of investing in such products with your custodial broker, financial adviser/advisor, and/or tax advisor. Past performance is not indicative of future results. Third Party Information: This presentation may utilize or refer to third party data. In such a case, let it be known that MSCM, LLC. does not control, nor has it developed the content being referred to, and does not make any warranty, express or implied, as to the accuracy, usefulness, timeliness or even the continued availability or existence of said information/content created or maintained by others. Opinions expressed by others are not necessarily those of MSCM, LLC., nor does MSCM, LLC. endorse, warrant, or guarantee products, services or information described or offered by such firms.

4 A Little About Me 33+ Year Veteran of the trading and Financial Services Industry Founder, Co-Founder and or Partner of: 3 Investment Firms 2 Onshore/Offshore Hedge Funds 2 40 Act Mutual Funds Been featured in numerous articles in the financial press including: CNBC.com InvestmentNews.com Dow Jones Newswire Euromoney Institutional Investor Markets Media And has been a regular featured guest on The Educated Investor On CBS radio affiliate KRLD in Dallas. Former President and Executive Board Member of the Dallas Security Traders Association Former Chairperson and Co-Chair of the Dallas Chapter of the Market Technicians Association

5 Trader/Investment Manager

6 Where Are We Today

7 Where Are We Today

8 Where Are We Today

9 Where Are We Today

10 Fresh Idea s - List Building In A High Volatility Market

11 Fresh Idea s - List Building In A High Volatility Market

12 List Building Think Outside of the Box

13 Long Opportunities XLU - Utilities NRG NRG Energy NEE Nextera Energy SO Southern Company XLV Health Care ESRX Express Scripts PFE Pfizer MDT - Medtronic XLRE - Real Estate AVB Avalonbay SPG Simon Property Grp Honorable Mentions UGI UGI Corp WBA Walgreens USM US Cellular

14 Long Opportunities XLU - Utilities NRG NRG Energy NEE Nextera Energy SO Southern Company

18 Long Opportunities XLV Health Care ESRX Express Scripts PFE Pfizer MDT - Medtronic

22 Long Opportunities XLRE - Real Estate AVB Avalonbay SPG Simon Property Grp

25 Long Opportunities Honorable Mentions UGI UGI Corp WBA Walgreens USM US Cellular

29 Long Opportunities XLU - Utilities NRG NRG Energy NEE Nextera Energy SO Southern Company XLV Health Care ESRX Express Scripts PFE Pfizer MDT - Medtronic XLRE - Real Estate AVB Avalonbay SPG Simon Property Grp Honorable Mentions UGI UGI Corp WBA Walgreens USM US Cellular

30 Shorting Opportunities CLR Continental Resources DVN - Devon Energy NOV National Oilwell Varco PDCE PDC Energy Inc SLB Schlumberger Lt. AIMT Aimmune Therapeutics IRC Irhythm Tech LOXO Loxo Oncology NP Neenah Paper BPMC Blueprint Medical

35 A Basic Strategy to Increase Buying Power

36 The Poor Man s Covered Call A Poor Man s Covered Call is a Long Call Diagonal Spread that is used as a substitute for a Long Stock/Short Call ( Covered Call ) Position. Your Directional Assumption is Bullish Done in Low Implied Volatility Environments.

37 PMCC Diagonal Spreads: Things To Know For a Passive Position - Consider Keeping Your Debit Between 50%- 75% The Width Of The Spread For a Dynamic Position - Calculate the Opportunity of Eliminating the Long Options Extrinsic Value while profiting from Directional Moves

38 PMCC Diagonal Spreads: Management Market Moves In Your Direction? Adjust or Close Market Moves Against You? Adjust or Close It s All About Time To Expiration

39 A Common Sense Approach A PMCC/CP is a great alternative to trading a traditional covered call using stock. In smaller accounts, this position can be used to simulate a covered call position with less capital and much less risk than an actual covered call.

40 Also Known As A Poor Man s Covered Call Poor Man s Covered Put

41 Begin by using any list that contains stocks that meets your prognosis Moving Average Crossover Leading Sectors An Imported List Any other directional list

42 Some Examples

43 Let s Do A Little Comparison Adobe (ADBE) January 2, 2018 Stock vs PMCC

44 Adobe Systems (ADBE) January 2, 2018

45 Comparison Adobe (ADBE) January 2, 2018 Buy Stock 100 Shrs = $17,700 Passive version PMCC - $3265 (x 5 = $16325) Active version PMCC - $3,206 (x 5 = $16,030)

46 Let s Discuss the Passive Version First

47 ADBE Buy Side

48 Sell Side

50 At Expiration

51 Closing Passive Position Summary April 18, 2018 Entry Debit - $2,643 Profit - $1017 ROR 39% (10.17% return per $10K) Stock Position Return 30%

52 Passive PMCC Summary Stock moved quickly through short strike. Potentially stuck in the position without additional profit potential. A nice profit was achieved but could we have done better?

53 Actively Managed PMCC

54 What About IV

55 Day Prior To Exit

56 Close Position Adobe (ADBE) June 19, 2018 Buy Stock 100 Shrs = $17,700 Close Stock 100 Shrs = 25,174 A Return of 42% on Risk generating $7,474 Buy PMCC - $3,206 Close PMCC - $5,582 A Return of 174% on Risk! ($5582 x 2 = $11,164) 11.16% Return per $100K v. 7.47% return on Stock (per 100K account)

57 Does this strategy work for stocks in a bearish pattern?

58 General Electric (GE) January 2, 2018

60 Be Sure To Take Time to Check Your Progress April 20, 2018

62 In Summary Pro s Poor Mans Covered Calls are a good stock replacement strategy. Best used in a Low Implied Volatility Environment. More efficient use of capital. Con s May underperform vs actual stock ownership Harder to make money when done in High Implied Volatility Environments

63 Q&A?

64 Contact Jeffrey Beamer

Butterflies, Condors and Risk Limiting Strategies. The Options Industry Council

Butterflies, Condors and Risk Limiting Strategies December 17, 2013 Joe Burgoyne, OIC www.optionseducation.org 2 The Options Industry Council Options involve risks and are not suitable for everyone. Prior