Q. Upon what trading methodology is Options Wizardry Profit Alert based?

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Damon Bennett
5 years ago
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1 Q. What exactly is Options Wizardry Profit Alert? A. It is a weekly trade idea service. Each week, we post high probability trade ideas for you to consider. The trade ideas are posted to a private, secure web site every Friday morning. [We post the information on Friday's to take advantage of the "weekend effect" in options.] Because these are trade ideas, and not actual recommendations, we do not provide follow-up instructions. If you want full-service recommendations, with specific price limits, allocation instructions, and follow-up instructions for all trades that are open, we do offer those features in our Options Wizardry Profit Alert: Platinum Edition. Q. Upon what trading methodology is Options Wizardry Profit Alert based? A. The methodology is based almost entirely on the high probability index option trading system I ve been teaching for nearly two decades. The details of this particular method were taught from start to finish in my Options Wizardry From A to Z course, which was first offered to the public in Over the years I added several minor enhancements to make the trading process easier. While my basic high probability method has a multi-decade history of success, it does have one weakness, and that is a major volatility shock to the market. With that in mind, I have good news. A few months ago I made a discovery on how to accurately forecast when market volatility is about to explode. This is exactly the type of information we need, because it addresses the key weakness in the high probability system. That gave us the key information we needed. We created a system that puts the two concepts together. We'd employ the high probability index options trading methodology (4-way spreads) when volatility was expected to be normal. But if our new indicator issued a warning that volatility shock was forthcoming, we would switch out of high probability index spreads, and into a volatility-based ETF. Importantly, this means we are rarely out of the market. Our objective is to find a high probability spread whenever our key indicator is in normal mode, and invest in volatility-based ETFs when the indicator is in crisis mode. Q. Are you in the market all the time, or are there lengthy dead

2 periods? A. As stated previously, except in rare circumstances, we expect to provide you with trade ideas each and every week. This means that, as one position expires, we will likely be providing you with a new trade idea. As noted above, we don't anticipate that there would be lengthy periods where we're idle. In 5 years of testing, there was never an idle period. If, however, the potential profits from doing these types of option trades is so low that the profits wouldn t even pay your commissions, we will elect to stand aside. That did not happen during the time frame between March 2007 and now. Q. How do you find the trade ideas you publish? A. It's actually a relatively simple process, once you know what to do. Basically, we use the exact high probability method I've taught those of you that have my Options Wizardry or Profit Power Seminar courses. Although the calculations are easy, they can be tedious. And for newcomers, they can seem overwhelming. Every Friday morning (if there are holidays, such as Christmas and Thanksgiving, that schedule may change) I'll provide you with a trade idea for you to consider. Q. How do I access the trade ideas you provide? A. The first thing you need to do is login. Once you ve done that, you ll see a menu of products to which you subscribe. Select Go To Options Wizardry Profit Alert Winner s Package. You ll be sent to the main landing page. Below is an image of that web page.

From there, you can find everything you need. In the top left corner is the link to the service itself. Below that is a link to the Volatility Escalation Index Chart. That chart is updated daily.

3 From there, you can find everything you need. In the top left corner is the link to the service itself. Below that is a link to the Volatility Escalation Index Chart. That chart is updated daily. At the bottom on the left is a link to the Instructions for using the service. For your convenience, on the right side of the landing page you ll find links to the Options Wizardry videos and the High Accuracy Options Trading Manual. This is in addition to the printed manual and DVDs that are shipped to you. This is a terrific way to watch videos whenever or wherever you want, without having to bring the DVDs with you. Q. So that subscribers can be prepared, may we see what a trade idea looks like? A. Here s an example of the first page of the weekly report. The section containing the actual trade idea is highlighted in light green.

As you can see, we provide the date and the underlying asset. In this example, the asset is the SPDR S&P 500 ETF (ticker: SPY). Below that is the option trade itself.

4 As you can see, we provide the date and the underlying asset. In this example, the asset is the SPDR S&P 500 ETF (ticker: SPY). Below that is the option trade itself. This is a 4-way spread, otherwise known as an Iron Condor. There are 4 components to the spread. We are selling a put and a call, and buying a further out-of-the-money put and call. The prices shown for the options are based on the bid/ask prices that we believe a trader would expect to see, assuming the market conditions in the morning have not deviated substantially from those seen near the close the prior evening. For instructions on how to implement a trade of this type, please read further. We discuss this in the answer to the following question: Can I

5 implement the Options Wizardry Profit Alert trades with an online brokerage? Q. If I get filled on the spread, what do I do next? A. Good question. It is important to realize that Options Wizardry Profit Alert does not provide full-service recommendations. We provide trade ideas for you to consider taking. Because this is a trade idea service, what you do next is up to you. However, I can tell you this, our normal strategy is to hold the position till expiration unless our Volatility Escalation Index rises to an extremely high level. More on that later. If our Volatility Escalation Index reaches the critical stage, we will exit any index credit spreads we own (4-way spreads fit into this category). Simultaneously, we will initiate a position in a volatility-based ETF. Q. What does the Volatility Escalation Index look like? A. Here is a chart from 2010 and 2011 showing a period where the Volatility Escalation Index reached a critical level.

6 When the index reaches 3, it is at a level we consider critical. That is, market volatility is likely to spike. This happened in July 2007, September 2008, April 2010 and July Note that each one of these instances was the month PRIOR to the market experiencing a massive volatility shock. Please realize that this indicator s past performance doesn t guarantee that it will be perfect in the future. Q. Okay, we now know what an option recommendation looks like. And we ve seen a chart of the Volatility Escalation Index. What does an ETF recommendation look like? A. Again, this is a trade idea service. It is not a service that provides detailed, specific recommendations. That said, we provide enough information for traders to determine what to do based on the idea we provide. Here s an example.

7 As you can see, there are two parts to the instruction comments: First, high probability option spreads are no longer appropriate. That means if you are holding index option spreads at the time, you might want to exit those. Second, the trade idea in this type of environment is to purchase derivative products that profit from an increase in volatility, such as volatility-based ETFs. One such ETF is VIXY. Q. What is the typical duration of a trade? A. We look for option trades whose expiration date is anywhere from two to seven weeks. That does not mean we remain in the trade that long. Sometimes we close out a position prior to expiration if the profits are too juicy to pass up. The four ETF signals during the test period lasted about 2 months. Q. How many trades could typically be open at any one time?

8 A. On average, the number of simultaneously open option spread positions peaks at 6. If the Volatility Escalation Index is at a critical level, only one ETF position will be open at a time. Q. What is the Options Wizardry Profit Alert refund policy? A. Only Options Wizardry Profit Alert Winner s Package comes with a guarantee. Q. Can I implement the Options Wizardry Profit Alert trades with an online brokerage? A. Yes. Most online brokerage interfaces now give you the capability to enter all the necessary information to implement the trades correctly. Just make sure your online brokerage provides you the ability to enter your order with the correct data (i.e.: 4-way/credit spread or iron condor, which market and symbols, how many positions you want), emphasize the "net credit" amount (never accept less than the minimum credit), and place as a "limit" order. Q. Are there any qualifications required? A. There are no qualifications required to subscribe. If you want to subscribe in order to learn, that's fine with us. But if you want to trade the recommendations, the trading level required for the service is Level 4. That's the level required to trade the credit spreads, which nearly all of our customers qualify for. Trading the ETF portion of the service requires the same suitability as investing in an ETF. Q. How much money do I need to use Options Wizardry Profit Alert? A. We don't have a minimum account size recommendation. As stated above, there is no requirement for you to trade the recommendations. You can subscribe to this service just to learn. If, however, you do trade, you'll need to open an account. As noted previously, there is no minimum account size to subscribe. But if you trade with a tiny account, you may not be able to implement all the trade ideas we provide. The good news is that, let's say you take one trade per month and ignore the rest. Testing has found that the trades that take place early in the expiration cycle actually perform a bit better than the trades that

9 come closer to expiration. If you only trade the early recommendations, you should do well. If you take all the recommendations, you should do better, because you have more profit opportunities. The point is, a small account is terrific. A larger account offers even more profit potential. Q. Do you provide samples? A. Yes. A complete sample can be found HERE. Q. The complete Options Wizardry Profit Alert is 10 pages long. Why so much information when all I want is the weekly trade idea? A. Not all investors are the same. Some just want the trade idea, others want access to the best research available anywhere, at any price. It is with this in mind that we decided to provide all subscribers up-to-date charts of rare, hard-to-find options-based indicators. Most of these are professional-level indicators. A description of each indicator is found in the caption below each chart. If you would like to learn even more about these indicators, that information is available for an additional fee. Subscribers are free to use these charts internally as they choose. Information contained in the report, including charts, may not be shared without permission. Q. Is there any way to begin the learning process before the DVDs arrive? A. Yes. As a convenience to you, we provide online access to the videos and manual. You can access them by logging in and selecting them on the main Options Wizardry Profit Alert Winner s Package web page. Q. Am I required to take every Options Wizardry Profit Alert trade idea and provide trading statements to get a refund? A. The recipients of the guarantee are intended to be only those who actually made the trades and lost. If you don't want to take the trades, that's fine. But you must provide proof that 90% of the trades over the prior year did

10 not win. That can be done by providing paper-trading or virtual-trading records. Also, please note, the refund policy is after your full year of your subscription only.

Don Fishback's ODDS Burning Fuse. Click Here for a printable PDF. INSTRUCTIONS and FREQUENTLY ASKED QUESTIONS

Don Fishback's ODDS Burning Fuse Click Here for a printable PDF INSTRUCTIONS and FREQUENTLY ASKED QUESTIONS In all the years that I've been teaching options trading and developing analysis services, I