Using Street Smarts To Beat the Options Game

Using Street Smarts To Beat the Options Game Presented by Rick Ackerman of Rick’s Picks November 14, 2009 www. rickackerman. com 1

The early days… 2

…and let’s not forget Patrick Mc. Donald 3

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 4

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 5

Stick with nearest month Plenty of liquidity Time works against premium buyers Paying for time shows lack of confidence 6

Trade the Openings Best price of day if you’re with Da. Boyz Panics are meant to be enjoyed Better to be raper than rapee Later in the day only gets tougher 7

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 8

Never pay the offer Nickels and dimes separate out winners There will always be another opportunity Risk: reward ratio is always paramount Self-esteem! 9

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Jump on sky-high premiums THEY really DO know something Short sellers are trapped Opens up great spreading opportunities 11

Setting up a trade 12

…begins with a stock, a price target 13

…and a technical system: 14

Here’s a day-trade in the QQQQs that starts with a bearish bias and a precise price target… 15

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1. Determine implied volatility of the option you plan to buy… 17

2. Reconcile implied and real volatilities 18

3. Raise volatility so that option price matches real-time bid 19

4. Finally, determine option price with stock trading at target 20

Here’s a longer-term play in a mining stock, Silver Wheaton… 21

Step 1: Buy calls at right moment 22

Step 2: Take partial profits early 23

Step 3: Spread off remaining calls 24

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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 27