| Hi, it was so good to see many of you Saturday night. Here's the guidelines I promised.
On January 1, 2023 I started the $2,000 JOURNEY. It's up 101% on 3 put credit spreads.
I'm using Wall St. Bookie's selling options strategy because I believe it gives me the best chance to grow a small balance.
Normally, when I sell options, I do it at-the-money (most extrinsic value), 5-7 days from expiration (fastest rate of decay).
Probability favors the seller at-the-money, but not as much as selling out-of-the-money.
Jeff Bishop co-manages Wall St. Bookie with me. He's also my trading coach.
So when I came up with the idea of doing the $2,000 JOURNEY, he recommended I change from selling at-the-money, to 1-2 strikes out-of-the-money.
At-the-money means the current price.
What Jeff coached me to do is move down 1-2 strikes out-of-the-money. He explained, while there's less premium the lower you go, the probability of winning the trade is higher.
POP is probability of profit at the onset of the trade. Selling at-the-money is around 55% POP. Selling a strike or two out-of-the-money is around 70% POP.
Which brings me to another recommendation Jeff had for me.
If I sell out-of-the-money, in the example above -$350 / +$345, then if $350 doesn't hold up, that's my stop loss.
Let me back the truck up. A put credit spread is a neutral to bullish trade. I can win 100% if the trade stays above $350. That means I win if NFLX goes higher, goes sideways, or even goes lower, so long as it's above $350. 3-ways for me to win.
The trader who bought the puts from me only wins if NFLX goes straight down.
Back to the stop loss strategy. Once I've alerted you I'm about to get in the trade, I enter. Once in, if at any time it's looking like NFLX will close below $350, I exit with a small loss and regroup for the next trade.
This is important because I put the full $2,000 in trade #1, AAPL. Then the full $2,476 in trade #2, NFLX. Then the full $3,176 in trade #3, TSLA.
And so on. Which means I can't let any single trade get out of control. I like this, it keeps me sharp and disciplined.
Timely tip: read The Disciplined Trader and Trading In The Zone.
$2,000 JOURNEY guidelines:
2023 outlook: bullish Tickers: best companies in the world AAPL, NFLX, TSLA, etc… Order type: put credit spread (neutral to bullish i.e. good companies tend to go up) Target entry: defined by technical analysis (sell below big support to boost odds) Credit: $.60-$1.50 or 30% of the spread width ($2 wide = $.60, $5 wide = $1.50) Debit goal: $.30-$.75 or 50% of the credit Stop loss: defined by sold strike Allocation: 100%, roll balance into next trade Expiry: 5-7 days from expiration (fastest rate of option decay) Hold times: 2-4 days on avg. (time decay favors the seller so I want to be in trades) Trades / week: 1 on average so far
I want to be clear. I know of no better way to build a small balance. But that does not mean I'm going to succeed at this.
It's off to a great start. However, that's no guarantee of what the next trade will bring.
I feel very confident about this plan I've put together. But make no mistake, growing any account size is hard.
If I can make this work, which I believe I can, this is likely to become the biggest service at RagingBull and will have its own subscription.
For now it's included in Wall St. Bookie.
And if you'd like to join, we're now offering a quarterly rate and even better annual rate.
→ NEW Wall St. Bookie QUARTERLY subscription option
P.S. 2 of my 3 wins so far have been earnings winners and I plan to keep going after those. Stocks like NFLX, after an earnings win, are not going to fall apart. I will monitor what's strong in this ER Cycle and build my watchlist off that.
P.P.S. If you have any questions at all regarding this offer and your options, you can contact Jeff Brown (your BOOKIE concierge) at (800) 585-4488. Or email him at jbrown@ragingbull.com
Jason Bond
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