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Time Is Running Out!

Time Is Running Out!

by The MoleMay 11, 2020
If you’ve dropped by the blog recently then you know that it t’s been another profitable earnings season for both Tony and the old Market Mole. One that was even more amplified by the huge jump in volatility exhibited by this market cycle. However for anyone purely trading on direction this increase in volatility most likely has been very bad news as event risk and endless hyperbole in the financial media served to trap quite a few traders in losing positions over the past three weeks.

Prime examples most recently were PYPL, TSLA, and WYNN – all of which heavily surprised to the upside. So you may wonder what we have been doing differently!

In a nutshell: WE DID NOT TRADE ON DIRECTION. Instead during earnings we mainly employ calendar spreads and a close relative called a ‘diagonal spread’ to purely exploit 1) volatility and 2) time value.
How does that look like? Well, here are the results of the ‘1-lot’ calendar spreads I put on early last week (profits/losses after commission):

WYNN – profit $159.

UBER – loss $44. I screwed up closing out one side here and had to leg out of the calls which probably cost me $20. But given how much it overshot the incurred loss was ridiculous.

SQ – loss $107.

SHOP – profit $275.

RTX – loss $22.

ROKU – profit $170.

PYPL – profit $69 – I accidentally got out early before earnings on that one, but it overshot so much that the result would have been similar.

LYFT – loss $56.

GOLD – loss $23.

EOG – profit $44.

GM – profit $16.

TOTAL for the week: $608 – all with 1-lot positions except for a few exceptions when I had to equal out the value of the put position with the call position (i.e. GOLD, ROKU, UBER, WYNN).

How Can YOU Do It?
If you’ve never traded calendars or diagonals before then you may want really to consider learning more about them. If not now then most definitely ahead of the next earnings season this July, which promises to be even more volatile as the current one.
Now if you go online and look for a good tutorial on calendar spreads you will quickly find yourself immersed in a sea of information, one more confusing than the next. At least that’s how I felt back in the days when I started to trade options and was eager to learn more about how to exactly exploit inflated IV and time value ahead of earnings announcements.
The more I read about it the more confused I got. Why? Because almost none of them teach the fundamental basics of vertical or calendar spreads anymore. The majority of tutorials you will come across focus purely on how to build a particular spread but not on how to quickly estimate its max profit and more importantly: its probability of success.
Stepping Up Your Game
But you are in luck! Determined to remedy this situation once and for all I spent the past three months quarantined in my Spanish lair working on my new Options 201 course.  It not only teaches you how to trade basic spreads – but more importantly establishes a paradigm, a mental framework, that will accompany and guide you for the remainder of your trading career.
You may also be happy to learn that I have devoted a full three episodes of my course exclusively to a deep dive on trading calendar spreads. That is how important they are – or at least I think they should be – to the arsenal of any self respecting options trader. I truly consider it my best work yet and only until midnight today (Monday, May 11th) my loyal crew here at Evil Speculator gets it at a heavily discounted price.

What’s In The Box?

In this class, I cover some of the core fundamentals of vertical and calendar spreads which represent the basic building blocks of ALL other option strategies you will ever encounter, without exception. Everything you do in options is going to be based on, and will be comprised of, at least one of these two spreads.

Although you may have traded options for many years already, odds have it that you have never been taught basic probability calculations and spread tactics that form the basis of successful options trading.

Many of the techniques covered in this course, (e.g. box spreads) simply aren’t taught anymore, as most of the contemporary material focuses on strategies (e.g. butterflies, iron condors, ratio spreads, etc.) and not on the underlying concepts and the structure of option spreads.

Until now! This is your opportunity to learn how to trade spreads ‘the right way’ and to elevate your option trading to the next level. Even if you are an experienced options trader I guarantee you that you will have learned something new after having watched this course.

Once you understand the basics of trading options spreads from a probability perspective, and of course assuming you can get your head trash out of the way, this course will completely change the game for you.

This is not brain surgery or rocket science. Successful trading comes down to this:

  1. Knowing the probability of success when selecting your option spread.
  2. Knowing the risk to reward ratio.
  3. Maximizing #1 and #2 through by selecting the proper spread.

Options and by extension option spreads have risk baked right into them by default. There is no difference between perceived risk and the premium you see in front of you.

Since the introduction of additional weekly expirations in 2016 option markets have become extremely efficient  and thus more predictable. Which makes trading options easier IF you know what you are doing, what to look for, and of course understand how price and risk are intimately correlated.

In this Options 201 class, I cover a laundry list of fundamental topics related to trading spreads:

  • Why you should never buy a naked option and why buying a spread is the better ans more profitable! choice in 99% of all cases. Yes, I back it all up with numbers.
  • Why risk equals volatility, which in turn equals price. You will never think about trading options the same way again.
  • How to calculate your max loss and profit potential instantly without the use of complex tools. For beginning and new spread traders, this will change the game for you.
  • Why the risk graph in your trading platform is pure science fiction and how to more realistically estimate the risk you take on which each spread you trade.
  • The difference between credit spreads and debit spreads and why they are merely two sides of the very same coin.
  • The box spread – an integral concept in trading options that over 90% of retail traders have never even heard about. It’ll be your epiphany moment that on its own is worth the price you paid for this course.
  • How to calculate the probability of your options spread. It’s amazing how many option traders have been active in the market for years on end and still don’t know how to quickly and efficiently calculate the probability of an option spread. I’ll fix that for you.
  • The basics of time decay and why it means everything when it comes to trading options. I’ll be doing a real deep dive with you here and you will walk away with a thorough understanding of how time value (a.k.a. theta or extrinsic value) affects the price of an option throughout its lifetime.
  • How to use calendar spreads to make time (extrinsic) value work FOR you as opposed to AGAINST you. Of course I also show you how to maximize your profits when trading calendar spreads and why placing calendars is tantamount to playing a game of darts.
  • How to use the theoprice calculator in ThinkOrSwim to estimate the future value of a calendar spread. And then how to do the same without it, the way old school floor traders used to do it successfully for decades.

For a limited time I am happy to offer my loyal readers at Evil Speculator exclusive lifetime access to the course for only $97.

Yes, that’s right – for less than the price of one losing trade, you can level up your trading game forever. This offer is only valid until midnight today (Monday May 11th)  – after that it’s gone FOREVER. NO EXCEPTIONS!

It is information you will want to revisit over and over again until it all becomes second nature. Once you have the knowledge, nobody can ever take it away from you. It’s yours to keep, forever.

Still on the fence? Well if all that didn’t convince you yet – then here’s episode 1 absolutely FREE to whet your appetite:

You know what to do:

Months of hard work culminated in the most thorough introduction to trading options spreads you are going to find.

So get off the damn fence and buy it now!

Sign up here to receive my FREE early morning briefing:

About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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