Thurs. Jan. 31: Introduction To Credit Spreads

John Marsland will give an Introduction To Credit Spreads.  That is the subject of a new book he is writing, so he is very focused on techniques for explaining this subject.

This talk will be accessible even to those with limited background in options.

(A credit spread is an options combination placed to give an initial cash credit to your account, often used as part of an income strategy).

John's previous talk on Trading Iron Condors on RUT was very popular, but John felt that some of the audience was not fully following the ideas completely.  He wants to go back this time and focus on making credit spreads crystal clear, even for beginners.

Credit spreads can be used to achieve weekly, or monthly income. They can also be used as a multi-month trade.

In this presentation John will cover:

-The Insurance Agent Trade

-Put Credit Spreads in an uptrend

-Call Credit Spreads in a downtrendB

-A Brief look at Iron Condors

-Easy technical analysis

-Deciding how and when to place the right trade

John is a forceful, clear, interactive, and patient educator, and I am confident that this talk will be very worthwhile for anyone who has any doubts about fully understanding options and credit spreads.  John is one of the clearest educationally-oriented speakers we have ever had, or for that matter that I have heard elsewhere.

We will be moving on in later meetings to some more advanced option topics, including volatility arbitrage, futures options, delta-hedged ratio trades to exploit skew, testing of option system strategies, problems with adjustments, and combining a trend following approach with volatility trading.  We already have a speaker ready for some of those topics.

But first, this month, we want to do a "level set" to get everybody up to speed on the fundamentals of options trading. So please try to make it if you might use some help in moving forward with options, and then you will get a lot more out of our later meetings.

John will talk for about an hour and a quarter, including lots of interaction.

Later on in the second hour, we would like to ask some of our other expert traders to add their own insights and comments, possibly taking a few minutes each where needed, and John will comment back.  We may have a two-way discussion on risk and model adequacy issues, for example.

John Marsland is a member of our group who works and has worked in the RTP at Cisco, and formerly IBM, as a Marketing Manager, Executive Communications Manager, Business Development Manager, and Product Manager, having originally graduated from NCSU in Electrical Engineering.

For the past several years, he has been building his retirement nest egg using option spreads.

John is now one of the Coaches at Market Tamer , teaching several classes on options trading each month. He also provides trading and investing ideas and education through his own web site, Wealth Direction.  He is the author of the recent e-book, Fiscal Cliff Investing .

The talk is free and open to all, preferably with RSVP, but we have the full combined room space, so you can come and bring or send friends even without RSVP if need be.

Afterwards, Dave W. will be organizing an informal get together at the nearby Village Draft House - all welcome and everyone on their own tab!

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  • Rik R.

    Good evening. Enjoyed the discussion.

    February 1, 2013

  • Mike M.

    Thank you for putting this session together. John’s presentation was well done! I also enjoyed the information shared by other experienced traders.

    February 1, 2013

  • Colleen

    Wonderful presentation!

    January 31, 2013

  • Ron R

    Excellent presentation. John is an outstanding instructor with a solid grasp of his subject.

    January 31, 2013

  • Dave

    We will be going to Village draft house after the meeting around 9 PM

    January 31, 2013

  • Don B.

    Thanks Brian.

    Another absolutely outstanding article on this very same subject is in the February 2013 edition of Active Trader magazine.

    It is "The variance Premium" by famed options author Euan Sinclair (author of "Volatility Trading")

    A brief summary is at http://www.activetradermag.com/index.php/c/Trading_Strategies/d/The_variance_premium

    and people can read the whole (4 page) article free by reading it while visiting Barnes and Noble. It is current on the stands in the Cary store, and probably all B&N stores. I just read it there.

    He gives some very simple trades and rules. I recommend that anyone who can read the article in the store if not elsewhere.

    Is this risky? Yes, so always be careful and skeptical! Some of us will have more to say about the risks in the meeting.

    January 24, 2013

    • Brian J.

      Don, I found the variance premium article to be excellent as well. It also makes a strong case for the advantages of selling premium (64% CAR and Sharpe ratio of 1.14), but it also explains the risks - which are significant (32.9% drawdowns). There are a number of other premium selling strategies that require far less risk. Brian Johnson www.TraderEdge.Net

      January 25, 2013

  • Brian J.

    I wrote an article on credit spreads titled “The Science of Selling Options” that appeared in the September 2012 issue of Active Trader magazine. The article relates specifically to selling out-of-the-money credit spreads, which would make it an excellent primer for John’s presentation on January 31.

    The article is now available for download on the Active Trader website. If you missed the September 2012 issue and are interested in reading the article, please follow the link below. The cost of the article is $4.25 and all proceeds go to Active Trader.

    http://store.activetradermag.com/brianjohnson.aspx Brian Johnson
    www.TraderEdge.Net

    January 24, 2013

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