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On Sept 16,
I uploaded
How to do a
RISKLESS
“BEAR
CALL
SPREAD”
…a spread opened 8/31 that
expires 9/30, with NO risk…
SELL TO OPEN $77.50: $2.10
BUY TO OPEN $80.00: -$1.10
TOTAL CREDIT:...
There’s no capital risk to the
spread because we nested
it within a “Married Put”…
GILD stock 100 shares $75.70
November $...
In the 9/16
SlideShare we
explained that
COMBINING
these trades…
removed risk
from both sides!
The $100 income received for doing a Bear
Call Spread… takes the risk of the Married
Put down from $200 to $100. Meanwhile...
Okay, now you’re all caught up. Yesterday (9/20)
GILD was trading around $81.50. I sent an email
to subscribers about THIS...
The GILD shares were from
earlier. The next three lines
were entered on 8/31/16:
This second put option was
added yesterda...
The result is a BULLETPROOF
position, with infinite potential:
Worst case is $119 profit if GILD is
at trading at $80 on 9/30...
Best case is
more profit if
GILD goes
up…
OR more
profits if
GILD
decides to
go down!!
This is what
we call
“BULLETPROOF”
Watch along with me and see how it goes…
This SlideShare was uploaded on Sept 21, 2016
two weeks in advance of the Sept 30...
To learn more about Riskless Spread
Trading (and Bulletproofing!)…
…check out these articles on the
RadioActive Trading Blog!
Yes, you can Click these Links!
• Can You REALLY Do a RISKLESS ...
Upcoming SlideShare
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"Riskless" Spread Trade Followup, 9/21

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ON Aug 31, 2016 I asserted that it's possible to do a bear call spread without risk. That was in a blog post on blog.radioactivetrading.com. ON Sep 16 the SlideShare revealing the details was published.

Now, more than a week before the spread expires, the net position is "Bulletproof", meaning that it's no longer possible to lose money, but we'd be happy if the stock goes up OR down.

Check out these slides and see what you think.

Published in: Economy & Finance
  • P.S. For all of you reading this I am a marriage and family therapist (Allred Family Therapy) and am not a part of this organization. Just so you know this is not them faking these posts...
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  • I see - So the piece of the puzzle I was missing was the "sell to close" of the PUTs early which reduces the cost of buying the PUTs... That is wonderful... Is there any software you have that helps to make all of these calculations??? I am pretty good but can always make mistakes when doing it by hand... I am very interested... That is a wonderful strategy as it protects you in either direction and even when it is stationary... Love it I can see it now... Software???
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  • @Sean Allred So here's a simpler way to explain all the goings-on. The "bear call spread" nets $1.00, while the short call obligates the sale of the stock at $77.50. That's $2.80 "to the good"... the $1.80 profit on the stock and the $1.00 from the spread. NOW, we need to consider what happens to the two puts. One was purchased at $3.80, the other purchased (when the stock was higher) at only $1.97. The trade ENDS this Friday... I won't be holding the puts all the way to November expiry; the whole thing ends Friday. NOW... the puts are presently (9/27) trading around $2.60 apiece. That's with GILD around $80 now. Say it's only $2.50, $2.40 this Friday... the total $5.77 for both puts is liquidated for $4.80... a loss of about $100 but it's countered by the gains! $80 is indeed the worst scenario but we're still making bank. If the stock goes higher or lower, we do even better. This is the value of bulletproofing :-)
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  • @Sean Allred Thanks for your post!
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  • OK... Perhaps I am missing something but it seems like your calculations are off... I will try and explain... If the stock ends at $80 then I am showing a loss... Here is how I see that the trade would happen... Stock purchase (cost): $75.70... First Buy Put (cost): $3.80 - not exercised... Second Buy Put (cost): $1.97 - not exercised... Total cost is stock stays at $80: $81.47 (meaning you paid $5.77 just to hold on to a stock and lost the gain up to $80 ($4.30) but you are protected if it drops... Now there was also - Buy Call (cost): $1.10 - Increasing cost to $6.87 (we could exercise and buy stock at $80 which is no change but you still own the stock) and Sell Call (gain): $2.10 - Plus it would be exercised and you would sell the stock and make a profit of $2 - decreasing cost to $2.77 but wouldn't own stock unless you exercised your Buy Call option to buy it at $80 plus the cost of all of this $2.77... Meaning you had a stock you bought for $75.70 and now it cost you $82.77 without any gains... Please let me know how I am wrong I would love this to work...
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"Riskless" Spread Trade Followup, 9/21

  1. 1. On Sept 16, I uploaded How to do a RISKLESS “BEAR CALL SPREAD”
  2. 2. …a spread opened 8/31 that expires 9/30, with NO risk… SELL TO OPEN $77.50: $2.10 BUY TO OPEN $80.00: -$1.10 TOTAL CREDIT: +$1.00
  3. 3. There’s no capital risk to the spread because we nested it within a “Married Put”… GILD stock 100 shares $75.70 November $77.50 put +$ 3.80 TOTAL INVESTMENT $79.50 Protected by Put: -$77.50 Total Amount AT RISK $ 2.00 (per share; risk of 100 shares is $200)
  4. 4. In the 9/16 SlideShare we explained that COMBINING these trades… removed risk from both sides!
  5. 5. The $100 income received for doing a Bear Call Spread… takes the risk of the Married Put down from $200 to $100. Meanwhile, There’s capital NO risk from the spread!
  6. 6. Okay, now you’re all caught up. Yesterday (9/20) GILD was trading around $81.50. I sent an email to subscribers about THIS move…
  7. 7. The GILD shares were from earlier. The next three lines were entered on 8/31/16: This second put option was added yesterday (9/20/16) ..!
  8. 8. The result is a BULLETPROOF position, with infinite potential:
  9. 9. Worst case is $119 profit if GILD is at trading at $80 on 9/30...
  10. 10. Best case is more profit if GILD goes up…
  11. 11. OR more profits if GILD decides to go down!!
  12. 12. This is what we call “BULLETPROOF”
  13. 13. Watch along with me and see how it goes… This SlideShare was uploaded on Sept 21, 2016 two weeks in advance of the Sept 30, 2016 expiry of the Bear Call Spread. Whether the goes down, up, or sideways, the Bear Call Spread itself poses no capital risk. Watch for the followup SlideShare to see how this real example is managed!
  14. 14. To learn more about Riskless Spread Trading (and Bulletproofing!)…
  15. 15. …check out these articles on the RadioActive Trading Blog! Yes, you can Click these Links! • Can You REALLY Do a RISKLESS Spread Trade? • WHAT on Earth is a Nested Spread Trade? • The Strange Secret of Riskless Spread Trading • The RISKLESS Spread Trade that Pays You TWICE OR! Get this two hour video on SEVEN different riskless spread trades “Stop Losing at Spread Trades Forever”!

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