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Using Street SmartsUsing Street SmartsTo Beat the Options GameTo Beat the Options Game

Presented by Rick AckermanPresented by Rick Ackermanofof

Rick’s PicksRick’s Picks

November 14, 2009November 14, 2009

www.rickackerman.comwww.rickackerman.com

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The early days…The early days…

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……and let’s not forget and let’s not forget Patrick McDonaldPatrick McDonald

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Rick’s Counterintuitive RulesRick’s Counterintuitive Rules

Buy out-of-the-moneysBuy out-of-the-moneys

Stick with the nearest expirationStick with the nearest expiration

Trade the openings (when rape is legal)Trade the openings (when rape is legal)

Cut your profits shortCut your profits short

Never pay the offerNever pay the offer

Buy premium when it’s sky-highBuy premium when it’s sky-high

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Buy Out-of-the-MoneysBuy Out-of-the-Moneys

Easy to quadruple your stakeEasy to quadruple your stake

50 of them cost bupkus50 of them cost bupkus

Explosive short-squeeze potentialExplosive short-squeeze potential

Scale-out exits are a breezeScale-out exits are a breeze

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Stick with nearest monthStick with nearest month

Plenty of liquidityPlenty of liquidity

Time works against premium buyersTime works against premium buyers

Paying for time shows lack of confidencePaying for time shows lack of confidence

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Trade the OpeningsTrade the Openings

Best price of day if you’re with DaBoyzBest price of day if you’re with DaBoyz

Panics are meant to be enjoyedPanics are meant to be enjoyed

Better to be raper than rapeeBetter to be raper than rapee

Later in the day only gets tougherLater in the day only gets tougher

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Cut your profits shortCut your profits short

Four-day streaks are extremely rareFour-day streaks are extremely rare

Enjoy playing with the house’s moneyEnjoy playing with the house’s money

Savor your reduced costs basisSavor your reduced costs basis

Purge greed from your list of shortcomingsPurge greed from your list of shortcomings

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Never pay the offerNever pay the offer

Nickels and dimes separate out winnersNickels and dimes separate out winners

There will always be another opportunityThere will always be another opportunity

Risk:reward ratio is always paramountRisk:reward ratio is always paramount

Self-esteem!Self-esteem!

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Jump on sky-high premiumsJump on sky-high premiums

THEY really THEY really DODO know something know something

Short sellers are trappedShort sellers are trapped

Opens up great spreading opportunitiesOpens up great spreading opportunities

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Setting up a tradeSetting up a trade

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……begins with a stock,begins with a stock,a price targeta price target

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……and a technical system:and a technical system:

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

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1. Determine implied volatility1. Determine implied volatility of the option you plan to buy… of the option you plan to buy…

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2. Reconcile implied 2. Reconcile implied and real volatilitiesand real volatilities

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

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4. Finally, determine option price4. Finally, determine option price with stock trading at target with stock trading at target

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

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Step 1: Buy calls at right momentStep 1: Buy calls at right moment

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Step 2: Take partial profits earlyStep 2: Take partial profits early

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Step 3: Spread off remaining callsStep 3: Spread off remaining calls

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Featured at Featured at Rick’s PicksRick’s Picks

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