Trading Stock Options
Now is the time for you to start trading stock options. Save time by subscribing to the premier (and yet inexpensive) option screening service provided by Dr. William Moellmer & Dr. Theron Miller of American Option Trader LLC. We will recommend approximately 5-15 options each month along with their underlying stock symbols. We will also suggest when may want to close your position.
When you subscribe to American Option Traders' daily email service, you will receive simple and understandable suggestions for trading specific stock options. Your daily picks will be received after the close of today's bell. You evaluate and analyze all recommended entry and exit picks this evening and then, if appropriate, place your order first thing in the morning. Here is an example of a typical email.
Start of Email Example
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| Greetings from American Option Trader LLC | ||||||||
| These computer generated picks & exits do NOT include an analysis of news and closeness to earnings report dates. | ||||||||
| Always check charts and do your own research and analysis before entering or exiting any position! | ||||||||
| (1) We always open a position (based upon our algorithm) at least six weeks (as a minimum) before the expiration date. | ||||||||
| (2) We always open a position one step into the money and with a delta of approximately 0.60. | ||||||||
| (3) We may not enter a position if today's open is below yesterday's low (calls). We will watch it, and then buy. | ||||||||
| (4) We will probably exit when the CCI hooks over and the stochastic is above 50. | ||||||||
| Possible Opportunities for Stock and Option Trading for Next Day's Trading | ||||||||
| Updated on: | Saturday | 04-Apr-09 | 8:45 AM | Mountain Time | ||||
| Next Trading Day/Date: | Monday | 06-Apr-09 | ||||||
| Note: *Approx. Profit calculated on close price after the day's close. | ||||||||
| Stock Symbol | AOT Strategy | Stock Action | Call Option Action | Put Option Action | Option Chain | *Approx. Profit [1 Contract] | Date Closed | |
| LLY | LONG | Buy | OPEN Position | http://finance.yahoo.com/q/op?s=LLY | 4/3/09 | |||
| SPG | LONG | Sell | CLOSE Position | http://finance.yahoo.com/q/op?s=SPG | $363.52 | 4/3/09 | ||
| TEG | SHORT | Sell Short | OPEN Position | http://finance.yahoo.com/q/op?s=TEG | 4/3/09 | |||
| UPS | SHORT | Buy to Cover | CLOSE Position | http://finance.yahoo.com/q/op?s=UPS | -$7.68 | 4/3/09 | ||
William O. Moellmer, Ph.D.
william.moellmer@gmail.com
http://AmericanOptionTrader.com
End of Example--------------------------------------------------------
As to the question "Will I make any money?" you be the judge.
Here is a recent summary of backtesting results for the time period indicated.
| BACKTESTING RESULTS FOR : | 10/05/09 | Thru | 10/23/09 | Entry Calculated on Day's Close | ||||||||||||||||||
| Strategy & Other Information: | Number of Hits that Closed During this Period | % of Total | Total $ Option Profit | % Winners | Number of Positive Trades | Number of Negative Trades | Average $ Profit Per Positive Trade: | Average $ (Loss) Per Negative Trade: | Average $ Profit Per Trade: | |||||||||||||
| Closed Normal Option Calls [Long] | 30 | 93.8% | 5,936.64 | 90.0% | 27 | 3 | $228.86 | -$80.85 | $197.89 | |||||||||||||
| Closed Normal Option Puts [Short] | 2 | 6.3% | 94.72 | 50.0% | 1 | 1 | $103.68 | -$8.96 | $47.36 | |||||||||||||
| Contracts Purchased this Period: | 26 | Backtesting Assumptions: | Strategy: | Current AOT Client | ||||||||||||||||||
| Contracts Closed this Period: | 32 | Total Contracts per Trade: 1 (100 Option Shares) | ||||||||||||||||||||
| Total Closed Option Profit: | $6,031.36 | Includes all options closed this time period (Including purchases from previous month). | ||||||||||||||||||||
| Cost per Contract: * | $478.42 | Option Delta = 0.64 (Based upon the DOW 30, March 14, 2008, One Step into the Money) | ||||||||||||||||||||
| $ Profit per Contract: | $188.48 | * Estimated Option Cost = Entry Stock Price * 0.064 + 1.0813 [R2 = 0.53] | ||||||||||||||||||||
| % Gain per Contract: | 39.4% | (Based upon the DOW 30, March 14, 2008, One Step into the Money) | ||||||||||||||||||||
| Annualized Gain: | 866.7% | |||||||||||||||||||||
| Total Number of Positive Trades: | 28 | Catastrophic Stop Loss: $500.00 | ||||||||||||||||||||
| Percent Positive Trades: | 87.5% | |||||||||||||||||||||
| Est. Average $ Profit Per Pos. Contract: | $224.39 | Summary Statistics | ||||||||||||||||||||
| Total Number of Negative Trades: | 4 | Percent Positive Trades: | 87.5% | |||||||||||||||||||
| Percent Negative Trades: | 12.5% | Positions Closed: | 32 | |||||||||||||||||||
| Est. Average $ (Loss) Per Neg. Contract: | ($62.88) | $ Profit per Contract: | $188.48 | |||||||||||||||||||
| Approx. Closed Trades per Month: | 53.3 | Total Profit this Period: | $6,031.36 | |||||||||||||||||||
These results assume the trades were executed @ the closing bell on the day of the pick.
See detailed Historical Results.
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No long term contracts.
Our proprietary algorithms were developed by two Ph.D.s. who love statistics and love to trade stock options.
Cheers!!
The team at: American Option Trader LLC