Frequently Asked Questions
How often should I trade?
That depends upon you. How active do you want to be? It depends again how financially agressive you want to be. You can choose to be in only one position at a time or multiple positions. It is entirely up to you. How large is your bank roll? When you look at the historical data for a month and you want to trade on every pick potential it can be large. On the other had, if you only want to have only one position open at a time, you can be selective on which option to acquire. Again, it is strictly up to you.
I've never traded options.
Many of our subscribers start with little or no experience trading options. That's OK. Check out the procedures to trade options with your broker.
Nevertheless, we provide potential exits/picks that have passed through our proprietory filters. You should receive from one to 15 exits/picks per day to evaluate. We strongly recommend paper trading and educating yourself on procedures to the point where you feel comfortable before ever actually making a "real" trade.
When are new potential trades or exits posted on the website?
We evaluate the entire Standard and Poors 500 and the NASDAQ100 on a daily basis after the market closes. These 544 stocks are tested using our two proprietory indicators after the close of each trading day and the potential exits and picks are posted on our website by 8:00 pm Eastern Time . Our subscribers check our website prior to tomorrow's or next day's trading to get potential trading opportunities. The market gives continuing new opportunities for short term swing trades on a daily basis. We act on it and so will you when you become a subscriber.
Will I be notified of new potential trades or exits?
Our entry & exit picks can be viewed on our website with a login and password.
We do not send emails.
What kind of online brokerage account do I need?
Choose an online brokerage has the capability for you to do options. We stress that you check prices. The cost of the commission can kill you. Check with and negotiate with Interactive Brokers or Ameritrade. Moellmer likes Ameritrade. Miller likes InterActive Brokers.
How large a brokerage account do I need?
Anywhere from $2,000 is enough. Some clients start with as little as $500. Remember, the average cost of an option contract with a 0.6 delta is $450. Even if you are someone with a smaller account, you can still take advantage trading options. It doesn't matter how large your account size is at the beginning....it is the summary of the gain on each trade that counts!
What is the average holding period for the positions?
It really depends on the trade and the market conditions. A majority of the time the holding period would be about 10 days. We always exit at 22 days no matter what. But if the market gives us our exit point in a day or two, we take it and go on to the next trade.
Do I need real-time stock and option quotes?
Yes and No. We are end of day swing traders. By using the potential entry and exit and picks we provide, we hope we are removing a majority of the emotion out of your trading. We preach caution in saying, "I think that it will go just a little bit higher tomorrow after get the exit signal." Bill likes to take the raw statistics and trade early in the morning. Theron, on the other hand, likes to play the daily charts a bit. In that case you need real time quotes.
How do we know when to exit a trade?
We wait for the exit signal as indicated on the website or 22 days; or, if we get "antsy", we will take the profit or loss and go off to the next trade.
What are the disadvantages of your strategy?
You must be willing to take some losses and not loose your nerve. Look at the historicals and ask yourself if you got into a trade, how would you do? When you start to see a big loss that probably will not recover, it is a killer to hang in there for a turn around --- which may occurs. If not, you will loose approximately 85% your $450.00 contract.
Are there only certain market conditions that your system works?
No, not really. Going long, taking the "dead cat bounce" or the "dead cat richochet/bounce" covers both the calls and puts.
Do I need to be at my computer during market hours?
No. Our entry & exit picks will be sent out after the market closes prior to 8:00 pm Eastern Time. You could make your decision on which options to purchase and place a limit order and go to bed. Or, get up in the morning and watch the early market conditions and then act. It is a matter of each of our personal preferences.
Talk to me about "going naked".
This is something that we do not do. It is too risky. Essentially, you offer stock that you don't own through an option that you create. Our trading strategy is buy and sell the options themselves.
Talk to me about Covered Calls.
Nothing wrong with covered calls. You must own the stock to do it. Our cup of tea is to just trade the options themselves.
How do I cancel my subscription?
Send an email to william.moellmer@gmail.com and you will be removed from our membership and financial databases immediately. This information is not archived, so you will have to sign up again when you return. There are no prorations.
Also, to learn about options, we have found that one of the best websites is:
http://888options.com
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The Team at American Option Trader LLC