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Trading Strategies for Impending

Volatile Marketswith Don Kaufman

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Risk Disclosure• We Are Not Financial Advisors or a Broker/Dealer: Neither TheoTrade® nor any of its officers, employees, representatives, agents, or independent contractors are, in such capacities, licensed financial advisors, registered investment advisers, or registered broker-dealers. TheoTrade ® does not provide investment or financial advice or make investment recommendations, nor is it in the business of transacting trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation. Nothing contained in this communication constitutes a solicitation, recommendation, promotion, endorsement, or offer by TheoTrade ® of any particular security, transaction, or investment.• Securities Used as Examples: The security used in this example is used for illustrative purposes only. TheoTrade ® is not recommending that you buy or sell this security. Past performance shown in examples may not be indicative of future performance.• Return on Investment “ROI” Examples: The security used in this example is for illustrative purposes only. The calculation used to determine the return on investment “ROI” does not include the number of trades, commissions, or any other factors used to determine ROI. The ROI calculation measures the profitability of investment and, as such, there are alternate methods to calculate/express it. All information provided are for educational purposes only and does not imply, express, or guarantee future returns. Past performance shown in examples may not be indicative of future performance.• Investing Risk: Trading securities can involve high risk and the loss of any funds invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon, or risk tolerance.• Options Trading Risk: Options trading is generally more complex than stock trading and may not be suitable for some investors. Granting options and some other options strategies can result in the loss of more than the original amount invested. Before trading options, a person should review the document Characteristics and Risks of Standardized Options, available from your broker or any exchange on which options are traded.• No part of this presentation may be copied, recorded, or rebroadcast in any form without the prior written consent of TheoTrade ®.• No Soliciting. No Recording. No Photography.

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Copyright DisclaimerAll rights reserved. This Material may not be reproduced or distributed, in

whole or in part, without prior written permission of TheoTrade, LLC. Any

other reproduction or distribution, in whatever form and by whatever media,

is expressly prohibited without the prior written consent of TheoTrade, LLC.

For further information, please contact:

TheoTrade, LLC

16427 N. Scottsdale Rd. # 410

Telephone: 1-800-256-8876

Email: [email protected]

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http://www.finra.org/investors/day-trading-margin-requirements-know-rules

mailto:[email protected]

Don Kaufman

➢ Co-Founder and Lead Instructor at TheoTrade

➢ Industry-leading options strategist

➢ Derivatives Risk Manager

➢ 20 year trading career

➢ 18 years of thinkorswim® platform experience

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About TheoTrade• TheoTrade Specializes in education for options, futures, and stocks.

• Founded by professional traders and trading educators each with a

minimum of 15 years experience, several with many decades

• TheoTrade is here to help you mitigate the risks in the market, while

learning a skill set that can last a lifetime.

7© Copyright 2018 TheoTrade, LLC. All Rights Reserved

Your TheoTrade Instructors

• Jeff Bierman – Analyst, Trader, & Former Chief Technician for TD Ameritrade

• Matt Williamson – market neutral/premium selling options strategist

• Corey Rosenbloom – Senior Strategist & Swing Trader

• Brandon Chapman CMT– Macro Economics, Technicals and Fundamentals

• Steve “Slim” Miller - 43 year veteran stock, options, futures trader

• Tony Rago - Nasdaq Futures and Intraday Strategist

Monkeys Throwing Darts

• The last 10 years monkeys throwing darts made

money…

• However, moving forward you will need a

definitive skill set.

• What we intend to do tonight is introduce you to

the skills and more importantly the criteria

needed to thrive in markets.

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All Good FED things MUST come to an END

• Starting in 2018 the Federal Reserve is effectively departing the

marketplace and will commence contracting the 4.5 trillion dollar balance

sheet.

• As FED capital declines, interest rates will increase… investors and traders

will be forced to unwind positions in countless marketplaces.

• In effect, as the Fed pulls away the “punch bowl“ capital markets will

become increasingly volatile.

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The writing is on the Wall… literally!• The FED will continue to raise rates and contract the balance sheet, Central Banks

around the world have already started to follow suit.

• Moving forward you need to be fully aware the FED no longer has your back!

• It is time to get back to SELLING Options Premium as increases in volatility are

forthcoming.


Higher Interest Rates Produce Volatility • In a higher interest rate environment the following are relevant:

➢Cost to finance positions for major trading firms increases substantially, the cost of carry for net positions makes firms contract capital from markets.

➢Stock buy backs become less viable as firms can no longer borrow capital at rock-bottom rates in order to purchase their own stock.

➢Fixed income once again becomes appetizing as being paid 4% on capital looks excellent compared to the last decade!

➢Consumer debt becomes a burden, as rates increase so do defaults.

➢Housing valuations slow or decrease, the ability to borrow against equity within the home stalls.

➢Car sales faulter, zero-percent loans are drying up, and discounts are getting hard to find as automakers preserve profits.



Fixed income once again becomes appetizing .


Consumer debt becomes a burden, as rates increase so do defaults.


Housing valuations slow or decrease, the ability to borrow against equity within the home stalls.


Housing valuations slow or decrease, the ability to borrow against equity within the

home stalls.


Car sales faulter, zero-percent loans are drying up, and discounts are getting hard to find as

automakers preserve profits.

Do NOT Flush Your Money

• You need to be smarter than your competition!

• You need to learn skills that can profit from

volatile markets!


Today we will discover a non-directional

trade logic you can use in order to profit

from stock, index, or ETF volatility without

taking on drastic risks!


Learning to SELL Options• Many have heard through the grapevine “selling options” is the way to

make money…

• Well if you have experimented with selling options you know full well there

is definitely RISK involved.

• Today’s session will separate the myths from the real risks and the fact

from the fiction in selling options premium.

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Don’t Panic, You Can Do This

• You may know NOTHING about options and that is ok for

today’s session!

• For starters, look to grasp the big concepts regarding

probability and risk. So let’s dive right in…

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Probability and Profitability

• Your trading is based on probability.

• You and I can create trades all day long with a 90%

probability of success and still lose money.

• Probability alone does NOT make you profitable.

Remember that!

Markets Are a Trade Off

• Markets are a series of trade offs.

• Higher probability equals Higher RISK!

• You can be right 90% of the time and still lose money!

• So where can I find an edge?

• That's what you here for right? Great, then get ready because

I’m about to show you something very important:

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Premium Selling Logic!

100

If the stock expires

below the short

strike, you keep the

credit.

Selling Out of the Money Options100

Sell 110 call for 1.50 credit

If the stock expires

below the short

strike, you keep the

credit.

High Probability Credit Spread100

Sell 110 call for 1.50 credit

Buy 115 call for .50 debit

Selling 110 call

Buying 115 call

Net Credit $1.00

Maximum Risk $4.00

80% probability and the 20% hammer• 80% sounds great but 20% of the time the market “rips your face off”.

• When you trade high probability strategies and you’re wrong, you get

hammered.

• And the market is just evil enough to allow you to make money 3 or 4

times, you increase contract size…then…

• Train wreck! Your losses exceed the gains on the previous 3 trades.

• I know…I know it’s like I can see your account. Well for the previous 15

years, I could ☺

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I Can Fix It, I Know I Can Fix It...

• Fix is a really dirty word in trading.

• 15 years in the brokerage business has made me a bit

cynical regarding good trades gone bad.

• Any time you are fixing a trade you are adding more risk to an

already losing trade and racking up transaction costs.

• Yes some “fixes” may work but the very notion of fixing a

trade throws good capital after bad.

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Yesterday’s Trash

• Take a car drive it off a cliff and bring it to a body shop.

The body shop will tell you the same thing about the car

that I am going to say about your losing trade. It’s a piece

of junk, let it go.

• Do it right…learn how to correct good POSITIONS gone

bad!

Selling Premium the RIGHT WAY!

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Fear NOT Selling Premium!• You may not know options OR have limited experience in placing options trades.

• DO NOT let options intimidate you! You need these strategies for the forseeable

market future!

• We can show you HOW and WHEN to place these trades in a matter of a few hours.

• TheoTrade creates detailed recipes for every strategy including Selling Premium.

• You would not bake a cake without a recipe, so why trade without one?


The logic we discussed today is how

some of the most successful firms on

the street sell premium and manage

their collective risks.


This is what you need to know to

successfully “Sell Premium and

Manage Risk”…


What makes a viable premium selling

candidate?


What volatility should I seek out?


What options Expirations do I select?


What should be the delta of the option

I sell?


What options do I sell against my

position?


How do I roll my options and manage

the risk ?


What is the right amount of risk for ME?


THEOTRADE RECIPES IN TRADING

Criteria… it’s what we at TheoTrade do!


Trading is about Answering the What Ifs

• What might be a good stock or ETF candidate for a short position?

• What is the correct options expiration cycle to buy put?

• How much capital do I commit to these positions?

• What Strike Price Options do I sell and how many?

• What Strike Price Options do I buy?


We Build Recipes with definitive criteria

and checklists for each strategy and each

unique variable you will encounter.


TheoTrade Has Your Answers

How, When, Why, at What Price?

This is just the beginning of the many variables you will face

while Selling Premium and Minimizing Risk!


The Secret is in the Sauce• Now you may be thinking…hey I can read about this strategy anywhere and can do

this; well think again…

• The following strategy and corresponding criteria requires the utmost attention to

detail.

• We spent YEARS fine tuning this trade setup and criteria, when we approach the

section on criteria FOLLOW the STEPS to build a trade!

•Here is how YOU can Selling Premium and Minimize Risk…


Selling Premium and Minimize Risk

Workshop Curriculum• The logic behind selling premium so you understand why these trades

work right now

• How to build an options inventory so you spread your risk across products

and time

• A professional trader's guide to capital allocation so you know exactly what

to risk at all times

• The Greeks demystified so you know how to use the Greeks to maximize

your returns and minimize your risk

• The key to all long term traders is risk management. If you understand

how to manage your risk you will thrive in the markets.

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• Trade Instructor: Don Kaufman

• 4 hour course is available immediately with 24/7 access

• Class slide deck that includes entry and exit criteria checklist available immediately for download.

$297

*Class qualifies you for a reduced commissions rate*


You’ve been there done that…• Many of you tuning in have been through the gauntlet of paid classes, indicators,

secret squirrel black boxes and more…

• Only to find… just BUY this one last thing to make all the difference? But wait

there is more!

• We at TheoTRADE have had enough of the educational garbage and sales pitches

and we intend to put and end to it!


Disrupt Financial Education!• TheoTRADE is built by professional traders with a minimum of 15 years

experience, not professional salespeople.

• Educating you is our ONLY goal and we will demonstrate it.

• Today we shall forever change the way you view education…

Introducing TotalTheo® Unlimited Streaming

Monthly Membership!


TotalTheo Unlimited ONLY $99 per month

• How to Selling Premium and Minimize Risk is INCLUDED in the TotalTheo®

Unlimited Monthly Streaming Membership

• ACCESS to OVER 75 Trading Classes! ALL available immediately On-Demand

• New Monthly Classes

• Live Trading Chat Room: Traders Provide Real Trade Ideas and Real-Time Market

Insights and Analysis– broadcasting live 6 hours per day.

• Indicators – 59 proprietary indicators and scans.

• Emailed Trade Ideas

• Daily Coaching Sessions with Timely Topics on Stocks, Options and Futures

• Instructors directly answer your trading questions via email!

TheoTrade.com/all


What Members are Saying:

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It’s As If We Are Giving You $200, Take The Money


$297 one time fee

✓ Selling Premium and Minimize Risk

TotalTheo® Unlimited Streaming

$99 per month

✓ Selling Premium and Managing Risk

✓ Over 75 classes

✓ New monthly classes

✓ Daily live trading and chat room

✓ Archived 24/7

✓ Emailed trade ideas

✓ Trading indicators and scans

✓ Daily coaching sessions


TheoTrade.com/all


What Members are Saying:

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live @ 7:00 pm central time - theo trade...your theotrade instructors •jeff bierman –analyst,...

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