High gher er Vol olati atility ity Ma Market! t! Disclai - - PowerPoint PPT Presentation

▶
high gher er vol olati atility ity ma market t disclai
SMART_READER_LITE
LIVE PREVIEW

High gher er Vol olati atility ity Ma Market! t! Disclai - - PowerPoint PPT Presentation

Aug 29, 2022 519 likes •1.18k views

Trading ading In A High gher er Vol olati atility ity Ma Market! t! Disclai claimer mers Investin esting g Risks ks: The risk of loss from investing in securities (stocks, ETFs, mutual funds, etc.), bonds, options, futures, and

slide-1
SLIDE 1

Trading ading In A High gher er Vol

  • lati

atility ity Ma Market! t!

slide-2
SLIDE 2

Disclai claimer mers

Investin esting g Risks ks: The risk of loss from investing in securities (stocks, ETFs, mutual funds, etc.), bonds, options, futures, and forex or related products, can be substantial. Investors must consider all relevant risk factors, including their own personal financial situation, before investing. Investments in bonds and fixed income products are subject to various risks (including liquidity, interest rate, financial, and inflation risks) and special tax liabilities. Option ions s Risks ks: Options involve risk and are not suitable for everyone. Options Trading privileges are granted at the account level by your custodial broker and are subject to review and approval. Not all accountholders will qualify. Before trading options, a person must receive a copy of Characteristics and Risks of Standardized Options. Individuals should not enter into options transactions until they have read and understood the risk disclosure document, Characteristics and Risks of Standardized Options, which can be found on our website www.mscm.net. Copies may be

  • btained by contacting your broker or the Options Clearing Corporation.

Spreads, Straddles, Strangles, and other multi-leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return. These are advance option strategies and often involve greater risk, and more complex risk than basic options trades.

slide-3
SLIDE 3

Disclai claimer mers

Genera eral Discl closur

  • sures:

es: Any strategies discussed in this presentation, including examples using actual securities and price data, are strictly for illustrative and educational purposes only and are not to be construed as an endorsement, recommendation, or solicitation to buy or sell specific securities or strategies. Investors should carefully consider the investment objectives, risks, charges, and expenses before investing in any investment product. To obtain a prospectus containing this type of information as well as other important information, contact your custodial broker. Please read the prospectus carefully before investing. You should discuss any/all implications of investing in such products with your custodial broker, financial adviser/advisor, and/or tax advisor. Pa Past perfor

  • rma

mance nce is not

  • t indicat

cativ ive of future e results ts. Third d Pa Party Infor

  • rmati

mation:

  • n: This presentation may utilize or refer to third party data. In such a case, let it be known that

MSCM, LLC. does not control, nor has it developed the content being referred to, and does not make any warranty, express or implied, as to the accuracy, usefulness, timeliness or even the continued availability or existence of said information/content created or maintained by others. Opinions expressed by others are not necessarily those of MSCM, LLC., nor does MSCM, LLC. endorse, warrant, or guarantee products, services or information described or offered by such firms.

slide-4
SLIDE 4

A Litt ttle le Abo bout ut Me Me

  • 33+ Year Veteran of the trading and Financial Services Industry
  • Founder, Co-Founder and or Partner of:
  • 3 Investment Firms
  • 2 Onshore/Offshore Hedge Funds
  • 2 “40 Act” Mutual Funds
  • Been featured in numerous articles in the financial press including:
  • CNBC.com
  • InvestmentNews.com
  • Dow Jones Newswire
  • Euromoney Institutional Investor
  • Markets Media
  • And has been a regular featured guest on The Educated Investor

On CBS radio affiliate KRLD in Dallas.

  • Former President and Executive Board Member of the

Dallas Security Traders Association

  • Former Chairperson and Co-Chair of the Dallas Chapter of the

Market Technicians Association

slide-5
SLIDE 5

Trader/Investment Manager

jbeamer@mscm.net

slide-6
SLIDE 6

Wh Where ere Are re We e Tod

  • day
slide-7
SLIDE 7

Wh Where ere Are re We e Tod

  • day
slide-8
SLIDE 8

Wh Where ere Are re We e Tod

  • day
slide-9
SLIDE 9

Wh Where ere Are re We e Tod

  • day
slide-10
SLIDE 10

Fresh Idea’s - Lis ist t Bui uilding lding In n A High High Vol

  • lat

atility ility Ma Market

slide-11
SLIDE 11

Fresh Idea’s - Lis ist t Bui uilding lding In n A High High Vol

  • lat

atility ility Ma Market

slide-12
SLIDE 12

List t Bu Buildin lding g –

Thin ink Outsid side e of the e Box

http tp:/ ://ww /www.s .sect ctor

  • rspdr

dr.c .com

  • m/sect

/sector

  • rspd

spdr/ r/

slide-13
SLIDE 13

“Long” Opportunities

  • XLRE

RE - Real l Estat tate

  • AVB – Avalonbay
  • SPG – Simon Property

Grp

  • Honor
  • rable

ble Menti tions

  • ns
  • UGI – UGI Corp
  • WBA – Walgreens
  • USM – US Cellular
  • XLU - Utilities

ilities

  • NRG – NRG Energy
  • NEE – Nextera Energy
  • SO – Southern Company
  • XLV – Health

alth Care

  • ESRX – Express Scripts
  • PFE – Pfizer
  • MDT - Medtronic
slide-14
SLIDE 14

“Long” Opportunities

  • XLU

U - Uti tilities lities

  • NRG – NRG Energy
  • NEE – Nextera Energy
  • SO – Southern Company
slide-15
SLIDE 15
slide-16
SLIDE 16
slide-17
SLIDE 17
slide-18
SLIDE 18

“Long” Opportunities

  • XLV

V – Health alth Car are

  • ESRX – Express Scripts
  • PFE – Pfizer
  • MDT - Medtronic
slide-19
SLIDE 19
slide-20
SLIDE 20
slide-21
SLIDE 21
slide-22
SLIDE 22

“Long” Opportunities

  • XLRE

E - Rea eal l Es Esta tate

  • AVB – Avalonbay
  • SPG – Simon Property

Grp

slide-23
SLIDE 23
slide-24
SLIDE 24
slide-25
SLIDE 25

“Long” Opportunities

Hono norable rable Men entions tions

  • UGI – UGI Corp
  • WBA – Walgreens
  • USM – US Cellular
slide-26
SLIDE 26
slide-27
SLIDE 27
slide-28
SLIDE 28
slide-29
SLIDE 29

“Long” Opportunities

  • XLRE

RE - Real l Estat tate

  • AVB – Avalonbay
  • SPG – Simon Property

Grp

  • Honor
  • rable

ble Menti tions

  • ns
  • UGI – UGI Corp
  • WBA – Walgreens
  • USM – US Cellular
  • XLU - Utilities

ilities

  • NRG – NRG Energy
  • NEE – Nextera Energy
  • SO – Southern Company
  • XLV – Health

alth Care

  • ESRX – Express Scripts
  • PFE – Pfizer
  • MDT - Medtronic
slide-30
SLIDE 30

Shorti ting g Opp pportuni tuniti ties es

  • CLR – Continental Resources
  • DVN - Devon Energy
  • NOV – National Oilwell Varco
  • PDCE – PDC Energy Inc
  • SLB – Schlumberger Lt.
  • AIMT – Aimmune Therapeutics
  • IRC – Irhythm Tech
  • LOXO – Loxo Oncology
  • NP Neenah Paper
  • BPMC – Blueprint Medical
slide-31
SLIDE 31
slide-32
SLIDE 32
slide-33
SLIDE 33
slide-34
SLIDE 34
slide-35
SLIDE 35

A Ba Basic sic St Strat rategy gy to

  • Increase

ncrease Buy uying ing Power er

slide-36
SLIDE 36

The Poor Man’s Covered Call

  • A “Poor Man’s Covered Call” is a Long Call

Diagonal Spread that is used as a substitute for a Long Stock/Short Call (“Covered Call”) Position.

  • Your Directional Assumption is Bullish
  • Done in Low Implied Volatility Environments.
slide-37
SLIDE 37

PM PMCC C Di Diag agonal

  • nal Spreads:

eads: Thin ings s To

  • Kn

Know w

  • For a Passive Position - Consider Keeping Your

Debit Between 50%- 75% The Width Of The Spread

  • For a Dynamic Position - Calculate the

Opportunity of Eliminating the Long Options Extrinsic Value while profiting from Directional Moves

slide-38
SLIDE 38

PM PMCC C Di Diag agona

  • nal

l Spreads eads: Man anag agem ement ent

  • Market Moves In Your Direction? Adjust or Close
  • Market Moves Against You? Adjust or Close

It’s All About Time To Expiration

slide-39
SLIDE 39

A C A Com

  • mmo

mon n Sen ense A se Approach

  • ach
  • A PMCC/CP

P is is a g a grea eat alter ernati tive e to tradi ding a g a tradi dition ional l cover ered ed call l usin ing g stock ck.

  • In sm

smalle ler r accounts,

  • unts, this

is po posit itio ion can be us e used ed to sim imul ulat ate e a a covere ered d cal all l po posit ition ion wit ith les ess cap apit ital al and m d much ch les ess ris isk than an ac actual ual cover ered ed call. l.

slide-40
SLIDE 40

Also so Known wn As s A Poor Man’s Covered Call Poor Man’s Covered Put

slide-41
SLIDE 41

Beg egin b n by y us using ng any li y list st th that t con

  • nta

tains ins st stoc

  • cks

ks th that t me meets ets you

  • ur

r prog

  • gnosi

nosis

  • Movin

ing g Aver erage ge Crosso sover er

  • Lea

eadi ding ng S Sec ector

  • rs
  • An Impo

mported ed Lis ist

  • Any other

er di direc ecti tiona

  • nal

l lis ist

slide-42
SLIDE 42

Some e Ex Exam amples ples

slide-43
SLIDE 43

Let’s Do A Little Comparison Adob

  • be

e (ADBE) DBE) Ja Januar nuary y 2, 2018 18

Stock vs PMCC

slide-44
SLIDE 44

Adobe

  • be Systems

ems (A (ADBE BE) Jan anua uary y 2, 2018

slide-45
SLIDE 45

Compar mparison ison Ado dobe e (A (ADBE) E) January y 2, 2018 Buy Stock – 100 Shrs ADBE @ 177.70 = $17,700 Passive version PMCC - $3265 (x 5 = $16325) Active version PMCC - $3,206 (x 5 = $16,030)

slide-46
SLIDE 46

Let’s Discuss the Passive Version First

slide-47
SLIDE 47

ADBE E Buy Side e

slide-48
SLIDE 48

Sell ll Side e

slide-49
SLIDE 49
slide-50
SLIDE 50

At Ex t Expi piration ration

slide-51
SLIDE 51

Closing losing Pas Passiv ive Position ition Summ mmar ary April il 18, 18, 2018

  • Entry Debit - $2,643
  • Profit - $1017
  • ROR – 39%
  • (10.17% return per $10K)
  • Stock Position Return – 30%
slide-52
SLIDE 52

Pa Passiv ssive e PMCC CC Sum umma mary y

  • Stock moved quickly through short strike.
  • Potentially stuck in the position without additional profit potential.
  • A nice profit was achieved but could we have done better?
slide-53
SLIDE 53

Act ctiv ively ly Ma Manag aged ed PM PMCC CC

slide-54
SLIDE 54

What at Abo bout ut IV

slide-55
SLIDE 55

Day Pr Prior

  • r To
  • Ex

Exit t

slide-56
SLIDE 56

Close se Posi sition tion Adob

  • be

e (ADBE DBE) ) Ju June e 19, 2018 18

Buy Stock – 100 Shrs ADBE @ 177.70 = $17,700 Close Stock – 100 Shrs ADBE @ 251.74 = 25,174 A Return of 42% on Risk generating $7,474 Buy PMCC - $3,206 Close e PMCC - $5,5 ,582 82 A Return of 174% on Risk! ($5582 x 2 = $11,164) – 11.16% Return per $100K

  • v. 7.47% return on Stock (per 100K account)
slide-57
SLIDE 57

Do Does es th this s st strategy egy work rk for st stocks ks in a bea earish rish pa patt ttern? ern?

slide-58
SLIDE 58

Genera neral l El Electric ctric (G (GE) E) Jan anua uary y 2, 2018

slide-59
SLIDE 59
slide-60
SLIDE 60

Be Be Sure e To Tak ake e Time me to Check heck Your Pr Progress gress April il 20, 0, 2018

slide-61
SLIDE 61
slide-62
SLIDE 62

In Summ mmary

Pro’s

  • Poor Mans Covered Calls are a good stock

replacement strategy.

  • Best used in a Low Implied Volatility

Environment.

  • More efficient use of capital.

Con’s

  • May underperform vs actual stock ownership
  • Harder to make money when done in High

Implied Volatility Environments

slide-63
SLIDE 63

Q& Q&A? A?

slide-64
SLIDE 64

Contact Jeffrey Beamer jbeamer@mscm.net 214-922-9200