To better understand what I’m doing in this live stream, I’m going to briefly bring you up to speed on the framework of all my trading systems. What you’re seeing on the screen is what I call The Trader Matrix. I created this matrix to help me quickly go over the levels of trading that I went through in my journey. And I believe you may be in one of these trading stages. And if you’re ready, my goal is to let you skip the line and become a top level trader or a level 5 trader.
Now, these levels do not need to be built upon one another. In other words, you can skip the line ahead to become a level 5 trader. Next, I will briefly go over The Trader Matrix and I’m going to move fast so if you’re interested in a slower pace more detailed version, I created a video called The Five Stages of a Trader and How to be Consistently Profitable. And I left a link in the description below.
So this is like the 10 second version. You can see level 1 fundamental analysis; number 2 is technical; 3 long options; 4 option premium selling, and number 5 the option premium selling that’s hedge. And this is not hedged. You can see up here kind of the results of these types of trading systems.
In this live stream I am fully revealing my level five proprietary Safe Wheel Strategy for free. You can watch me trade it live with real money including sharing my P&L every Monday morning at 7:15 a.m. Pacific time. You can follow my trades and remember trading options is risky. And I made a video on the back-tested results of this strategy, and I left a link in the description.
The traditional wheel is designed to keep the trading size in check, but it has similar risks as being long stock. Using my 28 years experience, I’ve developed the Safe Wheel Strategy which I’ve designed to cancel out the risk associated with the traditional wheel strategy. And this is a level 5 trading system. And my goal is to help others cut to the front of the line and become consistently profitable. And if you feel like I’ve helped you out in any way, please hit the like button on this video to help to get the word out.
Now, I designed the system to only need my attention once a week on Mondays, and on rare occurrences Fridays. And I hope you’ll join me every Monday morning at 7:15 a.m Pacific time.
So I’m not going to go over this in detail. I left it here the whole time during this video so you could read through it. If you have any questions about it, you can always leave a comment below and ask me some questions and I’ll put a link in the description on a video where I go in more detail on this matrix, just a video on this matrix.
Okay, let’s get started today. So the first thing I want to say is, you know, make sure that you post your questions for me. Put those in the chat box now so that way I don’t miss those towards the end. I want to make sure I answer all the questions. All right and, you know, second, I only trade, you know, level 5 trades. And I hope you guys understand what I mean when I say that. And if you don’t, there’s a video in the description of this. That you can see what I’m talking about when I talk about level 5.
There’s really no other level 5 educators out there except for Ron Betino that I know of. Everybody else out there is, you know, level1, 2, 3, or 4, so you’re really not going to get up to this level unless you’re here.
Now, let’s first, I want to go over my Earnings Edge see, you know, because I’m always going to be transparent, 100% transparent, on what’s happening with my Earnings Edge account. And you can see it on the screen here. Last week we traded Oracle and we hit another winner. There we’ve got six wins in a row, and made about $300. So this accounts up but $664 over since the beginning of the year.
Last month we did 17% so we’re starting to get the hang of this, obviously. And so far this year, up about 13%, so this is a system that I use. And if you want to turn a small account into a large account, take some risk, you know, this is not risk free. This is the way I would do it. And there’s a link in the description if you want to take a look at this is $259 a month, but if you make more than that it’s well worth it.
Okay, let’s get into the next subject which is where are we with the Safe Wheel? We’re trading Macy’s. Let me get into that account. And we have–last week I think we started a new cycle and so we were short a put and we bought our put hedge and we did not get assigned so we’re…
Oh wait a second. We did get assigned. So we own a hundred shares–shows how much I pay attention. I really don’t need to pay attention to this until, you know, the morning of which is today. So I do own 100 shares. So what’s next in the cycle is to sell a covered call. And our price is around $26.50 so we want to get at least $26. And we want to be out of the money.
So let’s see if that’s available. And we’re always in this expiration cycle where it expires on Friday, or one week, in this week. So we’re going to look at the calls and $26.50. Okay, so we’ve ran out of… We don’t have enough premium to sell. So what do we do?
So this is an interesting scenario. So this is what the problem with covered calls is that eventually you’re going to get stuck in a position where you can’t sell any premium or you could sell it up here, you know, at the $25 level. But then if you get called away, you lose money. That’s a problem.
So what I’m gonna do is I’m going to layer. I’m going to add a second tranche. Now, I’m not never going to add a third tranche. This is only going to happen one time or I’m going to add a second tranche. How do I add a second tranche? Well, I’m going to start this cycle over again as if those 100 shares, you know, don’t exist.
But let me back up, those 100 shares exist, I need to cover those. I need to cover that put hedge. So I’ll cover that put hedge later, but those 100 shares do exist. But I’m going to treat them like they don’t exist, okay, because I can’t get any premium out of them. So maybe next week I’ll get some premium out of them, maybe I won’t. We’ll see what happens.
So what I’m going to do is I’m going to start over again. I’m going to start a second tranche, or a second layer. And I’m going to sell a put. Where would I sell the put? Well, here, if I sold the $22, I’d get over $0.22, and here at the $21.50 I’m getting over $0.21, $0.22. But the $0.22 one looks a little more juicy. You could pick this one, the $21.50, or the $22. I’m gonna go with the $22.
Okay, so I’m going to sell one of the $22 puts. So I’m layering in. I’m adding risk. Okay, so let’s see what I can get for this. I’m going to put this in at $37 or $0.37. And we’re gonna have our layer number two. Oh, it filled right away. Okay, probably should have went for $0.38.
And now I still need to protect my hedge. So I’m going to pay around $5 or $6. So I’m going to pay for this $27 call. In case, you know, something crazy happens with Macy’s and it goes like $35, my put hedge is just gonna go, you know, it’s going to lose a bunch of value. So I need to kind of hedge my hedge.
Okay, so I’m gonna buy one of these. That’s interesting how that kind of filled at $5 when I set it was $6, but that’s okay. Okay, so here we are. We layered in.
Okay, so you get to the point where you layer and you can tell my layer is very well protected by the hedge because the market went down. The price of Macy’s went down. You see it’s down $1.40 and now I can’t even sell a call but that hedge is really covering really nicely the $21 put. Okay, so the put, the put hedge really is going to cover… What do I have? I don’t have $21 but I’ve got the $20, $22 put. So that $22 put now is really deep into that hedge. That hedge is really going to cover it. Okay, so you kind of see how things kind of work themselves out with the system.
Okay, let’s get into the questions.
[Saving Harrodsburg Castle]: how do you figure your ROI? Do you use the margin requirement or the price of a hundred shares? I figure my ROI by starting with $5,000 running it through the back test and seeing how much money I have at the end of the year. That’s how I do it. I do it based on my planned capital.
[Mammi Mammi]: your matrix mentioned level 5 only uses one underlying, but here I see many underlyings? True. So there’s a little bit of a tweak. There’s better level 5 trades and there’s level 5 trades that are not as good. And I would say that this particular trade is not as good because there are more underlyings to deal with but it’s still a good level 5 trade.
[Philipp Leckband]: what’s the smallest account size for the Safe Wheel? $5,000. That’s what we’re dealing with. The lowest. $5,000 is what I would deal with because, you know, I’m selling one contract. So you can’t really get much lower than that.
[Kevin Hawthorne]: good morning from Florida. I was just in Florida a couple weeks ago for the first time.
[Saving Harrodsburg Castle]: are your long puts not covered? Let’s see my long puts. I don’t have any long puts. Oh yeah my three long, sorry. Yeah, my three long puts. Yeah I do need to cover them and that’s what I did. Yeah, you were on top of it there.
[Mammi Mammi]: what criteria are you using to choose your strikes? I am using the price of the, you know, whatever I can get for them. I need to get at least, in this case, when I sold the $22 put, I wanted to get at least $0.22 so it’s based on the price.
[Lourdes Sarafyi]: v-y-n? Not sure what that means.
[David Isaac]: what do you do in this case? In this case? I’m assuming in the case where I couldn’t get any premium for the 100 shares that I already own, and you can see that what I did was I layered in a second tranche.
Now, if you want to get the Safe Wheel guidelines, they are available. I have them at a discount right now. I’m not sure how much longer I’m going to keep them at this price, the low price that they’re at, but you can check those out. They’re in the link in the description.
Okay, if there’s no more questions. Let’s see. I don’t see any more questions so I just have one more statement which is: if the P&L is not real, what else are they trying to conceal?
Link to Safe Wheel Guidelines & Flow Chart
Link to my Earnings Edge Alert Service
Link to My Safe Wheel Back Tests GO TO
Link to The 5 Stages of a Trader