Free Webinar on Calendar Spreads 6/30/11 3:30pm CT

Hello All,

Dan will be doing a FREE CBOE webinar on Calendar Spreads June 30th at 3:30pm CT. Here is a link to the event:

http://accordent.powerstream.net/008/00124/presentations/DS20110630

The event will be open at 3:15pm CT.

You have to be logged in to your CBOE account in order to view this session. If you don't have an account it is free to set up. To set up an account please visit www.cboe.com

Best Regards,

The Sheridan Mentoring Team

info@sheridanmentoring.com

www.sheridanmentoring.com

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Mailing address: Sheridan Options Mentoring, 1539 Della Drive, Hoffman Estates, IL 60169 USA

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Note from Dan Sheridan

Hello,

Dan will be doing a new CBOE Real Trading Seminar on July 14th, 2011 in New Jersey at the Hyatt Regency Jersey City.

Dan has added some new material and slides to this full day seminar. He will be showing you how to trade the various income and speculative strategies in this volatile market. 

Special offer price: $495 (includes free class below)

For the first time, this live session will be recorded so that you can go back and review the full day of education. 

We would love to see you at the July 14th event. We are offering you a choice of one of these three archived classes for FREE, included in the seminar price.  All of theses classes were individually sold for more than the cost of this seminar. Each class is about 10-12 hours of recorded material.

Calendar Workshop: $597

This class will sharpen your skills as a Calendar trader. Dan put 8-10 trades on with the class and followed them throughout the entire trade. He tackled different types of Calendar Spreads: Campaign, Guerilla, Double, Triple and directional. This was a hands on class where he dug into trade entry, adjustments and exits.

Weeklies: $547

With expirations every week, there are many more trading opportunities per year, but also pitfalls you need to be aware of. Dan explores Weekly Options in-depth in this course so you don't make the mistakes that can cost you money! 

Long Term Strategies: $547

Dan and hedge fund manager, Jim Riggio, teach you ways to manage your retirement accounts by reducing risk and maximizing your returns.

If you have any specific questions about the seminar you can contact Dan at dan@sheridanmentoring.com

To Register for this event and to let us know which free class you would like, please contact:

Barb Kalicki at: 312-786-7819

Thanks,

Dan

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Mailing address: Sheridan Options Mentoring, 1539 Della Drive, Hoffman Estates, IL 60169 USA

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Its not to late to sign up! Live online Dan Sheridan 6/16/11

Strategic Options Portfolio Live!

When: June 16, 2011


Where: Chicago Board Options Exchange (CBOE) - Chicago, IL

Attend via the Internet!

We received a lot of feedback from people interested in attending, but not able to travel to Chicago.  

So, you now have the opportunity to stay home and occupy a virtual seat in the classroom, where you can see the entire presentation, ask questions, and participate in the live event via Internet simulcast...

Dan Sheridan and Christopher Smith will be in Chicago, at the CBOE for a full-day seminar dedicated to providing attendees with a comprehensive overview of how to build their own options trading business.

For those of you who are working and cant attend live. Your paid access will also include the recorded archive of this event.

The cost of this event has been discounted to: $377

 

    Click Here to sign up for this event.

 

Or Visit http://www.theoptionclub.com/ for more information on this event.

 

 

Best Regards,

 

The Sheridan Mentoring Team

800-288-9341

info@sheridanmentoring.com

www.sheridanmentoring.com

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Mailing address: Sheridan Options Mentoring, 1539 Della Drive, Hoffman Estates, IL 60169 USA

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Sheridan Options Mentoring Blog

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Lessons in Greek: Vega Posted: 10 Jun 2011 05:24 AM PDT My previous post introduced the concept of "the Greeks" and their applicability to characterizing the response of an options position to changes in price of the underlying- the effects of delta and gamma.  There remain two additional major Greeks used to help understand the impact of time and changes in implied volatility.  These Greeks are theta and vega respectively. Before beginning this discussion, I need to describe briefly the anatomy of an option price.  Option market prices can be considered to be negotiated number that lies somewhere between the quoted bid and ask price.  In reality this figure is the sum of two components; intrinsic and extrinsic (time) value.  The intrinsic value is simply the amount of value attributable to an option by it being in-the-money.  For example, AAPL currently is trading at around $337.  I can buy a June 330 strike call, an in-the-money option, for about $11.  Of the total premium paid, $7 is intrinsic and $4 is extrinsic or time value. The amount of extrinsic premium embedded within the option price varies greatly amongst the available strike prices.  Time premium is reliably the least in deep in-the-money options; the deeper in the money each individual option is, the less time premium it contains. At-the-money options always contain the most value of time premium.    Extrinsic premium represents the entirety of the value of out-of-the-money options. Out-of-the-money options contain no intrinsic value. When considering the impact of either theta or vega on the price of an option, it is important to realize that each of these variables impacts only the extrinsic portion of the total option premium.  It is for this reason that traders who buy deep in-the-money options as surrogates for owning stock are generally little impacted by fluctuations in implied volatility because these options contain little if any embedded time premium. Another potential point of confusion is the difference between implied volatility and vega.  Implied volatility is a mathematically derived value which reflects the market opinion as to the magnitude of future price movement.  Implied volatility values are dynamic and change over time as a result of the aggregate trader opinion as regards future price volatility of the underlying. Vega measures the sensitivity of an individual option or option position to the changes in implied volatility. Vega is particularly helpful in more complex option positions consisting of combinations of several individual positions.  In such positions, the response to changes in implied volatility is often not intuitively obvious.  This "position vega" is calculated by simply adding the vegas of each individual option position. For a given option, vega is always a positive number whether the option is a put or call.  The trader who wants to construct negative vega positions must include short options for at least a portion of his total position. In order to help understand the impact of vega on a position, let us consider the AMZN June 195 call.  AMZN is currently trading at $194, so this 195 strike would be the current at-the-money series.  This option is priced at $4.45 and has a vega of 18.1.  Implied volatility for this option is 26.7% as I write. If implied volatility were to increase from the current level to 27.7%, the price of this option would increase by $0.181 as a result of a one point increase in implied volatility alone.  In this simple example, the "position vega" would be: 100 calls/contract *.181 vega/call or 18.1 vega/contract. The sensitivity of an option's price to vega is greatest in the at-the-money strike within an individual expiration cycle because this strike always contains the maximum dollar amount of time premium.  In addition, longer dated options have greater vegas than shorter dated options and are therefore more sensitive to changes in current implied volatility.  This effect is seen most notably in LEAP options which have the largest vega values.  This exquisite sensitivity of LEAP options to volatility is critically important to recognize in designing strategies using these long term options. The effect of vega becomes particularly important as the market prices future events expected to result in price volatility.  Examples of such events include earnings releases and FDA approval of new drugs. The failure to understand vega effects on option positions represents a major oversight in many trader's core knowledge.  Understanding and compensating for these variables will give the knowledgeable trader a significant competitive advantage.

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360 Degrees of Trading – Lesson One Trade Update Posted: 03 Jun 2011 01:37 PM PDT Dan just finished the first trade update session for the 360 Degrees of Trading class (sponsored by TradeMONSTER). Watch the Streaming Video Click for more information about the class and to sign up for the class See the 360 Degrees of Trading first class here. Don’t forget to check out our public discussion forums

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360 Degrees of Trading UPDATE VIDEO READY FOR YOU

Dan taught the 1st trade update class for the 360 Degrees of Trading today.

Dan focused on Calendar trades. The video is here:

http://blog.sheridanmentoring.com/

The next Trade Update will be on Monday, June 6, 2011.

We hope you like what you've seen so far. Only paid students of this class will be able to attend the weekly classes and the trade updates.

Dan is averaging over 2-1/2 hours per week of instruction.
That's 30 hours of instruction for one low price.

There's still time to join the class.

http://www.sheridanmentoring.com/x/360

We hope to see you in the class!

Regards,

Sheridan Options Mentoring
www.sheridanmentoring.com
800-288-9341

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Mailing address: Sheridan Options Mentoring, 1539 Della Drive, Hoffman Estates, IL 60169 USA

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Sheridan Options Mentoring Blog

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Profit Expectations as a Retail Trader (part 1) Posted: 02 Jun 2011 06:05 PM PDT Photo from wikipedia How much money can I expect to make? What monthly yield is reasonable? These are questions I'm asked weekly by prospects and retail option traders alike. Before I address this, allow me to have a brief Kung Fu moment. In the TV series Kung Fu, before David Carradine would start a fight in a small village with the local bad guys, he would have a flashback to his training by Master Po at the Kung Fu Monastery. This flashback caused him to meditate and reflect on some of the nuggets of wisdom from Master Po.  These nuggets guided him through his latest challenge. As I think back to my early options training by Jon Najarian ( I'll make him my Master Po), when he was training me at Mercury Trading, he would say " Grasshopper, ( just joking) focus on the craft and risk management, and  good things will come!  Those weren't the exact words, he never called me grasshopper, but it sounds good! The point is, we never discussed yields! We focused on the strategies and what to do when they went against us. We focused on trading a few vehicles and really learning them. Jon taught me that a good trader was simply a good risk manager. Jon was basically teaching me that if you applied and practiced good risk management principles and focused on the craft, you would get better. And as you stayed disciplined and focused on a few vehicles, and learned from your mistakes, profits would start to follow. The process from rookie to independent trader in the PIT at Mercury trading might take 1 ½- 2 years for some. Many didn't make it. But those with passion, discipline, and a bit of humility (ability to admit your wrong on a trade), usually lasted quite a few years and found some success. In the retail arena, unrealistic expectations are sometimes fueled by aggressive marketing by newsletter writers and option educators. They sometimes discuss yields like they are talking about annuities. They seem to be missing a very important step, learning the craft! In the retail world, yields can be confusing. Do you have a normal brokerage Reg T account or do you use a portfolio margin account? Portfolio Margin  accounts require less capital per position because the requirements are based on your loss or gain if the price moves up or down say 12%. Regular brokerage accounts require you to put up dollars sufficient to cover the entire risk of a trade. In a trade like a credit spread, Portfolio margin requirements might be 30-40% less than regular brokerage accounts at the beginning of a trade. Therefore, yields are different depending on the account type. Also, some people calculate yield based on the total capital in the account. Other traders base the yield only on the capital applied to a trade. For example, if I have a $1000 calendar on and make $100, that's 10%. But if my account size is  $10,000, some people might say I made $100 on $10,000, or only 1%. You can see that a conversation about yields has to begin with getting on the same page. Another important factor affecting your potential yields is the strategy you choose. Let's use AAPL as an example. The stock is currently at $336. If trader A buys 100 shares of stock at 336 and sells 1 July 350 call at $4.60, that is a covered write. Trader B buys 1 October 260 call at $80 and sells 1 July 350 call at $4.60. This position has a pretty similar graph to the covered write using stock, with one big difference, it's much cheaper. Trader B bought an  $80 call ($8000) instead of buying 100 shares of stock and paying over $33,000!  Trader A won't have the potential in a good month to make as much as Trader B because of the huge dollar outlay in a covered write with stock. Similarly a trader who does far out-of-the-money credit spreads for a small credit, wouldn't have the potential yields of someone who did credit spreads closer to at-the-money. Far out-of-the money credit spreads have higher probability of success than at-the-money credit spreads, but at-the-money credit spreads have higher potential yield. An example would be to compare today the SPX June 1340-1350 call credit spread to the 1380-1390 call credit spread. With SPX around 1332, the 1340-1350 call credit spread has a maximum potential 70 % return at expiration. The 1380-1390 credit spread has a maximum potential return of about 16%. Obviously, there is a trade off with credit spreads between probabilities and risk. The 1380-1390 call credit spread has higher probabilities of succeeding but also has a worse risk/reward than the 1340-1350 call credit spread. In conclusion, you can see that some foundation has to be set before you can really delve into a meaningful discussion of yields. Hopefully this was a help to you. In future posts, I will explore this topic more deeply.

360 Degrees of Trading – Lesson One Posted: 02 Jun 2011 12:45 PM PDT Dan just finished lesson one of the 360 Degrees of Trading with Dan Sheridan, sponsored by TradeMONSTER. Watch the Streaming Video Download the presentation slides Dan is putting on several trades.  Dan will update these trades 2 times per week in live 15+ minute sessions.   This is the most practical, hands-on, class we’ve done. Click for more information about the class and to sign up for the class Don’t forget to check out our public discussion forums

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360 Degrees of Trading VIDEO READY FOR YOU

NOTE: I had a typo on the website address to a few people... this is the corrected link.  I'm sorry if this is a duplicate message.... Tom

The video of yesterday's 360 Degrees of Trading with Dan Sheridan, sponsored by TradeMONSTER, is now ready for you to watch.

Please visit our blog to watch the video and download the presentation slides at:

http://blog.sheridanmentoring.com/

Don't forget to watch the trade update tomorrow at 10:00 AM Central at 

http://sheridanmentoring.webex.com/

Regards,

Sheridan Options Mentoring

www.sheridanmentoring.com

800-288-9341

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360 Degrees of Trading Trade Update TOMORROW

You are invited to attend the 360 Degrees of Trading, 1st trade update TOMORROW at 10:00 AM Central (Chicago) Time

To join this event, please visit:

https://sheridanmentoring.webex.com/sheridanmentoring/onstage/g.php?t=a&d=924447571

If the above link does not work, please visit:

http://sheridanmentoring.webex.com/  and manually join the meeting 

"360 Degrees of Trading UPDATE"

We only have 200 seats for this event so please join the class early.  We will open the room up 1 hour before the event starts.  We will post the recording of this update on our blog.

We hope you enjoy the class.

Regards,

Sheridan Options Mentoring

www.sheridanmentoring.com

800-288-9341

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Mailing address: Sheridan Options Mentoring, 1539 Della Drive, Hoffman Estates, IL 60169 USA

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Dan at TradeKing today at 4:00 PM Central

Dan is presenting a webinar at TradeKing today at 

4:00 PM Central (Chicago) Time.

To join this event, please visit:

https://tradeking.webex.com/tradeking/onstage/g.php?t=p&d=647069732

If the above link does not work, please go to

http://tradeking.webex.com/  and manually join the meeting:

"Adjusting Credit Spreads, part 2"

We hope you enjoy the webinar.

Regards,

Sheridan Options Mentoring

www.sheridanmentoring.com

800-288-9341

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