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Hi guys and gals.
For the better part of 18-months I’ve been working on a service I call the $2,000 Small Account Journey. This is an options trading blueprint for small accounts.
While some of my $2,000 balances haven’t gone up a lot, or even down, I’ve been able run one to a peak of $32,000 and another to a peak of $48,000.
My goal is $100,000. The process of accomplishing that should make me a much better trader. If you’d like to start your Journey, now is a great time to subscribe because Monday I’m going kick things off full throttle to try and break my records.
Here are step by step instructions to getting started.
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Get a $2,000 margin account
We don’t ever trade on leverage. The broker requires this type of account to trade spreads.
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Create a 3-7 stock watchlist with earnings winners on the best companies in the world
Let’s go with NVDA, META, and NFLX.
See how NFLX expected move was +/- 8.2% post earnings? It beat earnings and gave great guidance. Hence the +10.7% actual move. We call this an earnings winner.
Anytime NFLX stock dips over the next quarter you can bet it’ll likely get bought up by algorithms. I look to sell puts into dips below the 10-day EMA while referencing the bullish chart pattern. Think about it for a second. A short put vertical spread is neutral to bullish. An earnings winner with strong guidance is NOT likely to fall apart.
Know these 4 bullish chart patterns.
Enter AT or BELOW the 10-day EMA using a short put vertical spread. Rinse and repeat. I call this the trampoline trap in which the green line acts as a trampoline. Traders BUYING out of the money put options aren’t aware the 10-day EMA is going to be strong support, acting like a trampoline and springing the price action back up in the air.
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Learn what a short put vertical spread is a.k.a. Bull Put
I assure you this is an easy order to make and once you learn it, you can’t unlearn it. If you are new, don’t get hung up on this right now. You can watch as I do it or just call your broker and have them explain a bull put and bear call.
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Understand probability of buying versus selling options
A bull put spread means I’m SELLING a put and buying a put at the same time. So do option SELLERS have a trading edge? A CME study covering 3-years showed an average of 76.5% of all options held expired worthless.
Three key patterns emerge from this study:
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On average, three out of every four options held to expiry end up worthless;
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The share of puts and calls that expired worthless was influenced by the primary trend; and
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Option SELLERS still come out ahead even when the seller is going against the trend.
In fact, of put options alone, 82.6% expired worthless.
The last point on put options illustrates why this strategy I’m teaching you to grow a $2,000 balance is so effective. All we do is SELL put spreads and ONLY on stocks that smashed the predicted move. Starting to add up?
The study suggests an 82.6% chance of winning these trades.
Coupled with earnings winners (bullish trend) and it’s starting to click, right?!
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Understand the time decay of an option
Options are time-limited, expiring trades. Near expiry, the trade “spoils” with less chance for buyers to make a profit. In the final 30 days, the rate of decay picks up speed, with the steepest decay occurring in the final 5-7 days.
This “time decay” is why 76.5% of all options trades expire worthless and of put options alone, 82.6%.
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Know the economic calendar
This helps us know when big moves in the market are likely to occur. For example, think about how interest rate decisions move the market.
Now learn in real-time by watching me apply all this.
Each morning at 7 AM ET we’ll do a morning call. Then I’ll send you my morning watchlist around 8 AM ET. Once the market opens I’ll text you my real-money trades (trade alerts) using the RagingBull APP.
So far I’ve been able to get a $2,000 balance as high as $32,000 and another to $48,000. In both cases it took about 4-6 months. My goal is to get one of them to $100,000 in under a year. The process of trying to do this really improves trading skills quickly. What’s your goal?
Get my options trading blueprint for small accounts.
Eat, sleep and trade,
Jason Bond
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