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I also just recieved the booklets and video from Fishback on his options
"system." I've just finished reading the whole thing (less than a
night's work), and I've also watched the video.
The main book "Options for Beginners" is just that.... nothing I'm sure
average option player don't already know. The video and booklet
explaining the ODDS system are quite a bit more complicated, but when
all is said and done, I found myself wondering "what's the bottom line?"
How do I trade this system? (If is even a "system" at all.) That answer
seems to be found in the little 8-page supplement "How to win 87.5%,
etc." Here's how I boil it down... let me know if you think I got it
right....
In trading an index (Fishback uses the S&P 100), we're guessing the
index will trade within within 5% of where it started the month. Using
an option strategy called a credit spread, we can sell both puts and
calls five percent out of the money, and then insure our bets by buying
the same number of puts and calls at the next strike price out from the
ones we sold. For example, if the index is trading at the start of the
month at 500 (nice, round number), we can sell the 525 call and sell the
475 put for profit, and then insure it by buying the 530 call and 470
put. We pocket the difference between the puts and calls sold versus the
ones bought for insurance. And unless the market makes a fairly big move
in either direction, the puts and calls we sold expire worthless (all
profits to us), and so do the "insurance" bets (but at a lesser loss
than the income from the sales).
How does that sound? Is anybody doing this? And if so, is that five
percent "estimate" on a monthly move fairly safe? Fishback says you can
adjust the system to any level of safety you want, simply by selling
farther out of the money puts and calls. (The further out of the money,
the less the chance of the market moving to that point, the greater the
margin of safety - and less profit as well.)
Again, I'd love to hear from anyone making this work. Thanks in advance
for your replys.
Bill Sklodowski
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