Slides for the 37th Meetup for the Vancouver Disciplined Trading Hub.

1. Meetup Agenda
• Who are we?
• What is Disciplined Trading?
• Non-Directional Practice Trade
• Content for the week

2. This is a presentation prepared for Education purposes only.
Neither Vancouver Disciplined Trading Hub (VDTH), Round Table Educators (RTE) or
Prosperis Passive Income Strategies (PPIS) nor any of its personnel are registered
broker-dealers or investment advisors.
We may mention that we consider certain securities or positions to be good candidates
for the types of strategies we are discussing or illustrating. This does not mean that we
are telling you to trade these exact strategies or securities.
Keep in mind that we are not providing you with any specific recommendations or
personalized advice about your own trading activities. The information we are providing
is not tailored to any particular individual. Any mention of a particular security is not a
recommendation to buy, sell, or hold that or any other security, or a suggestion that it is
suitable for any specific person. Trading ALWAYS involves a risk of loss, even if we are
discussing strategies that are intended to limit risk.
VDTH, RTE and PPIS are not subject to trading restrictions. We could have a position in a
security or initiate a position in a security we mention at any time.
Disclaimer

3. Who are We?
6:00 PM EVERY FRIDAY – SFU SURREY
6:00 PM EVERY SUNDAY – CEDAR COTTAGE PUB, VANCOUVER
www.meetup.com/VDTHub
www.slideshare.net/vdth

4. Who are We?
Karim Adatia, CPA
• Tax Auditor (2008 – 2016)
• Full-time Stock Options Trader (2016 - )
• Financial Educator
www.ppis.ca

5. What is Disciplined Trading?
Place a trade based on:
1) CONVICTION (based on what is PERCEIVED as happening in any given moment.)
2) A CATALYST (A fundamental or technical reason/opinion)
3) COMPLACENCY (Eg. Wait for a bull market to return, convert to an investing position)
But a Disciplined Trader will …
1) Predefine their risk before taking a trade
2) Cut their losses without hesitation (when catalyst fails)
3) Use a systematic money management plan to make
consistent profits.
What Most Traders Do…

6. What are Equity Options?
An option is a contract that to buy or sell
a certain amount of stock.
allows you
BUYING AN OPTION GIVES THE OWNER A RIGHT
SELLING AN OPTION GIVES THE SELLER AN OBLIGATION
RIGHT or OBLIGATION

7. Why trade Equity Options?
Leverage.
An option contract controls 100 shares of the underlying stock
but costs a lot less!
Bullish Stock Trader
Apple Inc. (AAPL) costs $100.00/share
100 shares would cost = $10,000.
Apple Inc. share goes to $105.00/share
Stock Trader makes $500 or 5% profit.
Bullish Options Trader
Apple Inc. (AAPL) costs $100.00/share
1 contract costs $5.00, so trader pays $500.
Apple Inc. share goes to $105.00/share
The Option contract goes to $6.80.
Options Trader makes $180 or 36% profit.

8. SELLBUY
(SHORT)(LONG)
CALL PUT
THE RIGHT TO: THE RIGHT TO:
THE OBLIGATION TO: THE OBLIGATION TO:
Buy Stock Sell Stock
Sell Stock Buy Stock
CALL
WHEN WE DO ALL FOUR – WE ARE NON-DIRECTIONAL!

9. Non-Directional Trade
No opinion on whether market goes up or down.

10. Non-Directional Trade Characteristics
1. Option Writing (Write: To Sell an Option)
2. Range-bound (Confidence Interval: 95%)
3. Out-The-Money (No Intrinsic Value, Only TV)
4. Index-linked (Ticker: SPX)
5. Average Return (8% in 3 weeks)
6. 25-day Timeframe (Guaranteed Time Decay)

11. The Guarantee with Options – Time will Decay
$$$
Time Remaining Until Expiration Date (Days)
Option
Time
Value
($)
SELL
BUY
BACK
90 60 30 0

12. The Iron Condor Options Strategy
2450 2550 2650

13. SPX (S&P 500)
SHORT CALL:
= 2650
2550 26502450
95% CONFIDENCE INTERVAL : Under Normal Volatility Conditions
TRADING RANGE: 2450 – 2650
SHORT PUT:
= 2450
LONG PUT as
protection 5
points away
LONG CALL as
protection 5
points away
26552445

14. THE VOLATILITY INDEX – TICKER: VIX

15. Practice Trade
WEEK OF: JAN 2 - 6 2017
STEP 1: INFORMATION
-105.00 -100.00 (SPX VALUE) +100.00 +105.00
Long Put Short Put Short Call Long Call
STEP 2: TRADE Watch Video:
STEP 3: MANAGEMENT Watch Video:
CALL ALERT: SPX Value + 65=
PUT ALERT: SPX Value - 65=
YOUR PRACTICE TRADE

16. Determining Expectancy
Steps for calculation expectancy:
1. Calculate your win and loss ratio
2. Calculate your reward to risk ratio
3. Combine those two ratios into an expectancy ratio
SPX Trade Expectancy
1. Win and loss ratio:
41 trades. 41 wins. Win ratio = 100%, Loss ratio = 0%
2. Reward to risk ratio:
Winner size (Avg) = $361. Loser size (Avg) = N/A. Risk-Reward Ratio = ∞
3. Expectancy ratio:
(Reward to Risk ratio x Win ratio) – Loss ratio = (∞ x 100% ) - 0% = + ∞

17. Our Track Record
www.meetup.com/VDTHub

18. How much does the SPX Change on a Daily Basis?
www.investing.com/indices/us-spx-500-historical-data+45

19. How much does the SPX Change on a Daily Basis?
www.investing.com/indices/us-spx-500-historical-data-30

20. How much does the SPX Change on a Daily Basis?
www.investing.com/indices/us-spx-500-historical-data+55

21. How much does the SPX Change on a Daily Basis?
www.investing.com/indices/us-spx-500-historical-data+50

22. WORST DAY FOR THE S&P 500 IN 2017
2400 24652335
2.6% away
(Put Alert) Index Value (Call Alert)
2.6% away

23. Apply with caution
Disciplined Traders …
1) Predefine their risk before taking a trade
2) Cut their losses without hesitation
3) Use a systematic money management plan
to make consistent profits.
This Strategy…
1) Predefines your risk
2) Has an adjustment plan
3) Can be systematic / automatic with trade alerts
Has positive expectancy (is therefore consistent)

24. Takeaways!!
1) Be Disciplined!
Whether you are trading stocks, options, currency
or futures.
2) You Can Make Money by being Non-Directional!
3) Equity Options give you leverage that stocks can’t!
4) If you are interested in this particular strategy,
(1) Come to VDTH Meetups each week or
(2) Follow the Practice Trades on Discussion Board.
and only then…

25. Full Workshop
Wednesday Oct 18 – 6 PM
SFU Harbour Centre (Downtown)
Register at :
www.ppis.yapsody.com
Workshop (2.5 hours)
+ Workbook
+ 1-1 Coaching (1 hour)
Methodology
Adjustment Rules
Risk management
…

26. US ON FACEBOOK
www.facebook.com/ppistrategies
If you Liked the Presentation,
Write us a review!

27. Content Disclaimer
Content Availability to VDTH Meetup Members
1) Reference To Source
2) By Donation
In the Content Portion of this Meetup we may play copyrighted material;
the use of which has not been specifically authorized by the copyright
owner. We are making such material available for the purposes of
criticism, comment and review which constitutes the "fair use" of any
such copyrighted material as provided for in Section 107 of the US
Copyright Law. Not withstanding the provisions of sections 106 and
106A, the fair use of a copyrighted work for purposes such as criticism,
comment or review is not infringement of copyright.

28. This Week’s Content
Videos available by contact:
karim@ppis.ca

29. karim@ppis.ca

30. Backup Slides

31. Our Inspiration
Mark
Douglas
Norman
Hallet

32. NON-
DIRECTIONAL
TRADES
Stocks and Equity Options
3-month Program
US$799
DIRECTIONAL
TRADES
FOR VIDEO ABOUT MMT PROGRAM: www.youtube.com/watch?v=hzhJBdGNwyo
$200 off for VDTH Meetup Members (Contact us for details)
FB PAGE: www.facebook.com/MasterMindTraders.official/
www.mastermindtraders.com/freevideos

33. OUTCOMES WHEN TRADING OPTIONS
If you believe a stock will go UP:
BUY A CALL
• You are betting the price of the stock will go UP
• The person you sell the call to is betting the price will go DOWN or
STAY THE SAME
When you buy a call, you can win 1 out of 3 ways
When you sell a call, you can win 2 out of 3 ways
YOU WIN
1
NEUTRAL
2
YOU LOSE
3
YOU LOSE

34. OUTCOMES WHEN TRADING OPTIONS
If you believe a stock will go UP:
SELL A PUT
• You are betting the price of the stock will go UP or STAY THE SAME
• The person you sell the put to is betting the price will go DOWN
When you sell a put, you can win 2 out of 3 ways
When you buy a put, you can win 1 out of 3 ways
YOU WIN
1
NEUTRAL
2
YOU WIN
3
YOU LOSE
… Maybe

35. OUTCOMES WHEN TRADING OPTIONS
If you believe a stock will go DOWN:
BUY A PUT
• You are betting the price of the stock will go DOWN
• The person you sell the put to is betting the price will go UP or
STAY THE SAME
When you buy a put, you can win 1 out of 3 ways
When you sell a put, you can win 2 out of 3 ways
YOU WIN
1 3
YOU LOSE
NEUTRAL
2
YOU LOSE

36. OUTCOMES WHEN TRADING OPTIONS
If you believe a stock will go DOWN:
SELL A CALL
• You are betting the price of the stock will go DOWN or STAY THE SAME
• The person you sell the put to is betting the price will go UP
When you sell a call, you can win 2 out of 3 ways
When you buy a call, you can win 1 out of 3 ways
NEUTRAL
2
YOU WINYOU WIN
1 3
YOU LOSE
… Maybe

37. VIX During the 2008 Financial Crisis