ODDS WEEKLY INCOME FAQs

ODDS_WEEKLY_INCOME_LOGO

Frequently Asked Questions, Answers, and Instructions

 


Q. What exactly is ODDS Weekly Income?

A. ODDS Weekly Income is a premium recommendation service. In order to prevent recommendations from being blocked by email filters, the recommendations are posted to a private, secure web site every Friday morning by 8:45 am ET. [We trade on Friday to take advantage of the “weekend effect” in options.] Recommendations will be tracked in the Open Position web page with up-to-date follow-up instructions.  It is vital that you check the Open Position web page each trading morning to see if there are any changes to make to your current position.

Back To Top


Q. Do you email me the recommendations?

A. Although email is convenient, its reliability is not 100%. Instead, we post the recommendations to a private, secure web site that has an uptime rating greater than 99.95%.

If there ever is a need to provide you with an interim update, we will post the update to the web site.  That’s why it’s imperative that you get in the habit of checking the web site every trading day. We will also try to email you notification that there is an update.

Back To Top


Q. Upon what trading methodology is ODDS Weekly Income based?

A. The methodology is as time-tested as you’ll get. It’s based almost entirely on the high probability index option trading system I’ve been teaching for nearly two decades.

The details of this particular method were taught from start to finish in my ODDS – The Key to 90% Winners course, which I produced in conjunction with Futures Magazine 20 years ago. Over the years I added several minor enhancements to make the trading process easier. New options products, like weeklys, have made things even better.

While my basic high probability method has a multi-decade history of success, it does have one weakness, and that is a major volatility shock to the market.

In probabilistic trading, which is what we do, the key is taking care of your rare losers. No system is perfect. There will be losers. The question is, will your few losing trades be so bad that your losses wipe out all your gains? The good news is that there is an automatic solution.
Weekly options and option spreads help solve that problem in two ways. Without getting into the mathematical details:

1. Spreads act as a “price” stop-loss.
2. Weekly options act as a “time” stop-loss.

Think of it this way. You can’t lose a lot of money because you’re in a spread, and you can’t stick with a loser because the expiration is only a few days away.

Back To Top


Q. Are you in the market all the time, or are there lengthy dead periods?

A. As stated previously, the weakness in high probability options trading is the susceptibility to a volatility shock. Interestingly, if there is a volatility shock, it is likely to hurt any positions we’re in. But because they’re weekly options, the pain is going to be experienced by just one spread, not an entire portfolio of spreads.

At the same time, however, the volatility shock creates conditions that make further spreads very attractive. That is, the event that causes a controlled loss for one trade, creates terrific profit opportunities for subsequent trades. This is precisely what happened during the volatility shock during the summer of 2011 during the European Debt Crisis.

Because of this, we don’t anticipate that there would be lengthy periods where we don’t have a recommendation. The only thing that we foresee keeping us out of the market is when option premiums are so low that the reward potential is too small to justify taking on the risk.

Back To Top


Q. How do you identify your trades?

A. It’s actually a relatively simple process, once you know what to do. Basically, we use the exact high probability method I’ve taught in my courses for the past 20 years. Although the calculations are easy, they can be tedious. And for newcomers, they can seem overwhelming.

Every Friday morning (if there are holidays, such as Christmas and Thanksgiving, that schedule may change) I’ll give you the exact trade to take, along with the exact entry price.

More important, I’ll also provide you with exit instructions at the inception of the trade! I believe it’s critical that you have your exit strategy ready even BEFORE you place your trade. You don’t want to be in a position where you have to react to events. You want to prepare for those events ahead of time, and have a plan in place.

That’s because ODDS Weekly Income does it all for you. We Make Options Easy!

Back To Top


Q. What does an option spread recommendation look like?

A. Here’s an example of a trade recommendation.

At the top is our corporate logo (ODDS) and motto (We Make Options Easy!)

Below that is the date. Note that the date is in this format (Year-Month-Day).

Below that is the trade information.

In this example, the ticker is SPY (SPDR® S&P 500® ETF Trust). Next to that is the closing price of the SPY. To the right of SPY’s price is the trade. This particular trade is a 4-way credit spread, more commonly known as an Iron Condor.

More often than not, we will be providing an Iron Condor. If, however, there are no high probability call spreads or put spreads available, we may only be able to provide you with a 2-way credit spread.

The Trade Instructions tell you what options to sell and what options to buy. Below that is the net credit that you should seek. In this instance, you are trying to get a net credit of 0.28 or better (higher).

To the right of the Trade Instructions are exit instructions. That’s right, the entry instructions also contain the exit instructions. I’m a big believer in being prepared. When I enter a trade, I want to know what it’s going to take for me to exit the trade before I risk my hard-earned money. So I always have a plan. In this premium service, we’re going to provide you with the exit plan ahead of time, so you can be prepared as well.

You’ll note that there are a lot of different scenarios that we’ve laid out. The most common situation is for the trade to stay between the strike prices of the options you sold. In that case, you’ll make the maximum profit on the trade. The exit strategy is to do nothing.

There are other scenarios where you might make a partial profit or a partial loss. There is also a very small chance of experiencing a more significant loss. The thing is, because we’re using spreads, all losses are capped. Your risk is no higher than it would be if you were buying options.

Back To Top


Q. If I get filled on the spread recommendation, what do I do next?

A. One of the nice things about this service is that I do all of the work for you. All information is contained in our Open Positions Page.

As with the Entry page, we start with the date.
The date is March 21, 2014.

Below that, we have the open positions. Here you can see that we have one trade that is open and one that is pending. The trade that is open is from the prior week. That trade is going to expire at the end of the day on March 21, 2014. The new recommendation is shown as “Pending”.

Once filled, “Pending” will be removed and the trade date will be displayed. Here’s an image from an earlier period showing what a typical open position looks like once it’s been filled.

Back To Top


Q. If I do not get filled on the spread recommendation, what do I do next?

A. The instructions are posted each Friday morning. If you do not get filled at the limit price shown, continue to try to get filled at the recommended limit until the next recommendation comes out, unless the Instructions in the Open Positions page say to do otherwise. Be sure to check the Open Position page EVERY trading morning for any new updates.

Back To Top


Q. What type of exit instructions do you give for spread trades?

A. I always tell people that it’s important to treat trading like a business — and I do! The important thing to remember about exiting is to be prepared. We provide a multitude of scenarios for exiting so you are not left wondering what to do.

Notice that the scenarios are all based on the ETF price; there is no option price limit contained in the instructions. We want to exit credit spreads immediately and are not interested in trying to get a good fill. We just want out.

Back To Top


Q. What is the typical duration of a trade?

A. We look for option trades whose expiration date is anywhere from 7 to 9 days.

Back To Top


Q. How many trades are typically open at any one time?

A. For most days, we’ll have just one position open. On the last day of the week, however, we’ll have two positions open. At the end of that last weekday, the prior week’s trade will expire and we’ll be back down to just one.

That’s important, because it tells you a lot about how aggressive or conservative you can be with respect to allocating your money.

Starting with $10,000 and using a conservative 10% allocation, your available cash never dropped below $8,500! You may have had a $10,000 account, but you only used a fraction of the cash to trade, while the rest was held safely in cash!

More aggressive traders could have started with $10,000, used a 30% allocation and their cash cushion would never have dropped below $5,000.

Back To Top


Q. How does the performance guarantee work?

A. If by some unimaginable twist of fate the combined trade recommendations from ODDS Weekly Income and ODDS Windfall Profits fail to produce a profit over the next 12 months, you’ll be entitled to a refund of every penny you paid us… But, you will return nothing.

Back To Top


Q. Can I implement the ODDS Weekly Income recommendations using an online brokerage?

A. Yes, most online brokers now give you the capability to enter all the necessary information to implement the trades correctly. Just make sure your online brokerage provides you the ability to enter your order with the correct data (i.e.: 4-way/credit spread or iron condor, which market and symbols, how many positions you want), emphasize the “net credit” amount (never accept less than the minimum credit), and place as a “limit” order good for the day only.  If you are not filled that day, always check in the next market open to the Open Positions web page to see if there is any reason for you to not continue to try for a fill.

Back To Top


Q. Are there any qualifications required?

A. There are no qualifications required to subscribe. If you want to subscribe in order to learn, that’s fine with us. But if you want to trade the recommendations, the trading level required at most brokerage firms for credit spreads on physical-delivery options is Level 4.

Back To Top


Q. How much does it cost to get into a trade?

A. A single spread requires you to post margin of between $320 and $420 dollars.

Back To Top


Q. Does this require margin?

A. Yes. When you put on a trade, you post margin representing the maximum risk in the trade. When the trade is closed out, your margin is released.

Back To Top


Q. How much money do I need to use ODDS Weekly Income?

A. We don’t have a minimum account size recommendation. As stated
above, there are no requirements for you to trade the recommendations. You can subscribe to this service just to learn. If, however, you do trade, you’ll need to open an account and you would need what is called a ‘margin’ account to do credit spreads.

One thing to be aware of for those of you contemplating trading with a small account: commissions may eat up a disproportionate share of your profits.

Back To Top


Q. Is the maximum loss potential greater than the maximum profit potential?

A. Yes. The thing to realize is these trades have a very high probability of winning, so the type of movement required is extremely rare. More important, in all the testing we’ve done, we’ve only had one maximum loss — EVER. This is what is required for it to lose the full amount: a rapid change in volatility even more extreme than what happened during the financial crisis in 2008.

That’s not to say we can’t lose, or that an event like that can’t happen. It can, which is why we use spreads. But the likelihood of a max loss is extremely remote.

Back To Top


Q. How do I access the trades?

A. Go to www.donfishback.com and press the red triangle LOGIN button in the top right corner. You’ll be asked to enter your email address and your password. That’s all there is to it.  You will then see a link to your Honest Options Paycheck subscription under “Current Subscriptions”.

Back To Top

 


 

Important information:

Fishback Management and Research, Inc. (FMR), its principles and employees reserve the right to, and indeed do, trade stocks, mutual funds, options and futures for their own accounts. FMR, its principals and employees will not knowingly trade in advance of the general dissemination of trading ideas and recommendations. There is, however, a possibility that when trading for these proprietary accounts, orders may be entered, which are opposite or otherwise different from the trades and positions described herein. This may occur as a result of the use of different trading systems, trading with a different degree of leverage, or testing of new trading systems, among other reasons. The results of any such trading are confidential and are not available for inspection.

This publication, in whole or in part, may not be reproduced, retransmitted, disseminated, sold, distributed, published, broadcast or circulated to anyone without the express prior written permission of FMR except by bona fide news organizations quoting brief passages for purposes of review.

Due to the number of sources from which the information contained in ODDS Weekly Income is obtained, and the inherent risks of distribution, there may be omissions or inaccuracies in such information and services. FMR, its employees and contributors take every reasonable step to insure the integrity of the data. However, FMR, its owners and employees and contributors cannot and do not warrant the accuracy, completeness, currentness or fitness for a particular purpose of the information contained in ODDS Weekly Income.

OPTIONS INVOLVE RISK AND ARE NOT SUITABLE FOR ALL INVESTORS

PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS

Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. You can access the Options Disclosure Document at

http://www.optionsclearing.com/about/publications/character-risks.jsp

SOME OF THE TRADE EXAMPLES IN OUR COURSES AND NEWSLETTERS AND NEARLY ALL OF THE HISTORICAL EXAMPLES CONTAINED IN THE MARKETING MATERIALS INCLUDE HYPOTHETICAL EXAMPLES FOR ILLUSTRATION PURPOSES. Although we do not provide any futures information, the CFTC provides an excellent description of the limitations of hypothetical trades and, therefore, we are providing it to you:

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

Trademarks: All trademarks and registered trademarks are the property of their respective owners.

Back To Top