Trading Conviction vs. Non-Conviction
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Trading Conviction vs. Non-Conviction

John f. Carter - March 9, 2016

Hello everyone, this is John, and welcome to the free video. We're just gonna look at a couple of basic charts. I just want to show you some current positions. A couple of people asked how my account is doing. We'll take a look at that. See where we are year-to-date and all that fun stuff.

BIIB, this is a biotech stock. And today, it started to falter. I didn't see any need to do what I would call a focused, concentrated bet, which would mean buying puts. I wanted to do something a little more higher probability.

So, for Biogen, that simply meant selling a call credit spread. Giving it ten days, so not as tight as the end of the week, sold it for $1.50, and in a perfect world, it expires worthless, but it's completely okay to buy it back at, like, $0.20, if it gets down there. Essentially, when you're doing this--in this case, a call credit spread, you can say I sold a 270 call, it's just really making a bet that Biogen isn't going to get back to 270 within the next ten days. It doesn't matter how far it falls, and it could actually still rally, and I could still make money on it. My main bet is that it won't rally $9 dollars by the end of next week.

On the long side, I like Intuit here. Intuit is a very quiet kind of a company. Okay? But on this one, on all time frames, it's actually looking pretty good. You can see I'm down on it from today, but I sold this put spread from $1.25. It's $1.50. On a spread like this, it's the same thing. I'm making a bet that in this case, that in 10 days, it can end up over $100.

My risk is limited. I'm fine taking a little bit of heat on this. I wouldn't like to see this get more than about 2x what I paid. So if it gets to about $2.50, then I'm gonna look at potentially getting out of that. And the only thing that would happen is if the markets really sell off, and take everything down with them.

If we look at Google, it's something different entirely. It's been kind of range-bound, and I'm not looking for that to change any time soon. I'm kind of looking for GOOG to stay range-bound. What I'm doing, and if you're newer to options, it's like saying, "All right. We're currently at $713. I don't think it's going to rally higher than $735, but I don't think it's going to fall lower than $705, and if it can stay between those levels, and this is just protection, so I know exactly how much risk I'm taking. If that happens, then I get to keep this $165 per contract.

So I have a bearish bet that's conservative, a bullish bet that's conservative, and what I would call a sideways market bet that is also conservative. All right. So this is just my account, what I'm doing. There's no, um, recommendations or anything like that. So, I started the year at $180? Something like that. If we look at today, it's up just over $100, in terms of P&L year-to-date. Today, I managed to make $66. So, a little bit today. I mean, right now, my positions are fairly light. I'm like 85% cash. I have a couple of spreads on.

But part of trading is knowing when to press it. And some people might take that to mean you just wait to make a big bet, and no. It just means what I call conviction. When I don't have conviction, I'm focused on selling premium. For example, on Biogen, I'm selling a call credit spread. If I had conviction, I'd be buying puts. Because there's potential greater reward in buying puts. By selling a call credit spread, there's less potential reward, but higher probability.

If I find anything in trading that becomes consistent, it's knowing when to have conviction: i.e. buy a call or buy a put, vs. knowing when to take the safer route. Most times, by default, taking the safer route is better. In fact, it's always better. You can never go wrong with taking the safer route. But if you want to really try to push, and nail a trade, like try to capture a move, and if it's a move that is well beyond the expected move, you have to be long options to participate in it. And you've got to know when it's okay to do that. Because most of the time, it's not.

Okay. So, for those who don't know, I'm going to be doing a in-depth class this Saturday. March 12, 2016. I'll be diving into these concepts in detail, about essentially, when you have a volatile market like this, it is about timing, and knowing when to press it. When to load up on puts and calls, and when to stand back and be conservative. When to do premium, and talking about what chart set-ups do I look for. What scans do I use? How do I make that determination? Because not only am I looking at individual stocks, but I'm looking at correlated assets, and all that fun stuff.

It's going to be a lot of fun. We did this last week, and we segmented everybody out into two groups, and so the second group is seeing it tonight. If, for some reason, you saw this again, you get a second chance at it. We wanted to make sure that both groups get the same bonuses, and those will expire within the next 24 hours.

If you go to, you will then see three classes. It's a strategy class, and then our most popular offering, which is strategy class + three days of live trading, and the elite class, which is the live event, and includes both of these. So let's take a look, real quick. Our basic class--and basic is the wrong word, because it's not a basic class. It's actually a class that's going to give you all the information that you need. Just when compared to these three offerings, it's like, that's basic, that's the next level, and that's the elite level. I've just found that I can show you strategy all day long on a Saturday, but it really comes together when you do live trading.

So the countdown clock at the top of the webpage is a bonus. If, in the next 24 hours, you sign up for this, you get one day of live trading for free. Okay. So the Saturday class is March 12, and then you'll be able to participate in live trading on March 15, and in this, we're going to talk about steady flow cash flow system, my favorite base hit set-ups, high probability set-ups for home runs, pre-trade checklists, my personal trading plan, designed to make $1,000,000 in 2016.

Now, if you've got a smaller account, like $5,000, you might be like, "Whaddya mean, a million dollars?" It's all relative. I'm trying to get my account to go up by 2.5x. So you could use that same plan, if you wanted to. It doesn't mean that it's going to work out, but it's what I've done in the past, and what I'm planning to do this year, in terms of my trading plan.

The most popular is this 3 days, where it's $997. Obviously, this includes the Saturday class. The bonus here is there's actually, well, one of the biggest requests we get after 3 days of live trading: Here's the 3 days of live trading: March 15, 16, 17. We're actually going to add a bonus session. It's like a follow-up trading session. So after 3 days of intensity, you get a little time off, and then we come back for another live trading session, so I can answer questions, follow up on positions, and anything like that. Which is nice.

Then here's the elite one, which is interesting. We're going to do another live event at the end June 2016, and that's live in Austin, Texas. Normally, this is a $5,000 live event, because we keep it small: 50 people. But for the bonus here, you can get it for $3,997. That includes all of this.

Anyway, this is going to be a fun class; the markets right now are unprecedented. The goal during the live trading is that we make enough money trading the one lot to pay for the course, and then some. Okay? And we'll knock it out of the park. Have a good night, and we'll see you at the next update.