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The last time I wrote on taking this home study course was just before mid-March.  Life is always hard to balance and find time for family, home maintenance, work, and learning new things.  But as long as you keep moving forward, you eventually will move down the path to the finish line of whatever endeavour you are on…

A month later I am still pumped and excited about learning the business of being a “credit spread out of the money option trader.”  The Trading Pro System, a series of online videos that take the student through detailed steps on how to trade options, is quite extensive.  I’ve completed watching Modules 1 through 10 and have written lots of notes to myself for each video.  Some of the videos are only 5-7 minutes long, while others are over an hour and a half.  I’m so glad I wrote notes, because David Vallieres, the Trading Pro System Creator and Instructor loads some much information in each video that I would forget too much of it without my notes.  I’ve also had to review a few of the videos at least once, sometimes parts of them about three times to get a good grasp of the concepts of trading spreads and what to look for in each position before actually pushing that “Confirm & Send” button.

I opened a trading account on the suggested opting trading platform, thinkorswim.  I started paper trading, as he suggested, before actually kicking in my real money.  I currently have put on 4 positions in May 2009 options (ie. IWM, EEM, SPY, & DIA) and have been practicing daily on analyzing the charts for each one and just trying to get comfortable with the thinkorswim platform.   I put some on around 48 days (he suggests between 35 and 40 days), and I put some on at 40 days and 35 days to expiration.  It’s pretty exciting, I’m runny a very TINY profit right now, but with patience and time, and waiting for those expiration dates of these options to get closer, I will see the profits grow.

This home study course is definitely not for those who want to rush through an educational course with a cursory review of what is being taught.  I felt I really had to shut the phone off, wait for all the kids to be asleep, and basically remove all interruptions, so that I could concentrate on the videos.  At times, David is so comfortable moving around the platform, that if you aren’t familiar with it, you lose track of something he is showing you.  The learning curve is big for me here.  I think I’ve already spent AT LEAST 150 hours (that’s over 6 solid 24 hours of learning spread over a month) watching videos, playing around with the platform, researching credit spread option trading through other internet sources, understanding iron condors, double calendar spreads, vertical spreads.  If you like playing with numbers and analyzing them, this is the perfect business for you.  I think once I get over the learning curve, this will be the evergreen business I believe it will be.  I’m in it for the long haul.

I first watched the videos non stop and wrote notes.  Then after I opened my paper trading account, I found it best to mirror his trading videos with doing it in my paper account at the same time.  Even though his video shows him doing this a year ago.  I’ve taken the very same indexes he uses in the videos and tried to emulate them a year later, using the current strike prices and bid and ask ranges of today.  I stop and pause the videos often, play around with the concepts I just learned and do them in my account, then I go back to his video.

Quickly perusing my notes has also helped me remember some important points and knowing which video to reopen and review.

I’ll let you know how the paper trading has gone by May 16th.  I’m trading with confidence!

I thought I’d do a Trading Pro System review and discuss what I have learned so far.  Though a large part of the Trading Pro System by David Vaillieres is based on managing The Greeks (ie. Delta, Gamma, Theta, & Vega), terms I was not familiar with until I got this system, I knew as soon as I saw the preview video of the system that this was something I would be interested in as an investment business I could manage for myself.

Everything is presented to a complete beginner, like myself, in such an un-intimidating way.  The videos are perfect to follow, David is very clear in his descriptions and definitions that any layman could understand, makes anyone realize they could make money with this.  I am so excited that I can finally invest in the stock market with confidence and control if I use the Trading Pro System.  I don’t have to be scared anymore that my price predictions will fall flat and I will lose money yet again.

I’ve already gone through  over 4.5 hours of the course (there is over 24 hours to watch) and I’ve learned so much just in that 25%.  I’m just chomping at the bit to get my money into a ThinkOrSwim trading account (which is where using this trading system will be really easy) and start trading.  But I am committed to not jumping the gun and going through the whole course to really get a strong understanding of the materials.

Here is a basic summary of the first 4 modules I have gone through:

Module 00 - Part 1 (35min 55sec)

If you don’t know anything AT ALL about options, this is a good primer to the terms that David introduces about trading with options. If you do have a good fundamental grasp of options and option strategies, you could probably skip to the 3 video (Module 00 - Part 3) and dive right into the type of position strategies his system uses and why they will work to provide consistent income long term.

He gives a few analogies, using insurance companies and buying a house to explain how options work when you buy or sell them.  He also explains that the main part of the monthly income component of the Trading Pro System will be the combination of buying and selling call and put options at the same time for an underlying stock.  These positions are a combination of using strategies like the iron condor, calendar spread, and double calendar spreads.

Throughout his video and the following videos, he hammers in two key facts, that “stock prices will fluctuate” and “options will expire.”  By the time you get to the 3rd video, you’ll really understand why he repeats these 2 facts.  If the investor can really understand these core concepts, it is the basis for how profits are made trading options.

David Vaillieres also dispells the myth that trading options is highly risky.  If you use his system, options are traded with complete control.   As I watched his examples in his videos on how he manages his option positions, I truly began to see how he has greatly reduced any risk in the option’s positions simply by monitoring the Greeks.  The Greeks tell the investor exactly where his options are in terms of continued profitability or whether he needs to adjust his positions to create a continued environment of profitability.

Module 00 - Part 2  1 hour 37 minutes

In this module, every aspect of option trading that an investor can think of is reviewed here.

Without hurting yourself financially, you learn how this system is the most profitable way to trade.  David Vaillieres prefaces how he created this system with the experience he has gained in being a stock investor.  We learn that David has traded option contracts, stocks, systems, TA systems, has gone to the seminars, workshops, online seminars, webinars, free programs, as well as programs that cost $2k-$5k.

With confidence in having seen such a variation in information in trading, he has created a system that beats them all.  It will make money for you on a consistent monthly  basis and also build long term wealth.

David dives into more detailed discussion of call options, put options.  At times when I had a question lingering in my head, he would ask the question in his video, and I almost felt he had obviously anticipated a question a student would ask.  A key feature in his system which is why it will work well in any market is that it is designed to be only marginally affected by the key fact that stock prices fluctuate.

So whether the market goes up or down, you will still make money using the Trading Pro System. You DON’T NEED to have ANY OPINION as to the direction of the stock market.  This is a non-directional trading strategy.

 Module 00 - Part 3 (2 hours 7 minutes)

If you already had a handle on options and how to trade them, this may be where you would start watching all the videos.  The first 2 videos were great for me because I knew nothing.

David begins with quickly showing us how he likes to set up his viewing in the ThinkOrSwim Platform. This totally helped me because I simply followed all of his settings.  If I didn’t have his system and wasn’t reviewing it, I don’t know how I would have figured out what to select because there seems to be so many overwhelming choices to the beginner for trading.

By the time I was finished watching this 3rd video,  I really understood why the risk would be very low using his system and how the monthly income would be established.  I really liked the fact that you didn’t have to wait for the options you were trading to expire to determine if you were going to be profitable.  I could see that the mere fact of monitoring some key indicators daily would enable you to forecast  how much money you were going to earn.

He gives certain specific rules on the type of spread we are trading.  He also does an excellent job running through option trading strategies his system uses and why those specific call and put position combinations he has developed are the less risky and most profitable strategies.

David goes through very detailed analysis of each (about 15-20 mintues each one) of a vertical spread, an iron condor, a calendar, and a double calendar spread.  We learn the terms “Front Month” which is the month the options will will next expire on.  We learn about bullish call spreads and bearish put options.

To help us really visualize trading, he flips often to a graph of the option and explains how we can analyze the chart to maintain our position in a profitable positio.

By the end of the video, we begin to realize why Delta, Gamma, Theta, & Vega are so important in their role in the Trading Pro System.   David Vaillieres does a great job explaining each Greek and it’s effect on the option price.

Module 01-2-3 The Greeks (25 minutes 48 seconds)

After you realize in the previous video why “The Greeks” are so important to adjusting your option’s positions to maintain their profitability, this video goes into detailed definitions of each Greek and what specific number ranges they need to be at to maintain optimal option position until expiry.

He talks first of DELTA, then he follows with GAMMA and tells us that THETA is key to know our profitability.

By the end of this video, I am so interested I am ready to be shown how to set up these positions in reality.

In the following weeks, I hope to journalize my use of the Trading Pro System and share it here.  By the end of my journal, I would expect that the product will deliver exactly what is promised… that I have now set up a consistent monthly income and am on my way to wealth and freedom.

A little bit of background in my interst in the Stock Markets:

I’ve always been interested in technical analysis, candle-stick charting, and the general analysis of stock price patterns.  My concentration in my investments is largely based more on TA vs FA (Fundamental Analysis).  In my days before the decision to stay at home and be a parent-by-day/internet-marketer-by-night, I use to work for a public chemical company, Methanex Corporation (Cdn: MX, US: MeoH) as the Investor Relations Coordinator.   During my time in that department I also  completed the Canadian Securities Course.

But I must say I am a complete NEWBIE when it comes to really understanding Stock Options, the writing of them, the selling of them, the buying of them.  Yes I generally understood what they were, but I didn’t know how to trade them at all.

I’m currently going through all the video materials, watching them with extreme focus, taking lots of notes, and absorbing the explanations David Vaillieres (the teacher) presents to us.