Options made very easy

1. Options made very easy

2. To make money as an option trader you must be: • A bargain hunter. • Able to identify undervalued and overvalued options. • Know when to take profits and when to cut losses.

3. How would you like to know when to buy and sell options for maximum gain? • How would you like to take the guessing out of trading? • How many of you would like to minimize the risk in straight options? • How would you like to learn about the hottest strategy on the market?

4. The Gragg Strategy

5. SETUP • Go to www.stockcharts.com • On the left side of the screen click on the Stock Scans link. • After the predefined scan link appears scroll down past the technical indicators section, to the Candlestick Pattern and the P&F Patterns and look for reversals.

9. SETUP • Go to Predefined Scans. • Select the pattern that you like (Technical Indicators, Candlestick Patterns or P&F Patterns). • Select the Equities Exchange (NASDAQ, NYSE or AMEX). • You will see an underscored number indicating the # of stocks that were located. • Click on that underscored # • You will get a listing of the specific stocks it found • Click on the underscore Open button. • This will sort the list from the highest to lowest price • Don’t use any stocks with a Volume under 500,000.

11. From this list select the stock symbol. • Reading from left to right click on the second box for that stock symbol. • SharpChart will appear, from here you will analyze the stock. • This strategy works best when we find stocks that are in a overbought/oversold position • Relative Strength Index (Values above 70 are considered overbought and values below 30, oversold. When prices are over 70 or below 30 and diverge from price action, a warning is given of a possible trend reversal. ) • Slow Stochastic (below 20 considered oversold and readings above 80 considered overbought )

12. RSI EXAMPLE

13. GALLERY VIEW • Three charts will appear: daily, weekly and point and figure • On the daily chart each candle represents one day. • On the weekly chart each candle represents one week. • You will see price labels on the daily and weekly charts, if the price labels point down it is a Put signal and if they point up it is a Call signal. • Take the last signal on the weekly chart and find a match on the daily chart . • On the following charts you can see the weekly and daily price label match at $48.07.

14. DAILY CHART

15. WEEKLY CHART

16. GALLERY VIEW • When there is a match it tells you what to do. In this case since the $48.07 is pointing down you would buy a put. • If the $48.07 was pointing up you would buy a call. • Confirm price direction on PPO (Percentage Price Oscillator) chart, located above the daily chart. If black line crosses the red line it indicate reversal of trend.

17. GETTING A MATCH • Once you get a match between the weekly and daily charts: • Write down Stock Symbols. • Go to your Virtual Account and place the trade. • Buy options “ At The Money “ or “ In The Money ” two to three months out.

18. GETTING OUT OF THE TRADE • You can close out the position at any point based on your risk tolerance 20%, 50% or 100% return. • Or you can place a trailing stop order based on your risk tolerance. • Or you can wait for a Match to appear to close out the position. • For example in the case of the stock GLG we currently have a Put match of 48.07 so we bought a put option, we would wait until we get a Call match to exit the trade.