Credit Spread Definition

Credit Spread noun: A structured stock option trade where one option is sold and another similar option in the same expiration period, further from the money is bought.

To understand what a credit spread is, let’s look at an example. With XYZ stock trading at 100, I sell a put option with a strike of 90 that expires in two months. At the same time, I buy a put option with a strike of 85 that expires at the same time.

For the 90 Put, I receive $10/share in premium. For the 85 Put, I have to pay $9/share. Then net result is for the pair of options, I receive $1/share. If I trade on pair of options, that controls 100 shares, so the net premium that I receive is $100.

If XYZ stock price stays above 90 for the next two months, both of those options will expire worthless. That $100 is mine to keep. If, on the other hand, XYZ plummets to 40, I will lose money on the 90 Put, but I will make money on the 85 Put that I bought. The net result will be that I will lose $5/share on the pair of options, but still get to keep the $1/share in net premium. So my maximum loss would be $400.

If you’d like to know exactly how I trade credit spreads for monthly income, please get my free report: How I Target 3-5% Per Month Even If My Stock Goes Down. Just fill in your email address here, and I’ll send it to you right away.

Stock Market Insurance Trader – Reviews

What are they saying about Stock Market Insurance Trader? Here are just a few of the reviews:

“Everything you need to know is laid out plain as day in a simple to understand way. It’s so simple it’s BRILLIANT!”

“Highly recommend this text for someone who is new to options.”

“Simple to read, understand and apply.”

“…an excellent job in presenting information in a clear and precise manner that even a newbie like me can digest.”

“The author is on the side of the reader. This is an excellent book.”

 Get the complete story on this trading strategy in this free report, or head over to Amazon and grab the book.

SMIT Live!

SMIT Live! was a live training for newcomers to Stock Market Insurance Agent. If you missed that stock option training, you are in luck. The recording is now available.

Some of the material you will learn in this 90-minute class:

  • The Insurance Agent Trade
  • My favorite Technical Analysis setups
  • Trade variations
  • Bearish trading for today’s market
  • Stock selection
  • Building a portfolio
  • Current trades
  • …and more

I’ve been teaching stock options trading to people from all over the world for almost 4 years now, and I have to say that this strategy is my favorite. I’ve given classes on this material to a couple hundred people over the last year, and the feedback is always outstanding.

You can watch the recording of the class right now for only $97, and if you’re not completely satisfied with the material, then I’m not satisfied either. Send me a note for a full refund. That’s my 100% guarantee.




Free Starbucks for 2014?

I like Starbucks. I don’t get coffee to go every day like some fanatics, free starbucksbut I enjoy meeting friends and associates for coffee. And it’s good to get out of the house sometimes for a change of scenery. But it can get expensive if I go several times a week.

I have two tips for getting free drinks at Starbucks. First, give yourself a gift card. If you do that, refills are free. Simply get a refill, use your gift card to pay, and it instantly turns into no charge. Refills of coffee and tea are normally 50c or so. But with a gift card they are free. You can also load your gift card onto your phone with a free Starbucks app. It’s pretty cool.

But what about the first cup? Or what if you want a latte or something more expensive? I have an idea for that too. Here’s what I did to get free Starbucks for the rest of the year

In mid-April, I noticed that SBUX stock fell to about 69 and bounced off of that level. This was the same spot where it turned around on February 1. Two weeks later, it got up to about 72 before falling to a low of about 70. Note that the low on May 7 was a “higher low”. And then May 15 was another “higher low”. On the chart, I drew an ascending trend line connecting the lows. I also drew a horizontal line across the high on April 25. This formed an “ascending triangle” – a pattern that typically resolves higher.

So I waited for a sign that it was going higher. I got the sign on May 23, and it was confirmed by another high on May 27. That’s when I opened an Insurance Agent Trade.

Earn an Extra Income with SBUXI sold the August 67.5 Put to receive income, and offloaded the risk by buying an August 62.5 Put. The net credit for this pair of options was $.53. This would give me about 4.5% per month return on my risk over the period from late May to mid-August. And the best part is that I will get that return if SBUX goes up, stays flat, or even falls a few percent. I liked the odds, so I sold 5 spreads, for a target maximum profit of $265.

So how has it done? Very well. UBS upgraded SBUX last week, and it popped up a bit to 77. My profit as of today is $175, which is about 67% of the maximum. So I can hold on a little longer and close out the trade for $212 or 80% of the maximum. That’s a good target to shoot for.

So what am I going to do with that $212 windfall? I’ll probably take my wife out for a nice dinner at Winston’s Grille. Then I’ll load the rest onto my phone and I’ll have free Starbucks for the rest of the year!

**UPDATE**

I had placed a Good Till Cancelled order to close the spread for $.08, and it was just sitting around. I finally got tired of waiting and when I spotted it trading for .085, I raised my price to .09 and got filled.

So the final results:
May 27: Opened the trade for a credit of $.53
July 3: Closed the trade for .09
Net profit on 5 spreads was $220 in 37 days.
Return on Margin: 11.9%

Mmmm…. that sure tastes good… :)

Get more info on how this trade works.

Insurance Agent Trade on COST

Costco (COST) is a big box membership warehouse store. They have pretty good deals, but you have to buy a earn extra income with COST tradebunch of stuff. It’s great if you’re buying for a party, but do you really need a 24-pack of toilet paper if you live alone? But the place is always crowded; they seem to do a good business, at least at the store I go to. I thought it was particularly fascinating to see the lunch crowd last month. I don’t think of the Costco as a go-to place for lunch, but a lot of people seem to. It was packed.

COST showed up in April as I was browsing Yahoo stock screener for stocks with good analyst recommendations. So I decided to take the plunge with an Insurance Agent Trade.

On April 15, with the price of COST at about 112, I entered a trade, selling the July 105 Put for income, and buying the July 100 Put to offload risk. That gave me with a $5 Put spread for a net credit of $.60. With about 90 days until expiration, that gave me a maximum return of about 4.5%/month. Good company, good recommendations, good profit. And I would get that profit if COST went up, sideways, or even down a little.

But the thing about the Insurance Agent Trade is that if the stock goes up a bit, you can get out of the trade early, capturing most of the profit in half the time. This is a good thing.

COST had some ups and downs, but in early June, it jumped up to 118. This was enough to push me over my target profit and I closed the trade, buying back the options for a net payment of $.05. I sold the pair of options, waited for the price to fall, and I bought them back to close the trade.

The profit? 12.5% in 50 days or about 7.5% per month. A good trade!

You Can Target 5% Per Month

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Press Release – Stock Market Insurance Trader

For Immediate Release

Can We Live On Today’s Miserable Interest Rates?

New Book Shows How To Earn Extra Income from the Stock Market

Raleigh, NC – June 10, 2014. Rates down at the local bank stink. Can we really live with savings earning 1% per year? Couldn’t everyone use some extra cash each month?

In his new book, author and stock option guru, John Marsland reveals the specific strategies he uses to earn an extra income from the stock market. Stock Market Insurance Trader provides investors with a simple and clear methodology to earn money each month, selling insurance in the stock market.

That’s what Stock Market Insurance Trader is for. It presents an easy-to-understand system for making money selling stock options. Some people view options as complex and risky. But this book teaches a conservative strategy to let you take a small savings account and turn it into a cash-making machine.

The book helps the beginner by starting with an analogy of selling homeowners insurance, explaining how it is just like the strategy used selling options in the stock market. From that beginning it walks through the complete process of entering trades, managing them, and building an entire portfolio of insurance trades for monthly income.

“With such dismal interest rates available from their banks, most savers are not keeping up with inflation,” said Marsland. “Stock Market Insurance Trader shows one way to dramatically increase the return on their money.”

Of course there are no guarantees, and there is risk involved. But for people who want to learn how to generate a monthly income from their savings with a simple stock option strategy, this book is ideal.

In order to get this information to as many people as possible, the book is available for free, for a limited time from Amazon/Kindle – http://bit.ly/SMITrader.

 

# # #

Stock Market Insurance Trader provides an easy-to-understand method for using stock options to earn a monthly income. Learn more at http://SMInsuranceTrader.com.

Press Contact:
John Marsland, Principal
Bradford Analytics, LLC
info@SMInsuranceTrader.com

 

Introducing Stock Market Insurance Trader

So how do you like getting 1% per year on your money down at Bank of America? Can you live on that?

Would you like to develop an extra income stream making money every month?

There are dozens of books on trading stock options. Stock Market Insurance Trader is unique in that it focuses just on one trade. Rather than confusing you with an endless array of deltas and condors and bear calls (Oh My!), it shows you in detail how to do one trade and do it well. This book is all about the Insurance Agent Trade. It’s the best trade there is, and with just a few variations, it’s the only trade you will ever need. And the best news… Stock Market Insurance Trader makes it easy to learn… even if you have no experience in the stock market.

The beauty of this trade is that it automatically gives you outstanding profit if your stock is going up, going sideways, or even down a little. By employing the strategies outlined in Stock Market Insurance Trader, you can start with a small savings account and earn an extra income.

In this book, you will learn:

  • The Insurance Agent Trade
  • Easy Technical Analysis
  • Why This Trade Works So Well
  • Trade Management
  • Trade Variations
  • Advanced Trades
  • Risk Management
  • Stock Selection
  • Building A Portfolio
  • …and more

Of course some will tell you that options are complex and risky. Stock Market Insurance Trader takes the complexity out of options and teaches you how to boost your returns with defined risk trades. You’ll learn how to trade like the pros, not like the reckless amateurs.

Beginners, intermediate options traders, and gurus can all learn something in this breakthrough book.

If you would like to create a “small business” that you can run from your kitchen table and manufacture cash every month, then this book is for you.

Browse the Introduction right now and learn more about the Insurance Agent Trade. I know you’ll be excited!

Remember, you can buy the book right now and read it on your kindle, iPhone, PC, or even in the next tab of this browser.

If you’d like to get the complete strategy for the Insurance Agent Trade and Stock Market Insurance Trader, download this report.