If you are new to options, BELIEVE!

Yesterday concluded in Las Vegas the Trader Expo and boy was it full of information!

To me the highlight was the live trading with Think or Swim's Tom Sosnoff. Actually all of the presentations from the Think or Swim people were fantastic.

BTW, they have a subsidiary called Option Planet that give FREE option's seminars in various places. I will be attending the upcoming events in Burbank. That should be fun!

The most important nugget of information I came out with is that in this time of high volatility, we could be trading iron condors. Don Kauffman (also of "Think or Swim") said: "You should enter an iron Condor 4-10 weeks before expiration and exit it 4-10 days before expiration.

Coincidentally (or may be not so coincidentally), I have been playing with a paper trading account in which I have entered iron Condors ONLY! and guess what, it has been doing well, in just a few days. I will keep monitoring this approach and post my preliminary results in the next few days.

It is quite amazing to me that suddenly, almost unexpectedly, my results have been stellar. Obviously, the spike in volatility has been good for me, but I began trading the PCCRC long before Aug. 2007, as you well know, but the volatility spike has made me a consistent winner. Not to boast, but to say that my strategy was there not as a reaction to current conditions, but it is quite obvious that my perseverance and the perfecting of my strategy has paid off big this year.

This brings me to the main subject of this article: Success is about believing!!! This is not the first time I have come up with a strategy that works for the historical moment we live in. Back in 1995, I became familiar with the Elliott wave and using the approach outlined in Beckman's book "Elliott wave explained" of channeling charts, I became so efficient about reading the short-term direction of the markets I followed (mostly a basked of 20 technology and retail back then), that I got into options simply because I wanted to leverage my newly found forecasting abilities even more. I simply BELIEVED! with my scientific background it was very easy for me to believe that there is a logical and even mathematical predictability to mass psychology, and the Fibonacci numbers provided the proper model. By the end of 1999, I was making a great deal of money, and my account had grown many fold.

The Elliott wave, however, also fore casted an upcoming collapse of the markets, and that my ability to make money will soon come to an end. That gave me even better reason not to enter new stock positions and limit my risk by only trading small portions of my account on each call option I bought. As a good American, I believed then in holding my stock positions "for the long term". I owned a big chunk of shares on AAPL (which I had bough at the bottom of the market in 1995, when Steve Jobs came back (adjusted to today's prices, $6.33/share). In late Sept. 2000, that believe came crashing down as my position in Apple wave shaved by more than 50% overnight as the stock fell from $63 to 28. Events such as these may crush your core believes but if you persevere they actually shape your life in unsuspected ways.

Only months after that crushing event, other stocks began to tank. The events on AAPL warned me to be cautious. I begun to sell my long-term positions in advanced of the declining market. But my original believe that substituting Calls for Puts would assured me continued profits was only an illusion. After losing 15% of my profits accumulated over the previous years, I gave up, stopped trading and focused on other aspects of my finances and my Pathology consulting business. By the summer of 2002, I continued to believe that Options would be the way to limit my risk, assure me profits under most market conditions and bring further success. I just did not know all that I needed to know. I took some option courses believing that "if others can do it so could I". Yes, you NEED to believe this much in order to persevere, but that alone is not going to bring you success because you'll soon wonder if those self-appointed gurus are really successful. Aren't they all in the "B" (business) rather than the "I" (Investor) category? Another strong believe I had was "I had done it before, I can do it again", but this belief can be easily questioned too. Nevertheless, I persevered because other opportunities were not nearly as attractive to me. I wanted independence, work at my own schedule, and work out of my home. I wanted to be able to travel. In fact, I love to travel to exotic places were not even the internet is readily available.

I believe that such a form or trading, or strategy or system was out there, waiting for me to discover. Further, I believed that if I am to be successful and reach my goal of complete freedom, I was going to have to do it differently that everyone else. I agree with Earl Nightingale who said "What everyone is doing is NOT the best way, it is the average way". That means in practical terms that I can only expect average results if I do what everyone else is doing. I didn't and don't want to day trade (this is too time consuming). I don't want to have to close all my positions before I go on vacation. I want to make money even if I am not glued to the computer. But most of all, I don't want to lose big chunks of money every time a stock falls 30% or more in price. I decided to never trade stocks again. Not even with stop loss, or hedging with puts or covered calls. My AAPL debacle had taught me that stocks are actually riskier than options. Besides, I soon discovered that such strategies use too much capital and they truly do not protect against the downside.

Today, "Dan" posted a message saying that the PCCRC seems like a good trade for this time of uncertainty. But the reason I trade the PCCRC is because ANY time is a time of uncertainty in the markets. The PCCRC goes even further because it works as a long-term straddle, and if I were to enter a stock that falls 30% overnight, chances are that the PCCRC would turn a profit on the move. But the features of the PCCRC for the trader that hopes to get rich trading do not stay there! With the PCCRC you can afford to be "reactive" rather than proactive. If a stock jumps 10% after good news, chances are you would not play a vertical option's strategy such as a call, bull call spread or bear put spread. Why? because you'd think that you'd miss the run, and that a correction would follow. Corrections probably DO follow big short-term rallies in a large proportion of cases, but with the PCCRC, you can stay in the trade for one, two or three months until that rally has a follow through. Better yet, it the stock price declines, you may be OK, if the implied volatility increases.

Being "reactive" is a better alternative to learning "proactive" strategies like looking for "value stocks" in the hope that their earnings will eventually show and jump start the stock. You don't have to be "proactive" searching among hundreds of apparently dormant stocks that are about make a move. You don't even have to chose candidates from a collection of potential Elliott "wave 3" or "wave c" candidates. You don't have to place "stops" of any kind, just in case you were wrong. The PCCRC will turn a profit even if the stock goes against you. Most importantly, you can be "reactive" in your profit taking by selling a portion of your outstanding long calls (or puts) as the stock moves in one direction or the other because as you do, you leave the door open for further gains in case of continues movement in the direction of the trend, or a reversal, such as that which occurred to GOOG and other momentum stocks.

Here is the GOOG trade I have been describing for you. Today, My profits reached $20281. If you were to follow every step I have taken (you'd need a subscription to platinum), you'd see that I simply took profits when I felt the stock had moved strongly in either direction, without affecting the potential profits on continued trend, I collected profits and further opened the trade to the possibility of a reversal. BUT even if I had not taken any profits, if I had just rollover my shorts just before expiration, I could have still accumulated $12931 in profits (graph not shown here).





So BELIEVE, because you need it to succeed. It is OK to have a monetary goal, perhaps a percent increase over the course of a year. Chances are that if you truly believe, you will exceed that limit. That true believe is what is going to carry you through the bad times, the draw downs and the learning curve. When you fill like you are ready to quit, you may say "if others can do it, so can I", or "I have done it before I can do it again", you may even say "that system I just bought is not really for me (and that may include the PCCRC system), but I will find the one that fits me". You may even believe that you can reach your goal with one more piece of information, one more insight, one more paper trade, one more back test. Some others believe that enthusiasm is a key component of success. All this is good. What is essential is that you BELIEVE that you will reach unusual success. I begun this year thinking that last year's 30% returns could be reproducible. But I decided to set a goal that was achievable but also challenging, that would push me to a new comfort zone. I wrote it in big letters, and posted on the wall next to my computer, were I can see it every day. Not only did I reach my goal, I exceeded it. I have raised my targets and aspirations, and also post them on the wall. I have only one thing left to say: I begun to succeed when I begun to believe that I had a powerful system in my hand and that my goal was within my grasp, and that I was deserving of my goals because I had worked so hard to develop my system and put it into practice. You too can succeed, if only you BELIEVE!