Access Stock & Options Trading Videos
Now is a great time to profit from market trends. Get access to exclusive stock and options trading videos that provide powerful insights into successful trading.Chuck Hughes’ option trading strategies have produced record profit opportunities in the past few years, a surprising fact considering the state of most other investment companies. How does he do it? He sticks to his simple to learn stock and option strategies*.The rule base system is not complicated, but it works. You trade with the trend. When the price trend is up, you buy when the price trend is down, you sell. It’s a basic trade selection process that has produced consistent profit opportunities for Chuck Hughes and the members of his Inner Circle*.It doesn’t matter if you’ve been trading all your life or if you’re just starting out today, Chuck Hughes’ rule based trading system is designed to work for you. By becoming a part of the Inner Circle, you will gain access to a multitude of different tools that will guide you in your trading experience.
** Chuck Hughes profit results are not typical and do not guarantee future trade results.
*Strategies made may changeaccordingly
It Was The Best Of Times It Was The Worst Of Times
Dividend Cut87% 50% 85% 64%
These type of dividend cuts are rare for blue chip companies. For example, until this year Pfizer increased its dividend regularly for more than 40 years. And Dow Chemical went almost 100 years without cutting its dividend. At the same time these blue chip companies were slashing dividends, a little known option income strategy was actually increasing cash pay outs to investors due to rich option premiums. So while it was the worst of times for corporate dividend payouts, it was the best of times for investors who sell option premium to generate cash income. Most investors are not familiar with the concept of selling option premium to generate cash income. Selling option premium is a very simple but lucrative income strategy. When you sell an option, cash equal to the option price or premium is immediately credited to your brokerage account. Unlike a traditional stock dividend you dont have to own the stock on the dividend date to receive the quarterly dividend and you dont have to wait a year to receive a 3% or 4% dividend yield. When you sell option premium, you can get paid up to a 20% to 30% cash payment up front when the option is sold. You get to keep this cash payment regardless of the price movement of the underlying stock.
Up Sloping On Balance Volume Line
The price chart below displays the daily price movement for Apple stock. Below the price chart is the On Balance Volume line for Apple stock. We can see from chart that the On Balance Volume line is sloping up indicating volume is heavier on up days and buying pressure is exceeding selling pressure. The up sloping On Balance Volume line confirms the price up trend and the sustainability of the price up trend.
Confirmed Up Trend
Stock price is trending up with 50-Day EMA line above 100-Day EMA line Volume is increasing on days a stock closes up Volume is decreasing on days a stock closes down
50-Day EMA
On Balance Volume Is a Useful Tool to Confirm the Trend for Virtually Any Market
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$4600 Grows To Over 17 Million Dollars
The system produced $17,670,016 in total profits and $44,065 in total losses. Dividing the total profits by the total losses results in a Profit to Loss Ratio of 401 to 1 which equates to more than 400 dollars of profit for each 1 dollar of loss. The Profit to Loss Ratio is a good measure of risk. A high Profit to Loss Ratio indicates that the Major Trend System keeps losses to a minimum by exiting losing trades before a big loss occurs. The Major Trend System almost always exits a trade before a big loss occurs and provides you with the discipline necessary to become a successful options trader. Keep in mind that two global bear markets occurred during this period including the worst bear market since 1932 during which the S& P 500 Index lost 50% of its value and the NASDAQ suffered a 76% loss. These profit results demonstrate that the Major Trend System is a versatile, effective method for trading options during any type of market condition. Most investment programs recommend diversifying your portfolio across different industry groups. One of the great advantages of the Major Trend System is that it allows you to further diversify your portfolio by taking both long and short trades which increases the diversity and profit opportunities of the system.
% Of Times Aapl Increased In Price
Note: An increase in Apple stock price does not always correspond exactly to a similar price increase for an Apple call option due to the time decay characteristics of options. We will learn shortly how to minimize the effect of the time decay characteristics of options
The historical price data gives a good idea of the accuracy we can expect for the various time periods. Based on this data if Apple was in a price up trend and I wanted to purchase an Apple call option, I would trade the 3 or 6 month options for Apple which resulted in a stock price increase 76% of the time for the 3 month and 91% of the time for the 6 month. The 1 month option with 70% accuracy is too low. Longer term investors may consider purchasing Apple LEAPS options which historically is 100% accurate.
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Successful Stock Trading Can Be Reduced To Two Simple Rules:
Price charts are a great tool that helps us determine a stocks price movement. The daily price chart below displays the daily price movement for Apple stock over the past month. The horizontal axis at the bottom of the chart references the time period of the chart which is one month in this example from March 8th through April 8th. The vertical axis on the right side of the chart represents the price of Apple stock and in this example ranges from 218 to 242. The vertical bars display the daily price movement of the stock. Each vertical bar has a horizontal line which represents the stocks closing price for the day. On March 22nd the daily bar shows that Apple stock traded in a range from about 220 to 226 . The closing price on March 22nd which is represented by the horizontal bar was about 225.
Selecting A Buy Point
When a stock trades near the lower channel it is an indication the stock is becoming oversold and will most likely encounter buying pressure and then trade back up towards the middle or upper channel. If you are considering buying Apple stock you dont want to buy if the stock is trading near the upper channel as there is a good chance the stock will encounter selling pressure near the upper channel and then decline in price. It is better to wait until the stock trades near the middle or lower channel before buying. This results in a better entry as the stock most likely will trade back up towards the upper channel.
Upper Channel
Lower Channel
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Fcx And Esrx Trade Examples
My brokerage account Profit/Loss Report below shows that I sold the FCXFM calls at 16.35 points and the XTQFP calls at 22.40 points. This resulted in a $9,099.72 profit and a 126% return for FCXFM and a $12,199.65 profit and a 119% return for XTQFP.
Over the same time period purchasing FCX would have produced a 14.8% return compared to the 126% return for the option. The option purchase provided 8.5 to 1 leverage compared to the stock purchase. FCX Option Return 8.5 Times Greater Than Stock Return Purchase PriceStock Option 71.15 7.20
15.4% 119%
Inner Circle Advisory Service
Membership Benefits: Receive full support from our experienced staff to help you implement the high accuracy option trading strategies Receive clear and concise buy, sell or hold signals that eliminate guesswork Frees up your time spent on research Receive access to actual open trade and closed trade profit results that give you an instant picture of how a strategy is performing
High Accuracy Real Time Results $2,572,413.71 Profit with 94% AccuracyI also use the Option Cycle Strategy in my own trading accounts for option purchases, option spread trades and buy write trades. Using the strategy contributed to my $2,572,413.71 profit as shown by the copies of my brokerage account Profit/Loss reports that follow. There were a total of 251 trades of which 237 were profitable resulting in 94.4% winning trades. Option purchase trades are listed first followed by option spread trades. Option spread trades reflect the net profit of the combined long and short option. For example, if a spread trade has a $2,000 profit for the long option and a $1,000 loss for the related short option the spread would have a net profit of $1,000.
in premium income over the past 3 yearsBy Chuck Hughes
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$1633 Stock Loss = $3553 Buy Write Profit
Lets take a look at an example of how a buy write trade can be profitable even if the underlying stock declines in price. My brokerage confirmation below shows that I purchased 1,500 shares of Mosaic stock at an average price of 42.0 and sold to open 15 of the Mosaic 40-strike call options at an average price of 7.90 points. I received $11,850 in cash income for this option sale which provides substantial downside protection if Mosaic stock declines in price.
Mosaic stock price declined after I initiated this trade. Below is a snapshot of my Mosaic buy write trade in my online brokerage account. Even though I currently have a $1,633 loss in Mosaic stock I have a $5,187 gain in the short Mosaic options giving me an overall net profit of $3,553 for the buy write spread.
Ideal Strategy For Todays Volatile Markets
Selling option premium to generate immediate cash income is the ideal strategy for todays volatile markets and uncertain economy. We will look at an actual trade example shortly that allowed me to purchase Morgan Stanley stock at a 30% discount to its current price. When you buy stock at a 30% discount you can profit if the stock price increases, remains flat or even declines 20% to 25% resulting in a much higher probability that the trade will be profitable. This gives the option income strategy a huge advantage over a stock purchase strategy and allows you to profit in any type of market condition. 3
Added DimensionThis gives the option income strategy a huge advantage over a stock purchase strategy and allows you to profit in any type of market. The option income strategy works just as well with bearish trades which allow you to profit in bear markets when stocks and ETFs are declining in price. Bearish income trades not only reduce portfolio risk but can dramatically increase profit opportunities and provide a whole new dimension to income investing.
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Selling Covered Option Premium
Lets look at an example of an option sale and the resulting amount of cash that was credited to my brokerage account. The brokerage confirmation below shows that I sold to open 10 of the National Oilwell Jan 25-strike call options symbol YMPA25 at 12.72 points. Options cover one hundred shares of stock so a 12.72 point option is worth $1,272 . Selling 10 options at 12.72 points resulted in $12,720 cash being credited to my brokerage account . I get to keep this $12,720 cash payment regardless of the price movement of National Oilwell stock.
Sale of 10 Options at 12.72 Points Results in $12,720 Cash Dividend Credited to Brokerage Account $1,272 x 10 Contracts = $12,720
Lets look at an example of the first type of option income trade that is initiated by purchasing stock and selling a related call option. This is also known as a buy write or covered call trade. My brokerage confirmation below shows that I bought 600 shares of Morgan Stanley stock at 24.22 and sold to open 6 Morgan Stanley July 20-Strike call options at 7.27. These options expire in 4 months.
Buy Morgan Stanley Stock at 24.22 and Sell 20-Strike Call at 7.27
Buy Stock at 24.22 Points Sell Option at 7.27 Points Equals 30% Cash Dividend Over a Four Month Period 7.27 Divided by 24.22 = 30%
Up to 90% Cash Dividend Potential Over the Course of One Year By Rolling Over Option
Chuck Hughes Stock & Options Trading Strategies
Chuck Hughes knows his business. He’s been trading stocks, options, currencies, and commodities for more than 35 years. He is also a 10-time trading champion probably winning more awards than anyone else in Trading Championship history.In his first two years of trading, Chuck Hughes made over $460,000 in actual profits, using his trend following system that he himself developed. The most amazing thing about this is that Chuck Hughes started out with only a $4,600 trading account**.We want you to know one thing before you read on, Chuck is just a normal guy. He was an airline pilot when he first went into trading, wanting only financial security for his young children. In just a few short years, he had achieved just that by basing all of his trading choices on his rule base trading system.All Chuck Hughes wanted was a second income from his investing, but he got much more than that. He was able to retire from his job as a pilot, and now… his goal is to share success with you!
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Profiting In Down Markets
The Buy Write Analysis below displays the profit/loss potential for buying the bearish Emerging Market ETF symbol EEV at 96.80 and selling the EEV December 120-Strike call for 20.0 points. The Analysis displays potential profit results for various price changes for the EEV ETF at option expiration from a 25% increase to a 10% decrease in price. The cost of this buy write 76.80 points and is calculated by subtracting the 20.0 points I received from the sale of the 120-Strike call from the 96.80 cost of the EEV purchase.
The Buy Write Analysis reveals that if the EEV ETF price remains flat at 96.80 at option expiration a 26% return will be realized . A 25% increase in price for the EEV ETF to 121.00 results in a 56.3% return and a 10% decrease in price to 87.12 results in a 13.4% return . The return calculations for this bearish option income trade demonstrate the ability of the option income strategy to provide excellent profit opportunities during down markets.
S& p 500 Index Declined 43% Over The Past 10 Years
As we just learned, the Major Trend System buys when is a simple trend following system that buys when a stocks one month price is above its 20-Month Exponential Moving Average and sells short when a stocks one month price drops below its 20Month Exponential Moving Average. This rule based system allows me to do historical testing.
Now lets take a look at investing in the S& P 500 Index using the Major Trend System which takes both long and short trades. A $10,000 investment in the index using the Major Trend System grew to $29,311 over the past 10 years. Deducting the original $10,000 investment from the ending balance of $29,311, results in a 19,311 profit before commissions and a 193% return. So taking both long and short trades allowed investors to realize a 193% return and avoid the 43% loss incurred from a buy and hold approach. This demonstrates the ability of short trades to reduce risk and increase profits.
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Option Income Strategy Incurs Less Risk Than Owning Stock
Lets now look at an example of the second type of option income trade that is implemented using only options by purchasing a call option and selling a call option with a higher strike price. Because the short option is covered with the option purchase this would be a limited risk trade. The brokerage confirmation below shows that I bought 6 of the Goldman Sachs July 65-strike calls symbol GSG65 at 50.63 points and sold to open 6 Goldman Sachs July 95-Strike call options GSG95 at 27.93. These options expire in about 4 months.
Buy Goldman Sachs 65-Strike Call at 50.63 Sell Goldman Sachs 95-Strike Call at 27.93
Selling to open the 95-strike call at 27.93 points resulted in a $2,793 cash payment per contract being credited to my brokerage account or a total of $16,750 for 6 contracts. So purchasing the 65-strike call at 50.63 points and receiving 27.93 points in cash for the sale of the 95-strike call resulted in a 55% cash payment I received up front when I initiated the trade. I get to keep this 55% cash payment regardless of the price movement of Goldman Sachs stock. Goldman Sachs stock was trading at 112.10 when I initiated this trade.
Buy 65-Strike Call at 50.63 Points Sell 95-Strike Call at 27.93 Points Equals 55% Cash Dividend Over a Four Month Period 27.93 Divided by 50.63 = 55%12
On Balance Volume Indicator
Lets look at an example of how we use the On Balance Volume indicator to confirm the price trend. The price chart below displays the daily price movement for Riverbed stock. Below the price chart is an example of the On Balance Volume line for Riverbed stock. The numerical value of the On Balance Volume line is not important. We simply want to see an up sloping line to confirm a price up trend. We can see from chart below that the On Balance Volume line is sloping up. An up sloping line indicates that the volume is heavier on up days and buying pressure is exceeding selling pressure. Buying pressure must continue to exceed selling pressure in order to sustain a price up trend. So On Balance Volume is a simple indicator to use that confirms the price up trend and the sustainability of the price up trend. We only want to purchase stocks with an up sloping On Balance Volume line. Limiting stock purchases to stocks with an up sloping On Balance Volume line helps us further narrow down our list of potential stocks for purchase.
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