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© 2002 Optionetics 1
Who We Are
1. Leading stock market education
company in the United States &
Canada
© 2002 Optionetics 2
Option Elements
Stock
Price Expiration
Call Prices: Months
© 2002 Optionetics 5
Dogs of the Dow for 2002 January - March
Stock Symbol Price 12/31 Yield Price Today Difference Yield Totals
EK 29.43 6% 34.06 4.63 0.450279 5.080279
JPM 36.35 4% 34.96 -1.39 0.3398725 -1.05013
SBC 39.17 3% 39.25 0.08 0.25558425 0.335584
IP 40.35 2% 45.98 5.63 0.25017 5.88017
XOM 39.9 2% 44.02 4.12 0.233415 4.353415
ROI 8%
Annualized 16%
32%
© 2002 Optionetics 6
System Recap
Long Term Stock Buying System
© 2002 Optionetics 7
Analyzing Positions
1. What if I am right?
2. What if I am wrong?
3. Great traders look at risk.
FIRST !
© 2002 Optionetics 8
Bullish
Buy a Call instead of buying stock
• Lower Cost and Risk
© 2002 Optionetics 9
Dogs of the DOW System
Using Call Options
1. Uses the DOW 30 Stocks
2. Buy 1 year ATM Call Options
3. Rebalance each year in December
© 2002 Optionetics 10
Options on the Dogs of the Dow for 2002
Stock Symbol Premium Yield Price Today Difference Yield Totals
EK 3 0% 3.5 0.5 0 0.5
JPM 3.5 0% 3.2 -0.3 0 -0.3
SBC 4 0% 4 0 0 0
IP 4 0% 6.5 2.5 0 2.5
XOM 4 0% 6 2 0 2
Totals 18.5 Interest 2.3125
Profit 7.0125
ROI 38%
Annualized 76%
152%
© 2002 Optionetics 11
Bearish
Buy a Put instead of selling stock
• Lower Cost and Risk
© 2002 Optionetics 12
DOW Sell System
Buy 60-90 Day Put Options on the
DOW when the VIX drops below a
level of 20.
The Option Returns reflect buying 60-90 Day options and holding them no
longer than 30 days to expiration.
NOTE – We will show you a system using this indicator that works 96% of
the time with Delta Neutral Trades
© 2002 Optionetics 15
Spreading
With “Creative Financing” we can trim
the cost of our trades, therefore:
© 2002 Optionetics 16
Spreads on the Dogs of the Dow for 2002
Stock Symbol Premium Yield Price Today Difference Yield Totals
EK 1.5 0% 3 1.5 0 1.5
JPM 2.5 0% 2.8 0.3 0 0.3
SBC 2.5 0% 3.5 1 0 1
IP 2.5 0% 5.5 3 0 3
XOM 2.5 0% 5 2.5 0 2.5
Totals 11.5 Interest 2.3125
Profit 10.6125
ROI 92%
Annualized 184%
369%
© 2002 Optionetics 17
Comparing Trades
• Dogs of the Dow original system would
cost $18,500 for 100 shares of each
stock.
• Dogs of the Dow call option system
would cost $1850
• Dogs of the Dow Spreading would cost
just $1050
• Using Options lowers the risk
dramatically on this safe system
© 2002 Optionetics 18
Optionetics
• Visualize your Risk to determine the
BEST strategy to use.
• Combining Options into “Spreads” -
Slash your risk over 90%!!!
• Great Trading Systems to use the other
11 months of the year.
• TRADING SESSION Using the right tools
and indicators for High Octane/ High
Probability trades.
© 2002 Optionetics 1500/500/5 19