Dean Storholt

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I am not a registered broker-dealer or investment adviser. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any particular individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk.

I am not subject to trading restrictions. Myself and other instructors could have a position in a security or initiate a position in a security at any time.

Buying Stock

How many of you can think of a stock you wish you had purchased AND HELD?

MSFT – 1000 shares in 1986 ($21,000) Now be worth $3,456,000

FB – AFTER IPO dropped to $19 1000 shares = $19000, Took < year to DOUBLE$218 Per share all time highNow $178 per share

Buying Stock

AAPL -Went public in 1980 at $22ish per share1000 shares = $22,000Now be worth 11.2 MILLION

AMZN – 1000 shares ($18000)Now 5.6 Million

PCLN, GOOGL, CMG, SNAP On and on and on and on

All time lows

CITI – dropped to $1 per share!!!

Now $70Decent return

BBY – from $10 to $40 in 11 months!!!

BAC

Good entry? BACDbl btm at band

Near $4.88

Buy 1000 sharesOr leaps

14 weeks later we have a double

Sell ½?

Have 500 shares free!!!!

Today around $30

Why Not?Stocks versus options – how do we decide?

Some stocks pay dividends

Some stock don’t expire ☺

Some stocks cost more

Can we combine BOTH worlds

I want to build a portfolio that I can pass on

Sell ATM 300p naked 3 months out for $18.55Buy ATM 300c 3 months out for $19.90

Our cost in the trade $1.35 per contract

45 days in – on the break of the 5, around $435 close position BUT—Close by selling 7 contracts and exercising 3We now own 300 shares of BA FREEEE!OR BETTER THAN FREE!!!

Cost Basis ZERO

Our $300c option now have $135 of intrinisicvalue plus the remaining time value

The put option will have some time value left, but not much

Sell 7 contracts at $135 intrinsic value = 94,500Buy 300 shares at $300 per share = 90,000(Buy 300 shares at our contract price of $300)

We now have a cost basis on those shares of -$4500

Other ways to reduce cost basis?Selling naked putsSelling Covered CallsSelling naked putsCollect the dividend

Cost Basis ZERO

Dean Storholt

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Finding Candidates

Tonight I want to focus on ways to FIND candidates

IPO

Normal Watchlist

News

Scans

IPO

Do we have to get in on the IPO to make $$$$

NO!!!!

I would argue that you are better off waiting until after the IPO

Most RETRACE after IPO

IPO may not have options yet!

It’s all in the Charts

IPO

SNAPEntry Oct 28 $6.05Sell ½ May 30 $12.107 months, now own 250 shares FREE!!$3000 Investment

IPOPINS

Went public 4-18 @ $23.75

Ran to $35ish

RETRACED to IPO price in 1 month

Did we miss it?

Did it double?

Trending down?

Possible entries?

Stock or options

IPOSoly

Went public Feb @ $5.25

Doulbed by Apr 4

RETRACED to IPO price May 28

Are we nervous?

Sold ½ at double in April, Reload

Outside band/inside band move

Double within days/sell ½ again

Now own twice as many…FREE!!!

Normal Watchlists

I like these!

We are used to watching these – Familiar w/them

Have good options

Not Dead or Dying Companies (usually)

Normal Watchlists

AAL – American Airlines

I know high around $55

$27 would be 50% off

Hmmmmmm

Continue this live

AAL – American Airlines

What was our ½ off area?

$27

Bollinger band bottom7 candles downStochastics oversold

Good entry?

Where is stop?

What now?Double bottom?

Normal Watchlists

News

Any relevant news stories lately?

Anyone getting beat up?

Tradestation Scans

Tradestation Hot Lists

Analyzing potential candidates

How do we know that our candidate is not “dead”

Is there a reason or is the entire mkt down

Find reason for the decline

Is there a problem with the company

Has the problem been fixed

To the charts?

Continue watchlist scan

Any news stories

GE GMEF DFSIRIODPGNCOthers?

I am not a registered broker-dealer or investment adviser. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any particular individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk.

I am not subject to trading restrictions. Myself and other instructors could have a position in a security or initiate a position in a security at any time.