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IMPORTANT NOTE: This special report is for information and educational

purposes only, based on data as of 2022. Do not buy or sell any investments until

you have read a current Investment House Daily alert or email update. Therefore,

do not buy or sell any investments until you have read the current hotline of

Investment House Daily, or an email update from Jon Johnson.

Little Black Book of Options Secrets

Copyright © 2022, by Investment House. All rights reserved.

No quotes or copying permitted without written consent.

Published by:

Eagle Products, LLC

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Washington, DC 20001

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Email: InvestmentHouseCS@EagleFinancialPublications.com

Website: www.InvestmentHouse.com

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Simple Options Trading

for Beginners

Hi, Jon Johnson here. I’m writing you from my private trading

room in Texas, where I’ve literally made millions by trading

options.

Over the last seven years, my options trading system has

generated a documented 1,308 double- and triple-digit gains.

That's over 1,300 times – and counting – that my recommendations have exceeded

profits of 10% or 100%. (Stay with me to see a number of these trades in action.)

So when you examine my track record more closely, it comes to an average of

over three double- or triple-digit gains each and every week.

What's more... my system is generating wins of 90%... 190%... and 390%... even in

the face of all the market volatility stemming from the Coronavirus Collapse.

In fact, I’ve made this kind of money through the 2007 meltdown... the 2011 U.S.

credit rating downgrade... and the Christmas Eve crash of 2019.

And today, I'll show you how I do it, using two stock price indicators and two

stock patterns.

Not only that, but I'll show you how I do it safely. The truth of the matter is, you

don’t have to take big risks to make money.

You can start out small, like I did... and build your way to a fortune. Especially in

this crazy market.

And when I say I started small, well... that’s not how we usually do things down

here in Texas.

In fact, in my former career, I was an attorney practicing commercial law.

My specialty was oil and gas laws. I argued before the Texas Supreme Court and

the U.S. 5th District Court of Appeals.

But during my commercial practice, I met several traders, and began dabbling in

trading myself. I took to it like a duck to water.

Once I got my feet wet, I found I loved trading so much that I learned how to trade

all the time... and in all kinds of market conditions.

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I found making money was easy during a boom, and even easier during a bust.

You see, that’s the great thing about trading.

Volatile markets give you a “target-rich environment.” They give you the

opportunity to haul in loads of double- and triple-digit gains.

Here’s what my system handed readers, in less than a month after the Coronavirus

crash started on February 14, 2020:

• 155% Lam Research Corp (LRCX)

• 133% Slack Technologies Inc. (WORK)

• 107% Sunrun Inc. (RUN)

• 63% Visa Inc. (V)

• 61% Netflix, Inc. (NFLX)

Just $5,000 compounded into each trade would grow into $161,380 in less

than a month!

Now of course that money would've been yours to do whatever you wanted.

But here's what I did when I got accustomed to routine wins.

I used the money to buy a small business... and retired from my law career. I’ve

owned several businesses since, but my days are spent trading, full time.

So let's jump into the nuts and bolts of my trading system.

It starts with these...

2 Indicators and 2 Trading Patterns

You Need in Your Trading Arsenal

There are two indicators I primarily use in my system.

The first is called a “simple moving average” or “sma.”

Moving averages were created to cut down on the market noises (false spikes and

dips), and show market trends more clearly.

Here's how they work.

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A simple moving average is merely a line drawn on the chart that tells you the

average stock price for the last few days.

The most common are:

The 200-day simple moving average, or “200 sma”... which displays the average

price for the last 200 days.

And the 50-day simple moving average, or “50 sma” ... which displays the average

price for the last 50 days.

On this chart below, the 200-day sma is orange. The 50, which moves a lot faster,

is blue:

Now, if you're ready, I’ll next show you how to make money with them.

3 Steps to Triple-Digit Profits

with Simple Moving Averages

I had my eye on Moderna, Inc. (NASDAQ:MRNA). Moderna Medical was

starting a trial of their Corona vaccine.

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Now, because it’s one of the “virus stocks,” MRNA had been quite volatile.

On March 13, its price sat on the 50 sma. Touching the 50 sma was our first

indication something BIG might happen.

(I have circled this on the chart below as Step 1):

The next trading session MRNA “bounced-off” the 50 sma (its price went higher

after it hit the 50 sma).

That was our “buy” signal.

I advised my group of traders to buy a simple call option (I'll explain more on

these later in the report).

We chose the option selling for $5.00. See Step 2 below:

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The stock surged and hit our price target Thursday. We also sold our options for

$10.80 and banked a gain of 116%... in only 4 days.

That trade transformed $500 into $1,080 after just 4 days.

Now, let’s look at a 200 sma trade.

Walmart Inc. (NYSE:WMT): Old, stodgy WMT is also a “virus stock.” People had

been panic-buying toilet paper, hand sanitizer, canned food, bottled water, and the

like.

We got in when WMT moved over the 200-day sma on March 17 with a powerful

upside move.

Because there was so much momentum, we bought two call options for $3.50

each.

As WMT surged higher, it hit our first target the next day.

So, we sold one of our calls for $8.40 and banked a gain of 140%...

And let the other option ride, as you can see in Steps one and two below:

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Since WMT continued higher during the next session, in Step 3 in the chart above,

we sold the other option for $11.00 and collected a gain of 214%... in 3 days.

Just to be fair...

The average between the two gains was 177%. That would have exploded a $1,400

investment into $3,878.

Not bad for 3 days of work. And all you would've had to do was act on my email

alerts.

Now let's recap what we've learned so far...

1. The best indicators and most often used by professional traders are “moving

averages.”

2. Simple moving averages are the average of the price for the last few days.

For a 50-day moving average, it’s an average of the stock’s price for the last

50 days. For a 200-day moving average, it’s an average of the stock’s price

for the last 200 days.

3. On my trades, which you’ll see from my free Weekend Wrap Up newsletter,

you’ll see how we use different moving average times to optimize profits for

a given market situation... allowing us to trade in booms and busts.

4. But again... the 200 sma and the 50 sma are usually our gold mines.

Okay, there are your two primary indicators. Both exceedingly valuable.

Now let's look at...

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The 2 Most Powerful Patterns I Use

in my Trading Services

1. The “Cup and Saucer”

One of my favorites is the “cup-and-saucer” pattern.

We often watch this pattern form in the background for months... waiting for it to

complete itself on the charts.

It often forms a “handle.”

And when it does, we simply wait for price to be above the right moving average...

And there’s often a fat payday waiting for us.

For example, Amazon spent most of last year forming its cup.

We kept an eye on it until January 2020, when the cup completed its handle.

Here’s what the pattern looked like when it was fully set-up:

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Now, look a little closer...

You can see the 50 sma as the blue line, flowing across the chart.

You can also see how the cup has formed over the last few months and ended in a

handle.

Now I’ll show you the trade, in three steps.

1. On the chart below, at you can see we entered January 6, 2020, in the cup’s

“handle,” well-above the 50 sma.

2. The price started to fade as it dipped. But once it bounced off the 50 sma,

we knew we had a winner.

3. We exited January 31, 2020, with a hefty 112% win.

And that is one of the most powerful patterns you’ll find... even if it does take a

little while before it sets up.

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2. Triangles

Triangles are easy to find. They’re everywhere.

Triangles are called different names: wedges, flags, and pennants...

But the idea is the same: You start with wide price swings that narrow over time

into smaller price swings.

This means the market’s coiling-up... building tension... and often ends in a

powerful breakout.

Here are a couple of examples:

Now, I’ll show you a triangle we banked a nice little gain in after just two days.

We caught Schrodinger Inc. (NASDAQ: SDGR) in a downward-pointing wedge.

That usually means a high-profit breakout at the end of the wedge... which is

exactly what happened:

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We saw the wedge narrow, so we entered March 18, 2020.

It broke out over the next two days.

And we sold March 20 for a 78% gain:

Anytime I can get a 78% gain in two days... I’ll take it.

But now, I have a question for you:

What if you’ve never traded options before, or found them confusing?

Earlier, I promised to explain how simple and easy call and put options can be.

Here's a primer... the same one that I give all my new options traders:

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Options Trading, in Plain English

Buying Options:

Let’s start making money by using “call” options.

When you buy a call option, you get two things:

1. The right to buy 100 shares of a stock at a price you previously agreed on

2. A date on which your contract expires

Now, for our purposes, when you buy an option, you’re buying that option on a

stock. There are thousands of things you can buy options on.

But we’re going to learn about buying options on stocks that are listed on the

Nasdaq or the New York Stock Exchange.

So when you buy an option on a stock, that stock has a special name. It’s called the

“underlying asset.”

Let’s take an example.

Let’s say there is an electric car company called “AC-DC Motors.” Their stock

ticker symbol is ACDC. So, ACDC will be the underlying asset of the call option

contract.

Now, let’s say ACDC’s stock price is $90 today. You think it’s going up. In fact,

you think it will be $100 three months from now.

That means a contract with a 90 days expiry (expiration date) is all you’ll need.

And since you think it’s going up, you’ll want to buy a “call” option.

Because you think ACDC will go up to $100, you think it’s safe to buy a call

option that gives you the right to buy ACDC at, say, $95. Anything over $95 is

pure profit for you.

That $95 is called the “strike price.” Why? Because that’s the pre-agreed upon

price you “struck a deal” for you to cash-in your option contract.

Again, you struck a deal to have the right to sell 100 shares of ACDC stock at $95.

Since you believe those shares will be worth $100 soon, a strike price of $95

gives you a cushion.

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Let’s sum this up. I’m going to be repeating myself, so hang on...

You’re buying a call option on ACDC. Their share price is $90 today. Your option

contract means:

You have the right to buy 100 shares of ACDC, the “underlying asset.”

The strike price, the price you can buy 100 shares of ACDC, is $95 per share.

Your right to buy 100 shares of ACDC is only valid until the expiry (the date the

contract expires... and in this case, it’s 90 days away.)

How much is this option going to cost you?

A lot less than if you bought 100 shares of ACDC outright. At ACDC’s price of

$90 per share, you’d have to invest $9,000.

But in our example, a 90-day expiry call option on ACDC with a $95 strike price

can be bought for $300 (use $300). That $300 fee is called the premium.

Let me repeat this: The price you pay when you buy an option is called a

premium.

Fast-forward 90 days and let's see what happens...

Let’s say you were right. Better than right. ACDC went up to $102 per share.

Your call option gives you the right to buy 100 shares for only $95 which you do.

Why? Because you can instantly sell them at the new price of $102 per share.

You just made a $7 profit on 100 shares. That means you just pulled in $700 on an

option you bought for a premium of $300.

Once again, you bought a call option for a $300 premium and ended up with

$700.

Now, subtract the $300 premium you paid for the option... and you’re sitting pretty

with $400 pure profit.

Do the math, and you’ll discover you made 133% in just 90 days.

People who just bought ACDC stock made 13%.

Here’s the difference:

On a $9,000 stock investment at 13%, that’s a $1,200 profit.

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But if you put that same $9,000 into call options, that’s a $12,000 profit.

Which gain would you rather have?

Of course, once you get the hang of it, you’ll buy more than one option contract at

a time.

Buy 10 contracts, you’d have made $4,000. Buy 20 contracts, you’d have made

$8,000.

Surely you can see how you can start with a small amount of money, have a stock

move a few dollars... and make fast wins by playing options.

Now what about “put” options?”

When you buy a put option, you get two things:

1. The right to sell 100 shares of a stock at a strike price

2. An expiry date for your contract

Now, let’s say there’s a company named Zipper International. Their (hypothetical)

ticker symbol is XYZ.

Coincidentally, their share price is also $90 today.

Well, what if you think that instead of this stock going up...

You think it’s going to drop. In fact, you think it will be $80 three months from

now.

So, you go to your online brokerage account...

And you buy a put option on XYZ for an $85 strike price with an expiry of 90

days from today. And your premium (purchase price) is $200.

Now, what on earth did you just do?

Let’s follow the money... and it’ll all be clear in a moment.

You bought the right to sell 100 shares of XYZ at $85 a share, anytime within the

next 90 days. That right cost you a premium of $200.

And your broker is obligated to buy those shares from you at $85 per share.

What if XYZ drops all the way to $80 a share before 90 days are up?

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Because of your put contract, your broker is forced to pay you $85 for each of

those 100 shares in your put contract...

Which you happily sell to them...

Because the going price is only $80...

And you just made $5 per share.

And remember, your put contract gave you the right to sell 100 shares.

You just got paid a total of $500.

But the premium on your contract was $200. So, subtract that from your total of

$500...

And you pocket $300.

Bottom line: you risked $200 and walked away with $300.

You made 150% on your money in less than 90 days.

Now what if you just sold short the stock, and not the option?

If you crunch the numbers, you’ll see, in the same timeframe, you would have

made an 11% profit.

I don’t know about you, but I’d rather play the option for 150%.

OK, now I’ve shown you both calls and puts.

And you’ve seen the beauty of options: You can make just as much money when

the market plummets as you can when it soars.

Order Types:

Stop Losses and Stop Limits

Stop Loss:

A Stop Loss is a Limit order that can turn into a market order. In practice, it is

placed at a certain price to sell automatically should the market hit that price.

Benefits:

Cuts losses short before they turn into big losses

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This is the theory: It doesn’t always work as desired.

Explanation:

If a stock gaps lowers (e.g. bad news) below your stop order, your order becomes a

market order and you are taken out at the next trade price... often much lower than

your original stop price setting.

Problem:

Stocks often bounce up after bad news so you get the worse trade exit price.

Thus stop losses can make you lose more money than you originally set them for.

What is secure about that?

Here's when you can get away with using one (though this still does not defeat the

gap lower scenario):

When stocks are not swinging wildly

Lower volatility for your particular stock

Plenty of liquidity for your stock and/or option

Stop Limit:

What it is:

A limit order that does not turn into market order if stock gaps below (or above if

you are short) your limit order price

Benefits:

If stock gaps below stop limit price, your order stays at a limit order and you are

not taken out at market (Remember: limit order says you will be taken out at the

limit price or better)

This allows you to get out at a better price if your position bounces.

Problem: If it doesn’t get you out, you can be stuck in a position that continues to

fall!

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Why Use Them at All?

We prefer to use “mental” stops where we know the point we want to sell. Not an

automatic sell because a stock/option can rebound into the close

This introduces more emotion into your investing, however, and that can hurt you

if you are not trading like a machine

If you cannot watch the market and it is weak, then the stop limit does give you

some protection

We never use stop losses... but if we need to, we use stop limits.

What Does an Option Recommendation Look Like?

Decoding the Options Order:

An option is defined by five main components:

1. The ticker symbol

2. The expiration month

3. The strike price

4. Whether it’s a call or a put

5. The premium paid to buy the option

So, an option recommendation might look something like this:

Buy the XYZ December $25.50 Calls for $2.75.

This is a completely theoretical recommendation. But let’s examine what each

component means and how it would impact your investment if this was an actual

recommendation.

It’s also a helpful review of what you already know.

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A ticker symbol is quite simply a short-hand description, featuring a unique

combination of letters, to help investors identify a specific publicly traded

company.

The expiration month is just what you would expect. It indicates the month in

which an option expires.

If the month when the option becomes invalid (or expires) is reported without

including a particular year, you can assume that the option expires in the current

year.

All stock options end their useful life on the Saturday after the third Friday of their

expiration month. I’ll provide further explanation about expiration dates elsewhere

in this report.

The strike price of an option is the price that signifies whether the investment is

“in the money” and able to help you turn a profit. I watch for the stock price of a

related option to rise to and especially above its strike price.

When a given stock rises well beyond the strike price in a call option, the investor

can sell the option at a handsome profit. (I alert you to such opportunities through

my trading services).

The “Little Black Book of Options” Glossary

At the Money — The price of the underlying stock is equal to the strike price of

the options contract.

Exercise — For options, this term means you chose to buy a given stock at the

price outlined in the options contract.

Expiration month (Expiry) — The month during which your option will expire

unless you exercise the contract or choose to sell it beforehand. All stock options

expire on the Saturday after the third Friday of their expiration month.

Extrinsic value — This is the value assigned to the premium of an options

contract, based on the expiration date and the perceived volatility of the underlying

stock price. It is combined with the intrinsic value to determine the total premium

of an options contract.

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In the Money — The price of the underlying stock is above the strike price of the

options contract.

Intrinsic value — The value assigned to the premium of an options contract in

proportion to the underlying stock price. It is combined with the extrinsic value to

determine the total premium of a contract.

Option — A contract that grants you the right but not the obligation to purchase

100 shares of an underlying stock at a predetermined price, within a certain time

frame.

Out of the Money — This occurs when the underlying stock price is below the

strike price of the option. Some people buy options that are out-of-the-money in

hopes that they move in-the-money before the options contract expires.

Premium — The price of each options contract. It usually is expressed in terms of

a per-share dollar amount. Since each contract controls 100 shares, a premium of

$.50 would actually cost $50.

Strike price — The price at which a call or put option can be exercised.

Conclusion

I hope this educational report helps lay the foundation for trading options,

including how using just 2 indicators and 2 trading patterns can dramatically boost

your profits.

The great news is that you don’t have to master all of this all by yourself.

As a member of Investment House Daily, I do all the work for you. I spend all

day, every day, looking for these patterns so you don’t have to!

And as I mentioned earlier, over the past six years I’ve given my readers over

1,300 double- and triple-digit winners.

That includes these wins below, which happened right after the market began

crashing due to the Coronavirus pandemic:

• 155% gain on Lam Research Corp (LRCX)

• 133% gain on Slack Technologies (WORK)

• 107% gain on Sunrun (RUN)

• 63% gain on Visa (V)

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• 61% gain on Netflix (NFLX)

So you can see how my system works like gangbusters in ANY kind of market.

Think about that for a second. Just $5,000 compounded into each of these trades

would have grown into $161,380 – in less than a month.

Do you know anyone else raking in these kinds of gains right now?

So now, I want to share my live trades with you – risk-free – for the next month:

Get 30 days of full membership – 100% risk-free – in Investment House Daily...

and save 50% off what others are paying. Get started by clicking here now!

See for yourself how to open the floodgates to outsized gains during both booms

AND busts.

I look forward to working with you.

Jon Johnson

Chief Market Trader, Investment House

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Biography

Jon Johnson is the editor of Investment House Daily, Technical

Traders Alert and Success Trading Group. Jon has been a guest

on CNBC-TV, Bloomberg TV, Houston’s 650 Business Radio

and his newsletters have been featured in various financial

articles, including articles in the Washington Post, Chicago

Sun, The Wall Street Journal’s Smart Money Magazine,

Bloomberg, Kiplinger Personal Finance Magazine, Houston Chronicle, Business

Week, Money Magazine and other news magazines. He was even featured in

Forbes.com’s Best of The Web online edition.

Jon holds Business and Law degrees from the University of Texas at Austin and

has practiced in commercial litigation and oil and gas law, arguing before the

Texas Supreme Court and the US Fifth District Court of Appeals.

During his law career Jon became very interested in investing and

entrepreneurship as he worked with many dynamic clients. He became an investor

in several small businesses and today owns and helps operate private companies.

Jon educated himself in investing and trading, reading everything he could find on

markets. From that he developed his own trading and investing style. It became so

successful his brokers asked if they could follow his trades themselves and with

their clients. That soon morphed into him providing investing and education

services to clients and then offering his insights through Investment House.

For the past 21 years, Jon has helped thousands of clients gain success in the

financial markets through his newsletters and education services. His philosophy

in investing and trading is to take what the market gives you regardless if that is to

the upside or downside. The goal, of course, is to make money… which leads to

his definition of success: doing what you want to do when you want to do it.

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