Focus on Credit Spreads in 2018

Good afternoon. This is James Cordier of OptionSellers.com with a market update for March 2nd. For those viewers today who have read The Complete Guide To Option Selling, possibly Chapter 10, which describes the credit spread, our favorite form of positioning accounts in short options and commodities, we describe it as the Maserati of all option positioning. Basically, the credit spread allows you to add premium to the account and have a safety measure of having one long position versus possibly three or four short sales. Basically, what the long position does is it babysits the position until later on the market decays. We normally buy back the position and then we offset our one long position getting some of the premium that we purchased it for back and put into the account. Basically, what this does is it smooths out the equity curve in times of high volatility. The high volatility sometimes scares people but what that does is it allows us to sell options much further out in time and much further out in price than we would normally be able to do. 2017 we did extremely well during the low volatility times but we were selling strikes quite close, and in 2018 and 2019 it looks like we’ll be able to sell options even further out of the money and with all the luxury of having a long position on to protect it. We started doing that this past week in gold, and silver, and crude oil, and we’re now looking to position the exact same way utilizing the rally that’s going on in the wheat market right now – something we really feel is going to be an attractive position later this year. We think that the credit spread is going to offer great returns in 2018. We’ll just have to wait and see. As always, it’s a pleasure chatting with you and looking forward to doing so again in two weeks. Thank you.