Accredited Investing Education

Six-Step Methodology of

When the Bear Market of early 2000 hit, my IRA had lost in one quarter, more capital than I had accumulated in over four years. I experienced an emotional
response to this because I was looking toward retirement and didn’t think I could earn it back before that occurred.

I decided to take on Options Education so that I could protect my capital and possibly even earn profit in my IRA in a down market. I investigated other
educators and spent money on two well-known companies. Each of these were a disappointment to me because they were completely focused on persuading me to
“buy more stuff” from them, rather than teaching me the behavior of options and their usefulness. I felt that I had been burned and still didn’t understand
the basic behavior of options. I kept an open mind as I explored other options educators.

I attended a Webinar hosted by OptionsANIMAL (OA) and saw a trading strategy that seemed appealing to me. The Dynamic Collar was the strategy that used
long stock, short calls, and long puts. The data that made it dynamic is that the use of the two options (long put and short call) was dependent on the
need for each of these instruments. If I learned to analyze the technical data well enough to have a high probability of need for each of these
instruments, then I could repeat this strategy in an IRA to meet my goals. One result of applying a Dynamic Collar was with MR (Mindray Medical
International) where I bought the long stock, short calls, and long puts on the same day at a cost basis of $41.75 per share. What was my risk? $1.75, less
than 5% of my capital invested for five and a half months. My reward? $3.25, almost 8% in the same time frame. There was good news and bad news about this
equity, the bear market of 2008 caused a very large drop in price. Five and a half months later I filled an obligation and allowed the long stock to be
called away at $20.00, 53% below the price at which I purchased it. Yet, I ended up with a profit of $2.45 per share (5.9% of the capital invested.)

When I think about the education I received at OA I see that their 6-step methodology was the most important guideline I learned. I needed to complete each
of these steps under any circumstance, or I’d end up at a loss in my portfolio. I’ve now applied these steps so many times that they’re firm in my mind.

1. Due Diligence [Fundamental Analysis, Technical Analysis, Sentimental Analysis, Market analysis]

2. Select Trading Strategies [apply the expectation that resulted from step #1, to reduce the number of trading strategies from which to

3. R/R Ratio [Do the math to find the complete risk/reward ratio and select the strategy that best fits your personality]

4. Trade Journal [Write down the entry price, profit goal, primary exit, and secondary exits]

5. Place the Trade

6. Monitor the Position [Each day that the market is opened, go to the price charts and apply your technical analysis on the equity. Is an
adjustment needed? Or is it moving towards your primary exit?]

These six steps become less time consuming the more they are adhered to. Learning how to become dedicated to this is like learning something else. It’s
like learning how to drive a car. Once you learn how to drive you don’t have to think about it anymore.

Emilu Bailes
OptionsANIMAL Instructor

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