Thank you very much for taking the time to stop in and take a look at this simple yet most powerful option trading strategy called the FREE TRADE. If you have never used the free trade option strategy, or if you have pyramided futures contracts, I think you will find this strategy very enlightening and a beneficial tool to add to your trader's tool box. If you are new to trading, or have never traded options before, I'll show you step-by-step how to trade this strategy plus five more equally as powerful in my LOW-RISK OPTION TRADING COURSE.

The goal of every trader is to minimize losses and maximize gains on every trade they place. Unfortunately, it's a known fact that most traders are wrong about a commodity's or stock's price move more than they are right. In fact, an industry wide saying is that you can consider yourself a profitable, successful trader if you can call a the market's direction correctly only 50% (fifty percent) of the time. So it's pretty simple to see, using the 50% average, your winning trades should at least be double the amount in profit over the amount you lose on the losers. So controlling losses is by far the most important step towards successful trading. It's even more important for beginners and not yet successful traders with small trading accounts.

Futures contract traders have difficulty controlling risk of loss due to slippage which is the point difference between your stop order and your actual fill price, and daily limit price moves where a commodity is locked up or down it's daily price limit. The last one could get ugly if the market opened limit down for three or four days in a row and you were long! Although daily limit price moves are not the norm, they do occur therefore your trading account is subjected to unlimited risk of loss!

Futures contract traders also have problems maximizing profits. Assuming a futures contract trade moves in your favor, you must pyramid contracts as profits allow to maximize profits. You risk more account margin to purchase more contracts as you make profits. This creates an inverted pyramid where profits can erode very quickly.

Option traders, on the other hand, can completely eliminate the three problem areas of trading futures contracts mentioned above because you can never lose more than you pay in premium for an option, and daily limit price moves have no effect. You can trade a trending market with options using the free trading method I teach which has far less risk than pyramiding futures contracts. In fact, the risk is completely defined to the cost of the initial option purchase; you cannot lose any more than that!

But don't get me wrong, there are also risks when trading options! You could lose the entire amount of premium you paid for an option if the market doesn't move as you expect by the allotted amount of time given (option expiration date), and if you don't employ wise money management principles of cutting losses short. Also, the 'unlimited risk' factor associated with selling uncovered (naked) option premium can subject your trading account to unlimited losses if you do not cover your position as I show you how in my course. My strategies I teach in the LOW-RISK OPTION TRADING COURSE are never subject to more losses than defined up front in the total trade costs and risk rules for each strategy. 

Enough facts about trading futures and options, let's take a look at the free trade strategy below in detail.

THE FREE TRADE OPTION STRATEGY consists of purchasing an undervalued option in a market that we feel is ready to make a substantial price move, and later selling an overvalued option when and 'if' prices move as we expect. Then repeat the process if the trend continues.

Benefits include: No futures margin required, cannot lose more than the initial cost, being able to participate in a trending market with no additional risk, once the free trade has been completed there is NO risk of loss period.

Negatives include: Must pay a premium up front for the initial option purchase. Profits are limited to the point difference between the option purchased strike price and the option sold strike price. Market must move as you expect or you cannot complete the free trade. 

Taking a look at the chart above you can see the sideways price channel at point "A". We use chart patterns and trend line changes as signals to enter option trades. The only other indicator we use is the two-year volatility ranking to tell us which markets are undervalued and which are overvalued, and we get this information free at http://www.optionetics.com

The sideways chart pattern is one of the most powerful and reliable patterns to trade. It consists of weeks, months to sometime even years of daily prices that trade in a tight sideways range. The daily open, high, low, and closing prices are close to the same making trading in the sugar pit a very dull job for floor traders. Option Implied volatility has dropped below two-year lows on our scale because no one is interested in buying or selling this market. This results in some very reasonable option premiums with often a year or more until expiration.

We had been following this sideways channel since May of 2003. Yes, it was a long channel, but we wait for prices to break through the channel before placing a trade. This did occur on March 22, 2004 at point "A". We waited for prices to pullback to retest the breakout price area before placing trades because this could have been a false breakout. 

The retest was confirmed on March 30, 2004 and we issued the order to purchase the October 2005 Sugar 750 call option strike price for $450 with nearly eighteen-months to expiration. 

About one-month later we were able to complete the free trade by selling the now more overvalued October 2005 sugar call option with an 8.50 strike price for $470. This covers our cost for the 7.50 call we initially purchased. There is 100 points between the two strike prices and each point in sugar is $11.20. This translates to a maximum profit potential of $1,120.00 if October futures is trading at or above 8.50 at option expiration.

So what we have created is a trade that has ZERO risk of loss and has a $1,120.00 profit potential. Pretty good odds, I'd say. Ok, I'm not trying to sugar coat the risk here, because it's obvious that there is a $450 + commission and fees up front risk until the free trade can be completed. This amount is a common risk amount when trading futures contracts so you may be comfortable with that. If not, risking one half the cost of the trade is a good rule to follow. And you can close out any completed free trade, option purchased or sold at anytime you wish! You simply place an "at-the-market" or "Limit Order (your price) to sell the 7.50 and Purchase back the 8.50 you sold. If you are in a hurry to exit a position, use a market order because a limit order may not be filled while a market order must be filled at some price. You can expect some slippage using a market order. It's also VERY IMPORTANT that your broker understands that you are closing out a position rather than issuing a new order, so make sure your order goes on an "OPTION TO CLOSE TICKET". 

What next after the first free trade has been completed?

Price action within market trends always rally then pull back to the long-term trend line. Our goal of free trading a trending market with options is to enter (purchase an option) when prices pullback to the trend line because they become more valued during a pullback as the implied volatility drops. We sell option premium to complete free trades as the underlying futures price rebounds higher. This increases the demand (implied volatility) for out-of-the-money options we sell giving us the maximum distance between the two strike prices which increases the profit potential while still covering the trade costs.

On 05/25/04 we purchased the October 2005 Sugar 9.00 call option for $450. Now we will be looking to complete another free trade soon if prices continue higher. However, after rallying for nearly five months, this market is subject to a large price pullback if long traders decide to exit. 

So, what do you do when everything goes wrong and prices drop out of site maybe even below the 7.50 call we first purchased?

Well, you could do nothing. You do not have any risk in the trade at all! But we didn't put this trade on to breakeven. We have been in this market since March of 2004, and it would be senseless to sit by and watch profits dwindle away! Read those chart comments again. Those are the same comments my members saw telling exactly what to do up there as prices were forming the ascending triangle. If prices had broken out to the downside of the triangle and below the up trend line, we would sell the 9.00 call we just purchased for a small loss. If prices continued down below the 8.50 sold call option of the first free trade, we would liquidate it.

No, we wouldn't make as much because maximum profits are determined at option expiration, but when the market signals a trend change on the futures chart, we don't hesitate in jumping ship!

However, the market rallied as we expected and now we are looking to sell the October 2005 sugar 10.00 call for between $450 and $500. But we'll just have to see about that. It's currently, as of Friday October 08, 2004, trading at $404. We will let the charts tell us what to do.

When completing a free trade your goal is to sell the highest strike price possible because ultimately your profit is the difference between the two strike prices. We do not like to sell an option to complete a free trade until we see signs that a current rally or price decline is ending. We didn't see that until 07/25/04 (see chart) so we can now sell a much higher strike price. We sold the 13.00 October call option for $550 to complete our second free trade.

You simply continue to follow the market, buy when prices retest the trend line and sell on rallies.

The free trade option strategy is by far the most stress free trading strategy you'll ever use. It takes advantage of purchasing options when the implied volatility is low and selling the most overvalued options when prices move in your favor. 

In my LOW-RISK OPTION TRADING COURSE you'll find three more powerful option strategies like the Call and put Option Spread, Ratio Spread, and the In-the-Money Debit Spread. Each strategy is designed to take advantage of any given market trading opportunity.

For instance, the In-the-Money Debit Spread is a low-risk option position that accomplishes the same goal as trading a futures contract without the unlimited risk factor! This is a perfect strategy to consider every time you plan to go long or short a futures contract! Don't trade another futures contract or option until you read this strategy!

How about the Ratio Option Spread Strategy. Would you consider a trading opportunity that GUARANTEES that you make a profit regardless of where the futures price trades? It's a very simple strategy used at the most opportune times that you'll easily learn. This strategy is stress free trading at its best!

Also, the Call or Put Option Spread is a very popular option strategy that we use to lower the risk when entering a price move that has already begun. 

You will learn how to use each of these option strategies In the LOW-RISK OPTION TRADING COURSE. Each strategy is explained in detail using current clear chart examples of each trade example. 

Did you know that many markets have very reliable seasonal price patterns? I'll show you these patterns on charts and explain exactly how to trade the market with options to control risk and maximize profits. In fact, many of my course members trade seasonal patterns throughout the year exclusively and do very well.  

Course members have logged a great deal of profits this year trading seasonal patterns in July corn, July soybeans, March 05 corn and soybeans, December live cattle, January feeder cattle, and December lean hogs.

Each of these seasonal price patterns and option trade suggestions are reported to my course members each week in my Low Risk Option Course, Option Alerts Service. We scan the markets every trading day to spot opportunities to employ the option strategies you learn from the course. 

Each suggested trade is fully explained with charts and specific option strike prices to use, clear profit objectives and risk management stops. And, we send out special alerts anytime there are adjustments to current orders or new opportunities arise. 

In short, the option alert service which is both emailed and posted within the LOW-RISK OPTION TRADING COURSE course members only private web site each week, is the best way to learn to trade the strategies from the course in real-time.

I know you'll be amazed at how simple these trading strategies are, but more importantly you'll see just how much money you can make! Where else can you double your money in two weeks? Don't worry if you think you can't do it, because I know you can. In fact, I'm making  my courses available to you at absolutely no risk to you...that's how sure I am of you making it! 

If you are not sure if this business is right for you...then don't decide now. You can get started today with as little as $98.50 and you can test out my strategies for the next 90 days, and if you're no happy I'll give you a 100% on the spot refund period! 

Click the link below to read more about this incredible opportunity! 

CLICK HERE TO READ MORE ABOUT THE LOW-RISK LIFETIME MEMBERSHIP COURSE! Remember, you risk nothing with my 100% satisfaction guaranteed refund policy!

Learning to trade commodities is not difficult. However, if you start trading with limited knowledge, your new business is likely to fail in a short amount of time. Do what OTHER TRADERS have done and put the Virtual Trading University on your side. We have proved ourselves many times over for keeping our course members on the cutting edge of trading education. In addition, we have been recognized as providing the most complete futures and option trading course for the most reasonable price anywhere! 

Thank you very much for reading the free trade strategy. Please remember that this trade has been in progress since last March, so it is not a market to enter now. However, we are watching several other developing free trade opportunities in other markets.