Volatility Trader

Start targeting huge gains with limited risk

If you’re tired of getting wiped out by sudden reversals, “flash crashes,” and overnight news, Schaeffer’s Volatility Trader is for you.

The strategy in Volatility Trader virtually eliminates the huge, often total losses that can plague buyers of calls or puts in their quest for the triple-digit gains at the end of the rainbow for every options trader. 

The strategy underlying our Volatility Trader recommendations is known as "buying straddles" - you create a straddle simply by simultaneously purchasing a call and a put with identical strike prices on the same security.

Creating and buying straddles is just that simple, and we believe participating in this strategy through our Volatility Trader service is a "must" for any investor with the goal of becoming a serious (and profitable) options trader.

What you get with your Volatility Trader subscription

3-4 easy-to-execute straddle recommendations every month: You’ll receive an email containing both an easy-to-understand trade recommendation and a trade commentary link. Just click the commentary link for greater insight on why we think this recommendation is poised to deliver gains. This link will give you immediate access to the trade commentary and graphs, and also technical, sentiment, and fundamental indicators and parameters. So, you’ll always have the information you need – showing you exactly why we expect the trade to deliver.

See how straddles can potentially make money
whether the market goes up or down

The option trading philosophy at Schaeffer’s Investment Research is driven by the belief that a big move is more likely to occur when the consensus opinion about an underlying stock is surprised.

Our unique methodology – Expectational Analysis® – is a three-tiered approach to market timing, studying traditional fundamental and technical variable within the context of indicators that measure investor sentiment.

To take advantage of explosive moves in a stock, Volatility Trader focuses on using straddle trades.

With Volatility Trader our approach involves seeking options that we think are under priced relative to the potential move that we expect in the underlying. A combination of technical analysis, option activity and upcoming news flow will be used to see straddle plays offer attractive reward-to-risk potential.

Using IBM as our example, with the stock at about $128, you could buy the August 125 call for $5.50 and the August 125 put for $2.95. So, the total cost of the IBM July 125 straddle was $8.45 ($5.50 + $2.95 = $8.45).

You would profit from buying this straddle if IBM is trading above $133.45 (the 125 strike plus the total premium of $8.45) or below $116.55 (the 125 strike minus the total premium of $8.45) by August expiration.

If IBM were to rally by about 11% to $141.90 over this period, your call option would appreciate sharply to $16.90, or double the purchase price of the straddle.

And, if IBM were to decline by 13.5% to $108.10, you’d still double the purchase price of your straddle because, under this scenario, your put option would appreciate to $16.90.

Should the position make a big directional move early in the life of the trade, there is the potential for an additional option purchase to cap potential losses and/or lock in profits.

Just the facts...

Fact #1:

When you buy an "at-the-money" call or an "at-the-money" put (the stock price is equal to the strike price of your option), the probability your call trade (or your put trade) will be profitable at option expiration is about 34%.

This expectation of more losing than winning trades is a fact of life in traditional "buy call" or "buy put" options trading, and this is logical when you consider: 1. There is a 50-50 chance your at-the-money option will expire with the stock on the "wrong side" of the strike price. 2. You are paying a premium for your call (or your put), and so the stock must move "in-the-money" by an amount equal to your option premium for you to break even on your trade.

Fact #2:

When you buy an "at-the-money" straddle (buy a call and buy a put on the same stock at the same strike, and the stock price is equal to the strike price), the probability your straddle trade will be profitable at option expiration is about 42%.

This increased likelihood of a winning straddle trade is best explained as resulting from your ability when buying a straddle to profit from greater than expected stock volatility, regardless of the direction in which this heightened volatility plays out.

Fact #3:

If you had purchased all our Volatility Trader straddle recommendations over the past 12 months, you'd have profited about half the time (20 of 42 trades were profitable). Not 34% of the time (as you'd expect as a call buyer or a put buyer), and not 42% of the time (as you'd normally expect as a straddle buyer), but about half the time.

And when you then consider Volatility Trader gains can reach +100% or more while losses have rarely exceeded 60%, it's easy to see how the gains can accumulate and how Volatility Trader has achieved such a highly profitable bottom line.

The beauty of straddles is that you can potentially profit from a big move in the underlying stock, in any direction. So, instead of getting wiped out by sudden reversals, flash crashes, and breaking news stories, you can turn these market catastrophes into significant returns.

And Volatility Trader is designed to do just that. It lets you take advantage of these large moves – regardless of whether they play out to the upside or downside – and gives you an opportunity to turn them into big profits.

Volatility Trader’s turbo-charged track record and contained level of risk, combined with its proven ability to generate triple-digit profits for subscribers on many recommended trades, is the natural result of our experts combining the smartest trading principles and research based on decades of experience trading options with buying straddles – the smartest strategy for the vast majority of options buyers the vast majority of the time.

Start turning stock market catastrophes into
profit opportunities today with Volatility Trader!