TRADING COURSE – SESSION 5 www.optionstradingiq.com © Copyright 2016. Options Trading IQ. All Rights reserved.

DISCLAIMER Any information contained in this presentation is for educational purposes only. Neither IQ Financial Services, LLC or Gavin McMaster are licensed financial advisors, registered investment advisors, or registered broker dealers. Neither do they provide investment advice, financial advice or make investment recommendations and they are not in the business of transacting trades. Nothing in this communication constitutes a solicitation, recommendation, promotion, endorsement or offer to buy or sell by IQ Financial Services, LLC or Gavin McMaster of any particular security, transaction or investment. Any trades and / or results covered in this presentation may or may not be live trades. All trades and trading results are believed to be accurately presented. However, since the trades may not have been executed in the market, the results may have been under or over compensated for the impact, if any, of certain market factors such as liquidity, slippage and commissions. Therefore there can be no guarantee of accuracy or completeness. No representation is being made that any portfolio will, or is likely to achieve profits or losses similar to those shown. The risk of loss in trading securities and options in particular can be substantial. Customers must consider all relevant risk factors, including their own personal financial circumstances, before making any financial transaction. Options involve risk and are not suitable for all investors. See the Options Disclosure Document: Characteristics and Risks of Standardized Options, available from www.optionstradingiq.com/risks © Copyright 2016. Options Trading IQ. All Rights reserved.

OUTLINE Position Update Adjusting Based On Spread Values The Greeks and Greek Ratios Weekly Condor V Monthly Condor Condor Adjustments 3 © Copyright 2016. Options Trading IQ. All Rights reserved. 3

BEARISH BUTTERFLY Back to Flat P&L Exiting in week 1 would have been the right call August 8th we exit no matter what 4 © Copyright 2016. Options Trading IQ. All Rights reserved. 4

BEARISH BUTTERFLY 5 © Copyright 2016. Options Trading IQ. All Rights reserved. 5

BEARISH BUTTERFLY 6

IRON TRAPDOOR Not a great time to enter with Vol so low Not much margin for error either side 7 © Copyright 2016. Options Trading IQ. All Rights reserved. 7

IRON TRAPDOOR 8

IRON TRAPDOOR 9

IRON TRAPDOOR 10

IRON TRAPDOOR 11

COMBINED POSITION 12

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TYPICAL IRON CONDOR Sell 10 Put Spreads for around $1.00 Sell 10 Call Spread for around $1.00 Total Credit = $2.00 or $2,000 14 © Copyright 2016. Options Trading IQ. All Rights reserved. 14

AS THE MARKET MOVES UP Put Spread Now $0.30 Call Spread $3.00. An increase of 200%. Total Spread = $3.30 Total Loss To Date = $1.30 or $1,300 15 © Copyright 2016. Options Trading IQ. All Rights reserved. 15

ADJUSTING THE CALLS Buy Call Spread for $3.00 Now We Have A Loss of $2.00 Just on the Calls Roll Out To Higher Strikes Receive $2.00 for the New Call Spread 16 © Copyright 2016. Options Trading IQ. All Rights reserved. 16

AT EXPIRY If All Goes Well the Initial Put Spread and New Call Spread Expire Worthless Profit on Puts = $1.00 or $1,000 Profit on Calls = $0 TOTAL Profit = $1.00 or $1,000 17 © Copyright 2016. Options Trading IQ. All Rights reserved. 17

ADDING SIZE WHEN ROLLING Started With 10 Contracts. Add Another 5 When Rolling Loss on Initial Call Spread: $2.00 x 10 = $2,000 Credit Received for New Call Spread: $2.00 x 15 = $3,000 18 © Copyright 2016. Options Trading IQ. All Rights reserved. 18

AT EXPIRY If All Goes Well the Initial Put Spread and New Call Spread Expire Worthless Profit on Puts = $1.00 or $1,000 Profit on Calls = $1.00 or $1,000 TOTAL Profit = $2.00 or $2,000 19 © Copyright 2016. Options Trading IQ. All Rights reserved. 19

THE GREEKS Adding Size Is Fine, Provided You Stick To The Risk Parameters Keep An Eye On Delta Dollars and Delta / Theta Ratio Can Also Sell Some Extra Put Spreads to Bring Delta Back In Line 20 © Copyright 2016. Options Trading IQ. All Rights reserved. 20

GREEK RATIOS These Are Guidelines, Not Strict Rules Keep Delta / Theta Less Than Roughly +/- 20% Keep Vega / Theta Less Than Roughly 400% 21 © Copyright 2016. Options Trading IQ. All Rights reserved. 21

WEEKLY CONDOR Ratios Look Good, Right? 22 © Copyright 2016. Options Trading IQ. All Rights reserved. 22

23 © Copyright 2016. Options Trading IQ. All Rights reserved. 23

MONTHLY CONDOR Look at the Ratios Notice the Gamma? 24 © Copyright 2016. Options Trading IQ. All Rights reserved. 24

WEEKLY V MONTHLY CONDORS You Do Not Need To React As Quickly With Monthly Condors Ratios on Weekly’s Can Be Deceiving Can Be a Bit More Flexible With Longer Term Trades 25 © Copyright 2016. Options Trading IQ. All Rights reserved. 25

80 DAY CONDOR Different Strokes For Different Folks Ratio Guidelines Will Be Significantly Different Longer Term = Much Higher Vega, Much Lower Theta 26 © Copyright 2016. Options Trading IQ. All Rights reserved. 26

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Delta Is Basically Flat, But It’s 25% of Theta 80 DAY CONDOR Delta Is Basically Flat, But It’s 25% of Theta Vega / Theta Is 10x 28 © Copyright 2016. Options Trading IQ. All Rights reserved. 28

CONDOR ADJUSTMENTS 29

ROLL UP PUTS 30

ADDING CONTRACTS TO SAFE SIDE 31

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ADD A DEBIT SPREAD 33

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ADD A LARGER DEBIT SPREAD 35

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ADD A LONG OPTION IN NEXT EXPIRY 37

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ADD A LONG OPTION PART 2 39

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ADD A CALENDAR SPREAD 41

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ADD A BUTTERFLY SPREAD 43

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REPOSITION ENTIRE CONDOR 45

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