Frequently Asked Questions
Q: Do I sign up for the Bull/Bear Credits or the POI Strategy with TOS Autotrade and how much of my account do I allocate to each.
Bull/Bear Credit refers to our Weekly OEX/SPX trade recommendations. The POI Strategy is our monthly peak open interest options trade. Since the two don't overlap, you can sign up for both and allocate the same amount to each. This gives you the potential for a low-risk options trade every week.
Q: How much money do I need to auto-trade?
Although ThinkorSwim requires a minimum account of $3,500, we recommend that you have at least $5,000 in your account. We trade 5 point OEX spreads, so the margin requirement is $500 per spread. We also recommmend that you retain 20-25% of your account in cash in order to have enough equity to close an open position.
Q: I'm interested in your system but I have a question about your track record. You have the weeklys on a different page from your trade history. If I autotrade through TOS which trades would I be taking? The weeklys or the one monthly trade?
All trades now show on the same Trade Record page. You can autotrade both the Weeklys and the POI with TOS, since they don't overlap. Effectively, you can make a trade every week.
Q: Can you elaborate on your "market-if-touched" stop loss? I would love to know the maximum stop loss per position.
We set stops at breakeven at expiration. Depending on when you get stopped out determines the debit, but its usually not more than 15-25%. However, its rare that we get stopped out using the OVA to set the probability bands at +85%. Note that eOption does not use stops, so you will have to manage your own stop orders. TOS does use stops, so their auto-trade is completely hands off.
Q: I may be wrong or am missing something but it is a little unclear how many positions are entered at the same time per month.
We only put on one position at a time. The Weeklys do not overlap with the monthly trade, so there is never a conflict.
Q: How easy is it to follow your trade recommendation if I want to trade myself instead of autotrade?
We give you exact instructions, including symbols and limit prices. There is no guesswork involved.
Q: Do I have to watch intraday stock option movement?
Usually not. We'll let you know when its advisable to watch your positions.
Q: What time of the day you send e-mails to buy/sell?
Usually around mid-morning CT, but we do send email alerts during the day if market action warrants.
Q: I understand that for the monthlies, I can set up a contingent stop order. But for the weeklies, I can't set up a contingent stop order. If I set up the contingent stop order correctly, then does it mean that I can avoid losses on the monthlies?
You can set up stops for the Weeklys at TOS, but not eOption. Whether you incur a loss or not depends on when you get stopped out. We set the stop at breakeven at expiration. There is always some premium up until expiration, so the closer to expiry you are stopped, the smaller the loss.
Q: Will autotrade accounts at TOS and eOption follow the same email instructions?
Yes, they receive the same notifications you do.
Q: OEX and SPX are just index options. They are not stock. Could they ever be exercised? I have had stock options exercised but don't really have any experience with the index options.
SPX options are European style and cannot be exercised. OEX options are American style and can be exercised. Please see the product specifications for the OEX and the SPX Index Options.
Q: Can you tell me what a subscriber to your options service receives please? Does a sub include BOTH the Monthly Option expiry trades and the weekly Trades? and can both these strategies be auto traded with your partner firm?
You will receive both the Weekly and the monthly trade alerts. Both are being auto-traded by TOS and eOption. You will also receive access to our Covered Call Stock tables.
Q: I did not realize you give as much support as you do. I really appreciate that. I don't know why in the world I missed your email It got lost in some of the junk email I get overnight. The only reason I subscribed to this service was because I would have professional advice on the trade. I lost some money today because I did not see your email. It was timely and my fault. I am looking forward to your trade next week. I have learned a lot today, unfortunately, the hard way. Thank you for the reassurance that you stay with your clients throughout the whole trade, beginning to end.
Thanks for your note. Please make sure that emails from info@peakinvesting.com are not being blocked by your spam blocker or by your ISP. We've had that happen with others. Its very important that you receive our emails.
Q: I am new to the weekly spread concept you are using. If the call we sold expires above the OEX 575 strike price, what are the consequences?
The loss is equal to $100 per contract for every point the OEX closes above 575.00.
Q: Since OEX is American style, can the calls be exercised when the price rises above the 575 strike price?
Yes, the options can be exercised, usually after 1:00 pm ET.
Q: I am interested in subscribing to your Peak Investing and auto-trading through ThinkorSwim. However, since this is very new to me, I have some questions. I don't understand how you can buy both a put and a call on certain dates, have them expire worthless, and still gain a percentage credit? Another question, is each contract the same price, or do they very from month to month? Thanks for your advice!
Thanks for your interest. You can read the definitions of bullish put and bearish call spreads on our website Glossary. The strike prices of the options we buy and sell vary from week to week depending on the Options Volatility Analysis. The value of the options also varies.
Q: Any chance of offering Auto Trade with OptionsXpress in the near future?
Thanks for your note. We used to auto-trade with optionsXpress, but they changed their advisor requirements last year. They will only auto-trade with those advisors who are registered representatives and money managers, which we are not.
Q: I just started autotrading with ThinkorSwim and I saw the instructions on your page to do contingent stop orders with OptionseXpress and ThinkorSwim. I'm not sure if you know that Thinkorswim does contingent orders through the free software, but not through the web trading.
To do contingent orders in the software you:
1. Click on day under rules.
2. On the bottom grid you specify symbol, trades, "at or below" or "at or
above", and then the price. You can make the symbol OEX or SPX and this
should enter the order to close out the spread based on the OEX or SPX
hitting the breakeven point.
Thanks, we weren't aware of that. We'll let our members know.
Q: I am a new subscriber interested in the monthly (and maybe weekly) option spreads. I am often traveling during the week on business and cannot usually react immediately to intraday updates like these. I thought I would be able to manage this using auto-trading but it looks like it may be a bit problematic if I want to limit risk on these close call situations. Any suggestions?
Not a problem. If you are auto trading, we manage it for you by advising TOS. Our email alerts are mainly for those members trading on their own.
Q: I am primarily a futures trader. I make my living trading the ES but I'm really enjoying profiting with Peak Investing, too, and the diversification it provides us. However, I don't have a thorough understanding of what you do and I bet you can help me. I have noticed that if a trade goes against us, the potential loss is very high. If I understand the risk calculators, we could lose several times our initial investment on a trade, potentially wiping out a year or more of gains with a single loser. Yet, looking at your performance statistics, I see you haven't taken a loss worse than 20%. Is this because you have a method of risk control or because we've been a little lucky? If you can explain this to me a bit, it will help me know how much to allocate to your methods. As you can imagine, I'm tempted to allocate a little more to your system, but want to be sure I understand clearly what kind of loss to be prepared for.
Thanks for your note. We will close out our spread if the index trades through our breakeven point. Breakeven at expiration is the strike price of the option you sell plus or minus the credit received. If the trade is closed before expiration, the loss is usually limited to 15%-25%.
This is also a simple money management system you can use. If you have 90% probability of winning, then you have a 10% chance of losing. Multiply that 10% by the difference in strike prices. For a 5 point spread, that's $0.50. That's the minimum credit you need to receive to breakeven over the long haul. To make money, you need more than the minimum, say $0.60. If you can't find a trade with a $0.60 credit, divide the credit you want to trade by $0.60. That's the percentage of your account you should trade. For example, if the best credit you can find with a 90% probability is $0.30, then trade 50% of your account.
Q: Can you explain the commissions on option spreads with TOS?
If the trade was entered as a spread, there is only one $10 ticket charge regardless of the number of legs associated with that spread, or $2.95 per contract if that's less.
Q: I would like to set up this acct to be autotraded i have a TOS acct. What needs to be done in order to activate that feature?
Once you have created your account with TOS, then move your mouse over Autotrade and select "Sign Up/Newsletter Providers". Then click the link that says "Peak Investing". On that page you will click a link that says "Auto Trade with Peak Investing". Then on that page, allocate 50% to "Peak Open Interest" and 50% to "Bull/Bear Credit Spread".
Q: I am new to options spreads, so I blindly followed this trade using paper money. Can you please explain how this trade works? was this a bullish or bearish trade?
The trade we put on is an iron condor which consists of four options with four different strikes, a bullish put spread and a bearish call spread. The options all have the same expiration, and the strike prices are equal distances apart.
This strategy is mainly used when a trader has a neutral outlook on the movement of the underlying security from which the options are derived. It is neither bullish or bearish, but bets that the OEX will close within the range of the option spread.
The potential gain on the trade is the credit received from the difference in price of the options, usually $0.25 to $0.35. Which equates to 5% to 7%.
Q: I have $2500 in E-option account. Will I be able to auto trade 5 point OEX or credit spreads with you guys? also, do you guys manage the stops with e-option?
Yes, you will be able to autotrade with eOptions. They are one of the Brokers that receives our trade recommendations. eOption does not use stops, so you will have to manage your own stop orders. However, TOS does use stops, so their auto-trade is completely hands off.
Q: I see that you guys consistently make $500.00 trade on Weeklys. Can you elaborate?
Each week we put on an OEX iron condor spread. Typically, we receive a credit of $0.25 to $0.35. So that the gain for a trade with a $0.25 credit would equate to 5% (100 x $0.25 / $500). An account trading $10,000 would, therefor, realize $500 profit.