The 3Dimensional Trading Breakthrough

Brian Schad
Table of Contents
Introduction
Why this book has been written........................................................................... 1
What you can expect from this manual................................................................ 4
Why you need to know, understand, and practice this information..................... 6
Motivating statements/testimonials..................................................................... 8
Background on Schad Commodity...................................................................... 14
Section 1 - The Challenges of Trading
Professional traders vs. “non-professional” traders............................................ 16
Identifying risk.................................................................................................... 17
The problem with protective stops..................................................................... 19
Buying options for speculation ... watching ice melt.......................................... 21
Unconventional thinking for unconventional trading......................................... 21
Section 2 - Understanding the Trading Instruments
The futures contract: The history of the markets............................................... 25
The stock............................................................................................................. 30
The options......................................................................................................... 32
How options are different from futures................................................. 33
How options are priced with intrinsic/time value.................................. 33
The “Greeks”
Delta: The delta factor of options and how it works for you................. 38
Implied Volatility.................................................................................... 38
Theta...................................................................................................... 40
Options are a wasting asset................................................................................ 40
Section 3 - Execution of Trades
Position Initiation/”Pulling the trigger”.............................................................. 43
Evaluation of insurance....................................................................................... 45
ATM / ITM - Defining maximum risk up-front........................................ 50
Days to expiration............................................................................................... 52
Selection of correct option contract month........................................................ 52
Implied Volatility in Detail................................................................................... 55
Evaluation of comfort / confidence level............................................................ 55
Section 4 - “In the Trade” - Managing your Position
What to look for in “price discovery” and changes in momentum..................... 58
Trend line breakouts........................................................................................... 58
Volatility expansion breakouts............................................................................ 62
Types of trading indicators.................................................................................. 66
More Price structure........................................................................................... 71
Gap openings and reversals................................................................... 71