Thanks for the Q! Happy Trading,

Kurt

I have been watching your vidios and reading on your blog with great interest and it makes good sense. You had mentioned that you were looking into having a strtaegy to play the downside of the market and wanted to know if this was now available?

Regards
Simon

There is another way to do an inverse of this method, and put up the same amount of cash, but without some of the margin hassles.

I talk about it in The Blueprint a little more, but here are the basics:

1) Find the “Inverse RadioActive Profit Machine” that you want to trade.

2) Calculate the amount of margin that it takes to go short on the stock. Even if you have GREAT credit with your broker, I would just say the amount that it should cost to buy (not short) the stock at full price.

3) RATHER than putting up that deposit on margin, deposit the same capital in a safe, interest-bearing instrument.

4) Now buy a PUT at the same strike and expiration that you would have bought a protective call.

This forces you to keep everything a little simpler and still have an ideal position size. You won’t risk more than the amount of the OTM put, and you will have a position with an identical risk/reward structure.

Got it? Good. Any questions, post ‘em here again.

Happy Trading,

Kurt

It’s the exact reverse of the married put strategy, but of course you pick the stock with the expectation of it going down.

I also sold covered puts against the short stock (like a covered call) to generate income.

I confess I only did this once but I made some money on it. One potential argument for trying this is if you’re in a volatile market where puts are more expensive than calls, you can make more on the covered put than you could on an equivalent covered call.

Eugene

I tried a covered call strategy that used longer term puts like your system, however the puts were below the cost of the stock. The goal was to cover the cost of the puts in the first 2 months (construction period), and then like your system be bulletproof. It was difficult with 3 moving parts to make profit. If the stock went past strike, the put went down and the BTC cost more money than the sell to open. The newsletter that I followed inferred gains of 5-10% monthly with margin since the would be giving you “relative” safety. This was not my experience. In fact, I got burned badly with margin.

I enjoy your videos and it seems like your sytem, with locked in maximum losses makes sense, especially if your income methods could generate the 8-10% overall gains on your winning trades. I know your calculator shows about a 400% return when you have even less than 50% winners, so I am guessing that during the referenced time from May 2007 you would have had very few winners and you were doing a good job of damage control. My concern is that there are many “gurus” who believe that we are headed into a severe downturn based upon the technicals and the severely challenged debt ridden economy. Some prognosticators are recommending shorting the market. Have you developed a system to do this RadioActively that you alluded to in Nov. 24th response about R3 Account?

Thanks-

Stu

Your very last sentence is the most interesting and indeed very sensible. Play both sides - long and short. Money is money and if it is on the table we need fool proof strategies to profit from the market

Regards

Bill