REAL WORLD
Here's The Plan From Dan (Part 1)
Calendar Spreads With Dan Sheridan
by John A. Sarkett
In the first part of a series based on a seminar on option strategies with Dan Sheridan, we take a look at calendar spreads.Options and seminars go together like yin and yang, baseball and hot dogs, Abbott and Costello. Can't separate ‘em, wouldn't want to. Ten or more years ago, some of the prominent seminars focused on straightforward strategies like put selling or vertical spreads. In a surging NASDAQ market, these one-day affairs served their purpose in helping retail stock traders become more knowledgeable and comfortable with options.
Then after the 2000-01 stock market crash and with the equity markets in the doldrums came delta-neutral strategies, making money in options when stocks weren't moving -- timely and helpful. You might have seen infomercials for these "wealth creation" seminars.
But not all the attendees were successful, nor even the gurus themselves. One notable "expert" expanded from giving seminars to managing an option trading fund. The fund lost 40% in six months before closing. There are and have been many, many other seminars and countless newsletters, and we've all been invited by direct mail to attend or subscribe. Or both. Some of us have, or at least been tempted.
WHAT'S TO RISK?
Now streaking across the option-trading-and-seminar sky comes trader Dan Sheridan and his Options Mentoring series sponsored by OptionVue. He focuses on the missing dimension of most options seminars: risk management. That alone makes him different. Something else does, too: Dan Sheridan doesn't propose doing the education job in one or two days, like many of his predecessors; his is an ongoing program, with access to him anytime.
We've been taught that inventor Thomas Edison tried some 8,000 substances before chancing on tungsten and finally being able to devise the revolutionary light bulb. There haven't been that many options seminars, but there have been quite a few. For those who stuck around long enough (and there are those who have attended just about every option seminar given in the last 10 years), Sheridan just might be the tungsten everyone has been looking for.
But he might not seem like it, at least not at first. A natural comedian, "Trader Dan" affects a regular Chicago guy demeanor, because, as he would say, "I am one." Sheridan survived and thrived for 22 years in the rough-and-tumble CBOE pits. His superb risk management skills protected him and allowed him to grind out profits in markets both up and down, and those are the skills he wants to share. He's generous with his time and he tells the truth, flattering or not. What more could you ask?
Not just a market maker, though he's got lots of war stories from the pits to share and some good trading tips, Sheridan successfully traded thousands of income strategy trades for his own account over the past two decades (some 3,000 calendar spreads alone, he estimates). He also mentored a number of traders who went on to major success, some to head large trading firms.
...Continued in the May issue of Technical Analysis of STOCKS & COMMODITIES
Excerpted from an article originally published in the May 2007 issue of Technical Analysis of
STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2007, Technical Analysis, Inc.
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