## Self-Adaptive Options & Currency Trading: For the Volatile Markets of the 21st CenturyThis book will show you how with inexpensive tools you can begin with a limited amount of capital and make it grow impressively. I describe how the Welles-Wilder Indicator, a relative strength indicator, with equations included, can be used to decide when to open index options, stock options, futures options and currency positions. I have selected the best commodity futures options to trade for short-term profits. A currency trading expert from Madrid showed me the great leverage of one's capital is the outstanding advantage of currency trading. I also describe my self-adaptive trading software, giving you all the equations and algorithms used so you can create your own software at home. I first learned options trading in Brest, France, from the sponsor of my oldest son's 40' racing catamaran. Bob was making $2 million per month trading options in New York. He explained his strategy of selling index-option Calls two standard deviations (sigma) above the market and selling Puts two sigma below the market-the probability of the market rising above the Call or dropping below the Put was less than 10%, meaning you profit 90% of the time. This two-sigma strategy has been adapted to credit covered spreads for generating a regular monthly income. |

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### Contents

Foreword | ii |

INDKX OPTIONS FUTURE OPTIONS TECH STOCKS OPTIONS CURRENCIES | 13 |

Underlying Markets | 15 |

A Quick Overview of the Strategies | 16 |

Index Options | 18 |

Stock Options | 19 |

Neural Network Indicator 20 Futures Options | 20 |

Currencies for Trading | 21 |

Common Format for the 5 Excel Spreadsheets | 134 |

Standard Deviation Computations for Currency | 135 |

How to Use the Common Format Spreadsheets | 136 |

Euro Chart with WWI 20 Day Moving Average | 137 |

WWI 80 or WWI20 | 139 |

Summary | 140 |

CHAPTER 8 STOCK TRADING USING WWI AS A SIGNAL | 141 |

Results of Applying this Strategy for a Year | 142 |

How Does the WWI Trigger Work? | 22 |

Options Vocabulary | 23 |

Margins for Options Trading 27 Day Trading Requirements | 27 |

Option Codes | 28 |

Currency Vocabulary | 31 |

Objective of Options and Currency Trading 34 Capital Growth Models | 34 |

Summary | 37 |

CHAPTKR 2 OVERALL STRATEGIES FOR TRADING INDEX STOCK FUTURE OPTIONS CURRENCIES STOCKS | 39 |

When Do You Open These Positions? 40 When Do You Close These Positions? | 40 |

The Naked Spread Strategy | 41 |

Examples of Naked Credit Spreads | 43 |

The Covered Spread Strategy | 44 |

Example of a 2Sided Covered Credit Spread | 47 |

The Debit Spread or Long Strategy | 48 |

Currency Trad ing 50 Stock Trading | 50 |

Summary | 51 |

CHAPTER 3 How TO COMPUTE KEY TRADING PARAMETERS | 52 |

Exponential Moving Average Algorithms | 53 |

WellesWilder Indicator WWI | 54 |

Equation for 2 Sigma | 55 |

WWI Computations for | 56 |

Other Market Signal Indicators 57 FourDay Moving Average Difference MAD4 | 57 |

Difference Between 9Day and 4Day Moving Averages MAD94 | 59 |

The Stochastics KD Market Signal Indicator | 60 |

Complex Market Signal Indicators | 61 |

Summary | 62 |

CHAPTER 4 OEX INDEX OPTIONS | 63 |

Use of the 2 Sigma 2 Standard Deviations for Spreads | 64 |

How to Compute Standard Deviation 2Sigma for Covered Spreads | 67 |

Comparison of OEX SPX DJIA 2sigma Covered Cr Spreads | 69 |

Debit Spreads Triggered by WWI for | 71 |

OEX WWI Chart | 75 |

OEX Capital Growth Model | 76 |

Summary | 78 |

CHAPTER 5 STOCK OPTIONS | 79 |

Stock Splits | 81 |

At Beginning of New Option Month 1st Mon after 3rd Fri | 82 |

WWI 80 or WWK20 83 WWI Computations for Individual Stocks | 83 |

Amgen Stock Options | 84 |

Amgen WWITriggered Long Call Position Example | 85 |

Cisco WWITriggered Long Put Position Example 87 Dell WWITriggered Long Put Position Example | 87 |

eBay WWITriggered Long Call Position Example | 88 |

Ibm WWITriggered Long Put Position Example 89 Intel WWITriggered Long Put Position Example | 89 |

Results of Years Paper Trading for 13 Stock Options | 100 |

Coffee Future Options WWITriggered Debit Spread | 113 |

CHAPTER 7 CURRENCY TRADING WWI TRIGGERED 124 Seven Currency Trading Rules | 124 |

Applying These Rules to the Euro Trading Example 1 | 133 |

Buying Holding Stocks as LongTerm Equity Investment | 144 |

Buying and Holding a High Performance Mutual Fund | 145 |

Summary | 146 |

CHAPTER 9 SURVEY OF MARKET SIGNAL INDICATORS 147 Description of Each Market Signal Indicator | 147 |

Moving Average Difference Market Indicators 149 The 4Day Moving Average Difference MAD4 | 149 |

Difference Between 9Day 4Day Moving Averages MAD94 | 150 |

Stochastics KD Special Mov Avg Indie Difference | 152 |

Bellinger Band Indicator | 153 |

WellesWilder Indicator WWI Market Indicator | 154 |

Neural Networks | 155 |

Summary | 156 |

CHAPTER 10 SOME TIPS TO ENHANCE TRADING PROFITS | 157 |

Use Volatility to Increase Cov Credit Spread Premiums | 158 |

When to Open the Triggered Debit Spread | 160 |

Corrective Action for 2 Sigma Covered Credit Spreads | 163 |

What Do We Do When a Short Put or Call Is Threatened? | 164 |

Summary | 167 |

CHAPTKR 11 GLOBAL GROWTH MODEL | 168 |

OEX and Stock Options 4Year Growth Model | 169 |

Commodity Future Options Growth Models 170 Currency Growth Models | 170 |

Global Capital Growth Model | 171 |

Summary | 172 |

CHAPTKR 12 SELFADAPTIVE TRADINC SOFTWARE | 173 |

SelfAdapStkOp | 174 |

Common Format for the 11 Excel Spreadsheets | 177 |

OEX Stock Options Profit | 179 |

How to Use the Common Format Spreadsheets | 180 |

WWI 80 or WWI20 | 181 |

SeIAdaptFutOp | 182 |

Common Format for the 1 1 Excel Spreadsheets | 184 |

How to Use the Common Format Spreadsheets | 187 |

WWI 80 or W WK20 | 188 |

Trading Results for 10 Future Options WWI Triggered | 189 |

Summary ofSelAdaptFutOp | 190 |

SelfAdapCur | 191 |

Common Format for the 4 Currency Excel Spreadsheets | 193 |

How to Use the Common Format Spreadsheets | 195 |

WWI 80 or WWK20 | 196 |

Summary ofSelfAdapCur xls Software | 197 |

SelfAdapStockTrading | 198 |

Common Format for the Excel Stock Spreadsheets | 200 |

WWI1 riggered BuyingSelling 201 Results of Stock Strategy 2 Buy 200 Shares Hold for 1 | 201 |

How Do the Two Strategies Compare Side by Side? 202 How to Use the Common Format Spreadsheets | 202 |

WWI 80 or WWK20 | 203 |

Summary | 204 |

### Common terms and phrases

13 stocks 20-day moving average 7-day exponential moving algorithms Amgen Bollinger Band British Pound broker Call 2sig Call and Put Call Debit Spread Call options Call or Put Call strike price capital growth model cell Chapter charts Column H commission Covered Credit Spread currency trading eBay equation example exponential moving average Future Options Index Options Long Call Long Positions Long Put loss Lot of Euro Lot of Yen market indicators market signal indicators market value monthly profit naked spread number of options Option Month options book options expiration Options Strategy options trading paper trading Premium Difference Put 2sig Put Debit Spread Put options Put side Put strike price return on cost Return on Margin Short Call Short Put sigma Covered Credit SIGMA Covered Spread Spread is triggered Spread or Long spreadsheet Standard Deviation Stock Options Swiss Franc Total Initial Credit trading days underlying market WWI triggers WWI-triggered Debit Spreads