FAQ

Here’s what you can expect to receive as an exclusive member:

 

• Weekly market and portfolio updates: These are a way for me to touch base twice a week and look at where the market stands … how the model portfolio is doing … and potentially make an emergency decision if something changes.
• Trade alerts: Every time the system signals the start of a new seasonal trend, we will send you an email alert giving you everything you need to take advantage of the opportunity. You’ll know the specific option trade you should use to capture as much profit as possible. And you will get an alert to close a trade the moment the system indicates a trend has likely reached its peak.
• Access to my model portfolio: This online portfolio includes every option position I have recommended through my trade alerts. It will show you when a position has been opened, closed and at what price. It also archives all trade information on previous positions.
• The Precision Profits Trading Manual: This detailed guide contains a thorough overview of my approach to trading, what kind of trades to expect and how to enter and exit. It will tell you everything you need to know to start making money like an elite trader.
• How to Read a Stock Chart 101 Video Series: To get you completely comfortable navigating the world of trading, Michael and the team compiled a valuable set of tutorials. Here you will get to know the fundamentals of stock charts and how to read them. You’ll also learn about the common price patterns, what they mean, how to spot them and how to make profitable trades with this information.
• 24/7 members-only website access: Whenever you wish to access your subscription materials, we keep all of the latest information on an encrypted website that members can access anytime, anywhere.
• A dedicated customer service team: Finally, if you ever have questions about your membership, simply give my team a call at 866-584-4096, Monday through Friday, between 8 a.m. and 8 p.m. Eastern time. You can also reach out online through our contact form by clicking here. We’ll walk you through whatever you need. And if you ever have any feedback you’d like to share about the service, please send a note to precisionprofits@dev.prosperityresearch.com.

Once you have subscribed, you will be emailed temporary login information, followed shortly thereafter by your permanent username and password. Be sure to store this information in a safe place, as you will need it to unlock the many benefits your membership has to offer.

Have you entered your username and password exactly as you received them, including case-sensitive characters? Also, make sure cookies are enabled on your browser. If you’ve tried the above and you’re still unable to log in, please click here to access our login helper. And don’t hesitate to contact our customer service team for assistance. Our representatives are standing by and ready to assist you.

For help or information, you can fill out a contact form or call 866-584-4096. Our regular business hours are 8 a.m. to 8 p.m. Eastern time, Monday through Friday.

Click here to sign up for our complimentary Precisions Profits text-alert service. When you sign up, you’ll start receiving a text message on your cellphone that informs you when the alert has been issued. You will need to check your email or the trade alert archives for the specific details of the recommendation.

• There is no cost to register.
• Simply enter your name, zip code, email and phone number. Then respond to the initial text message you receive so we can confirm your registration.

If you wish to maximize your gains so you can rake in a consistent series of triple-digit winners, then yes, you have to trade options. Options provide incredible leverage.

For many of the trades in the Precision Profits service, we are looking for only a small move in the underlying stock — between 5% and 15% — but that small move translates into gains of 90%, 100% and even 200% when we use options.

What’s more, options allow you to devote a smaller portion of your overall portfolio to a position. If you wanted to buy 100 shares of ABC Widget Co. at $105 a share, for example, it would cost you upward of $10,000. On the other hand, one call option contract with three months of time to expiration and a strike price at roughly the same price level as the stock would cost you less than $1,000.

In other words, the option contract gives you control of 100 shares of ABC Widget Co. and allows you to participate in the movement of the stock. But you’re now risking only a fraction of your portfolio on one position. You can now better protect and diversify your investments than if you’d devoted $10,000 to one stock.

Be sure to check out my Introduction to Options video series to help walk you through the basics of options. In five videos I explain what options are, their advantages and their risks and terms you’ll run across while trading them.

Yes, but it’s not difficult. If you already have a brokerage account, you might need to request authorization to trade options. However, the process is very simple and often takes less than five minutes to complete. Check with your brokerage firm to see if they will allow you to upgrade your account online.

If you are opening a new trading account, you need only to check a box to indicate that you want options trading authorization. Either way, you will need to complete a simple one- to two-page form that will inquire about your goals, trading strategies and trading experience. For Precision Profits, the only trading strategy you will be using is the purchase of calls and puts.

If you have any trouble getting approval for an options trading account, speak to your broker and inform them that you are aware of the risks involved with purchasing options.

Be sure to check out my Requesting Approval to Trade Options tutorial that explains the process and walks you through the parts of a typical authorization form.

You will typically need “level 2” options trading approval (levels can vary depending on what brokerage you’re using), which allows you to purchase calls and puts. It’s one of the safest strategies because your risk is limited only to the money spent purchasing the option. You’ll never be required to add more money to the account should a position move against you.

If you’re looking for a broker, consider opening an account at one of the options-trading firms listed below.

Broker Contact Information

tastyworks	www.tastyworks.com	1-800-247-1963
Interactive Brokers	www.interactivebrokers.com	1-888-919-0022
E-Trade	www.ETrade.com	1-800-ETRADE-1
Charles Schwab	www.schwab.com	1-866-232-9890
TD Ameritrade	www.TDAmeritrade.com	1-800-669-3900

If you’re a high-level options trader, check out the tastyworks platform. While we do have a paid marketing relationship with them, we have found that not only does this platform have the tools to execute professional-grade transactions, but the fees are significantly less and opening an account only takes minutes.

Of course, these are just suggestions. Some brokers are better at certain things than others, and it’s not uncommon for people to use more than one to suit their needs. Remember to do your own due diligence in making sure you pick the broker that’s right for you.

tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with Banyan Hill Publishing (“Banyan”) whereby tastyworks pays compensation to Banyan if/when Banyan readers choose to open and fund tastyworks trading accounts. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of tastyworks by Banyan.

The stock market operates from 9:30 a.m. to 4:00 p.m. Eastern time, Monday through Friday. It is possible to trade stocks outside of those hours, but options will generally only be tradable during those hours.

The best period for small investors to trade is near the open or closing time. This is when liquidity is available and you are likely to have your order executed quickly.

The worst time to buy is during afterhours trading. This is between 4:15 p.m. and 8 p.m., when there are few transactions.

There are four types of orders to keep in mind as a trader: market orders, limit orders, stop orders and stop-limit orders.

• A market orderwill be executed at the current price. This type of order is used when it is important to enter or exit a position. While it does guarantee the purchase or sale, it doesn’t guarantee the price. That’s because prices are constantly changing, and this order simply instructs the broker to execute, or fill, the order. The price may move up or down the split second you send the order.
• A limit orderis only executed at a certain price. It guarantees you won’t pay more than your limit if buying, or receive less than your limit if selling. This order does not guarantee that your order will be filled.
• A stop order is used to execute a trade when its price moves past a particular point, ensuring a greater chance of achieving an entry or exit near the desired price. Once the price passes the predefined entry/exit point, the stop order becomes a market order. That means it will be executed, but the price may be significantly different than the desired price. Stop orders can be executed 10% or more from the desired price in stocks and 50% or more from the desired price in options.
• A stop-limitorder provides the benefits of a stop order and a limit order. It will only be triggered when the price moves past the stop price, and it will only be executed at the limit price or better.

We will rely on stop-limit orders to enter and market orders to exit trades.

A stop-limit order provides the benefits of both a stop and a limit order and requires putting in two qualifiers for your order: a stop price and a limit price.

This order type will only be triggered when the price moves past the stop price, and it will only be executed at the limit price or better.

We will always enter positions using a stop-limit orders because it means the option is moving in the direction we want.

The stop-buy triggers when our price is hit, meaning the option is moving in our direction. And the limit prevents us from paying too much once that’s triggered.

I’ll walk you through a quick example to show you what I mean.

Let’s say a call is trading at $3.20. To enter the trade, I might recommend a stop-limit order with two different qualifiers — for example, a stop price of $3.25 and a limit price of $3.50.

All you would have to do is select the “stop-limit” order type from your broker’s menu. Once this order is selected, the order entry form will ask you to enter two prices: the stop and the limit.

In the order entry form, then, you would set the stop price to $3.25, and the limit to $3.50.

This means that the option will have to trade at $3.25 to trigger the stop order. You then have a limit order, which will be executed at any price up to $3.50.

The stop-limit order is what gets us in at the best price, while ensuring the market is going in our direction.

Or I might simply recommend a stop-limit order of $3.25. This means the option needs to move to $3.25, or we won’t enter the trade. After all, the only reason the option would move higher is if the stock is moving in the right direction.

You’d simply set both the limit and stop price to $3.25. Once the option hits $3.25, the order is activated and turns into a $3.25 limit order.

Be sure to watch my “Improving Performance With Order Types” video for more information on how stop-limit orders work to benefit our strategy.

The stop order is designed to protect your capital. Maybe a stock is trading at $40 a share, and you decide to risk 20%. You can place a sell order at a stop price of $32. If the stock falls to $32 or less, your stock order is triggered and becomes a market order.

Now let’s talk about the buy stop. For the $40 stock, you might want to buy it if it moves higher. You could place a buy stop at $42. This ensures you’re buying only if the uptrend in the stock continues. The stop buy triggers when our price is hit, meaning the option is moving in our direction. That’s how we make sure that we trade the trend when it’s in our favor.

To accommodate those who have to adhere to these restrictions, I include separate instructions in our buy alerts. These are listed as “traditional instructions.” The stop and limit prices for these are the same.

Just keep in mind that we will not be tracking these orders in our model portfolio.

What we will be tracking is the first set you’ll see in the trade alerts known as “nontraditional instructions.” This is the more aggressive approach to trading and part of the strategy we’ll be following.

If you can’t place a stop-limit order with your broker even with the traditional instructions provided in the alerts, then you can simply place a stop order to open trades instead.

This is a more aggressive approach, as it makes trades more expensive. Using stop orders, however, increases your chances of getting filled.

I recommend using the approach that you feel most comfortable with for the long run. To learn more about choosing the right order type, watch my “Improving Performance with Order Types” video here.

You may also want to consider switching to a different broker that will allow you to place stop-limit orders as recommended by the Precision Profits system.

tastyworks,* Interactive Brokers, Charles Schwab, E*Trade and TD Ameritrade all permit account holders to place stop-limit orders with different stop and limit prices as we do with our Precision Profits strategy.

We’ve received comments from readers that some brokers require the stop and limit prices to be the same.

Fidelity Investments has this requirement. This broker does not allow placing a different stop and limit price for the stop-limit order.

There are plenty of brokers to choose from that do not have this restriction.

I like tastyworks because the order screen is simple to navigate, there are no commissions, fees are low and the firm provides great execution.

*tastyworks, Inc. (“tastyworks”) has entered into a Market Agreement with Banyan Hill Publishing (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks and/or any of its affiliated companies. Neither tastyworks nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent, or its website. tastyworks does not warrant the accuracy or content of the products or services offered by Marketing Agent, or its website.

While it is possible we made a mistake in the alert, we have safeguards built into our service to prevent avoid this. The symbol in the alert links to the Nasdaq’s quote page for the recommendation, and that verifies that the option is trading.

If it’s not in your broker’s quote chain, then it’s most likely because the default selection from your broker is for monthly options or at-the-money options. Find the menu that allows you to expand the view to include weekly options that are out-of-the-money in order to locate the options we trade in this service.

Remember that the stop price is triggered only if the trend moves in our favor. If it is never reached, then the order does not get filled, and the strategy avoids a losing trade. That is why the stop order is such a crucial part of our trading strategy. Check out the trading manual here for more information on how this order works to protect your capital.

First, it’s critical that you do not have your entire trading portfolio dedicated to options. You must stay diversified so you are not only protected against unexpected market volatility, but also so you’re well-positioned to profit from any significant moves higher. You should still have your staple investments while dedicating a small portion of your total portfolio to options trading.

I recommend trading an equal number of contracts per trade for several reasons. Perhaps the most important is that it prevents overtrading lower-priced contracts. I often see unusually high volume in options trading for less than $1 relative to options priced near $5. That makes sense in a way because the lower price allows for more contracts.

Unfortunately, lower prices indicate a slightly lower probability of success in the trade. The probability of a winning trade is still high, but lower than we’d see with an option priced near $3 or more. This probability isn’t a linear function in the sense that a $50 contract is likely to be more profitable than a $5 contract.

That’s a function of several factors. I will recommend lower priced contracts when there are signals, but I encourage trading a small number of contracts in these positions, ideally the same number of contracts you’d trade on a $10 option.

In the end, you should only trade the number of contracts you feel most comfortable with.

Stop-losses are a great way to limit losses with stocks, but options are a different matter.

We don’t use stop-losses often for one reason: Options are incredibly volatile. They can make quick, violent swings based on temporary or even irrelevant news. So an option’s stop-loss will often be triggered even if the underlying stock is performing the way we want it to. That means we could be stopped out of a great trade that would eventually bring us profits if we had waited just a little longer.

Naturally, if you wish to set stop-losses on positions to match your trading tolerance level, that is certainly your prerogative. But as a strategy, it is not something we do when we initiate a position.

Not all brokers allow you to place a trailing stop. More importantly, a trailing stop is calculated using the highest price of your asset while you’re holding it — meaning the trailing stop follows the movement of the option.

If the price rises, so does the trailing stop. Since options can swing widely day-to-day, we could get thrown out of a position before we want to. So we don’t hold one with a broker.

Precision Profits is for risk-tolerant investors who are able to stomach losing 100% on some trades. We don’t frequently lose that. But if a position is a quick loser, it could become a 100% loser and expire worthless.

The 100% losers are part of trading when it comes to options. But our strategy has shown time and again that we can easily absorb those when we’re cranking out such large gains elsewhere over and over again. Plus, our profit-managing measures save us from most big declines.

I just mention this because I want you to be aware of the possibility of an option expiring worthless.

In general, a specific trade will last less than two months. Some options will move quickly, maybe because of a certain earnings report that has a history of moving shares. In those situations, you’ll book profits fast, sometimes within weeks or even days. In other cases, we may roll over positions and sell one option in a stock to buy a new one with a later expiration.

Shorter-term options cost less, and it is usually less expensive to buy three one-month options rather than one three-month option.

In general, we think it’s best if you do not reinvest your gains. With options, there is always the risk that the underlying stock moves sharply against you in a single day and your position suffers a 100% loss. As you develop confidence in the service and with trading options in general, you might consider reinvesting a portion of your overall gains.

No, because of changes in market structure are driven by high-frequency trading, volume on an option no longer matters as much. All contracts in liquid stocks will trade in line with their fair value under the put-call parity formula, and the liquidity of the stock now determines whether or not an option is tradable. I always pick options that are tradeable for us.

We don’t generally put out recommendations before the market opens or after it closes. Options are way too volatile for that. If we put out a recommendation overnight, news could occur after hours or before the market opens that radically shifts the value of the options up or down, and then we may have investors potentially getting filled at bad prices.

So we don’t typically price options before or after market hours.

We send trade alerts as emails in two parts. The first part of the alert will be short and focused on the specifics of your trade. It will include just a few lines, plus the information to place the trade.

Later in the day, we will post a trade follow-up on the “Updates” section of the website. This gives you more details about the position — such as why our triggers were met.

This setup allows us to get the trade out to you as quickly as possible, giving those who want to get into positions early in the day a better chance.

For those of you who want to wait for the full write-up before making the trade, you can certainly do that as well.

As a reminder, we have a text-alert service — it’s free — that lets you know when a new recommendation has been sent. You will still need to read the details in your email or on the web site.

If you haven’t signed up for that, I encourage you to do so. You will know instantly when our alerts are released. Once you’ve clicked “submit,” just remember to check your phone for the final step. We immediately text directions to you to get your confirmation.

Keep your unfilled order open until you receive the next update. But remember, we use stop-limit orders to ensure the trade can meet our profit objective and manage risk. Some will not be filled. That’s okay because there will always be additional trades —so it is best not to chase trades.

No. It is best that you wait for the next new trade.

I don’t give more weight to a broad market trend than to a strong stock trend. Market trends aren’t generally relevant to the Precision Profits system because seasonal trends don’t really care about overbought or oversold conditions. That’s a psychological indicator, and seasonal patterns are about the seasonal and consumer issues that impact various companies for various reasons. If a trade meets our formula’s parameters, then we’ll trade it.

On the very top of the portfolio you can see the total open positions, the average gain percentage of the entire portfolio, the average hold time in days, and when the portfolio was last updated. You will also see the following columns:

Option: Shows the option’s unique identifying symbol, known as the ticker symbol, on its own for a clean view.

Strike price: Also known as the exercise price, this column represents the price at which you are willing to buy or sell the underlying security.

Option type: This lets you know whether the option is a call or a put. Calls increase in value as the underlying stock prices rise, while puts benefit from a decline in the stock prices.

Expiration date: Here, you can easily see when the contract for the option will expire. This also lets you know whether it is a weekly or monthly option. Weekly options expire at the close on any Friday, and monthly options expire at the close on the third Friday of the month.

The option dates mark the day I made a recommendation to buy a position.

This means that the position is still open. Be on the lookout for trade alerts with instructions to sell the position.

The model portfolio only tracks recommendation that triggered the stop conditions. Many recommendations will not be entered because the market fails to trigger the stop-limit conditions. By design, this is a good thing, so expect periods when several orders are not filled. There is no need to track these recommendations since they never placed trading capital at risk.

The portfolio is updated by the end of the day, and the current day’s recommendation may not be added until after the market closes.

If you have a question that wasn’t answered, be sure to check out the trading manual and the Options Trading Tutorial videos on our Getting Started page. In addition, we have a team of well-trained, highly knowledgeable customer service representatives ready to answer your questions about the service and your subscription.

You can contact us by filling out a contact form here, or call us toll-free at 866-584-4096 during the business hours of 8 a.m. to 8 p.m. Eastern time.