Table of Contents

CHAPTER 1 – LAYER SPREADS

Section 1 – Pre-Strategy Discussion of Risk 
Section 2 – Layer Spreads
Section 1 – Case Study: Vertical Time Spread

CHAPTER 2 – LAYER SPREADS CONSTRUCTION

Section 1 – Layer One – Foundation
Section 2 – Layer Two – Framing
Section 3 – Layer Three – Putting On The Roof
Section 4 – Layer Four – Windows and Sidings
Section 5 – Layer Five – Home Repairs
Section 6 – Layer Six – Room Addition
Section 7 – Layer Seven – Finishing the Basement

CHAPTER 3 – LAYER SPREADS ENTRANCE CRITERIA

Section 1 – Step 1 – Select the Instrument You Want To Trade
Section 2 – Step 2 -Ascertain Volatility Level
Section 3 – Step 3 – Ascertain Volatility of Market
Section 4 – Step 4 – Check for Earnings, Announcements, FDA Approvals, etc.
Section 5 – Step 5 – Determine the Expiration Cycle to Utilize
Section 6 – Criteria Intermission for Probabilities
Section 7 – Step 6 – Determine the Range of Protection You Require
Section 8 – Step 7 – Determine if the First Layer is Bullish or Bearish
Section 9 – Step 8 – Find the First Layer
Section 10 – Step 9 – Think the Trade Through
Section 11 – Step 10 – Determine the Contract Size
Section 12 – Step 11 – Second Layer
Section 13 – Step 12 – Timing of Second Layer
Section 14 – Step 13 – Adding the Second Layer
Section 15 – Step 14 – Review Foundation and Create a Game Plan
Section 16 – Step 15 – Adding A Third Layer – Explained
Section 17 – Step 16 – Add Third Layer Continued (Immediate Addition)
Section 18 – Step 17 – Add Third Layer (When Waiting)
Section 19 – Step 18 – Layer 3 Continued – Layer Placement
Section 20 – Step 19 – Layer 3 Continued – Select the Strategy for Layer Three
Section 21 – Step 20 – Layer 3 Continued – Resulting Position
Section 22 – Step 21 – Double-Check
Section 23 – Step 22– Execute
Section 24 – Step 23 – Wait Again
Section 25 – Step 24 – Layer Four, Five, Six….
Section 26 – Other Considerations

CHAPTER 4 – LAYER SPREADS ADJUSTMENTS

Section 1 – Preamble
Section 2 – Review of Layer Spread’s Risk Elements

CHAPTER 5 – LAYER SPREADS ADJUSTMENT CRITERIA

Section 1 – Step 1 – Calculate Margin
Section 2 – Step 2 – Determine Where You Will Move
Section 3 – Step 3 – Consider Volatility Levels
Section 4 – Step 4 – Do NOT Focus on PNL
Section 5 – Step 5– Get A List of All Positions and Break-evens
Section 6 – Step 6– Pull-up an Option Chain
Section 7 – Step 7 – Pull-up Figure 3.3 From the Entrance Criteria
Section 8 – Step 8 – Start Playing With the Strategies
Section 9 – Step 9 – Focus on the Break-even Point
Section 10 – Step 10 – Search Many Options
Section 11 – Step 11 – Decide Contract Size
Section 12 – Step 12 – Place the Trade
Section 13 – Step 13 – Re-calculate the Break-even
Section 14 – Step 14 – Be Ready to Repeat these Steps
Section 15 – Step 15– No More Adjustments are Needed. Go to Exit
Criteria

CHAPTER 7 – LAYER SPREADS EXIT CRITERIA

Section 1 – Exit Criteria Pre-Expiration Day
Section 2 – Exit Criteria Expiration Day