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Julian Sebastian Juris Doctorate
The #1 author for option cycles on

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"Julian Sebastian does a great job in sharing a time based cycle trading strategy. I was surprised from this book I bought on Amazon and his . . . videos he offers . . . had more valuable information than in webinars I have paid over $299."
Ernest G. - verified Amazon review 4/20/16



















"Author does a good job explaining the cycle phenomenon and how it relates to profitable equity option trading. Thanks for sharing this knowledge."
BCB500 - verified Amazon review 2/22/16



















"What I liked the most is his forecasting ideas and how he shared the specifics of his entry process. Making sure trades meet certain profit criteria based on his forecast before he would consider taking the trade."
Michael C. - verified Amazon review 12/26/15



















"I have been a mostly value and dividend investing for 40 years. During this time the Engineer in me has noticed the mean reverting nature of markets. Julian presents a workable view which I am now incorporating into my options trading strategies all be it with less risk. And less potential reward. Perhaps as confidence builds, I may take more risk. I highly recommend this work for any serious investor."
Michael B. - verified Amazon review 2/19/16



















"The author begins with large amplitude cycles prediction which demonstrates the huge regions for a stock to rise. Next, he develops the concept of a cycle vector to explain the movement mathematically. The discussion moves to a price trend which explains the dynamics of the price and time of two trade bars."
Dr. Joseph F. - verified Hall Of Fame Amazon reviewer 1/11/16



















"An excellent overview of trading options, well written especially for those who have been intimidated by the concept of options trading. Examples are clear and reflect objectivity by the author. I have been trading options for a few years and have done okay, but can enhance future trades with what I have learned from this book."
A. Edwards - verified Amazon review 1/13/16



















"I was not expecting to learn much, because I've been trading Options for 20+ years. I'm always looking for good systems. A lot of the books I've read have been very basic and poorly written with very little for me to learn at this point, but not this one. Julian is obviously not only a good writer, but BRILLIANT Options trader beyond belief! WOW! Julian has written an AWESOME book that shows not only the POWER of options to get INCREDIBLE returns (not kidding), but also, and what I consider more importantly, to manage risk. After all, it's not about how much you make, it's about how much you keep. Julian shows BOTH! :)"
Jimmy H. - verified Amazon review 1/19/16












5 Steps To 100%+ Option Trades


By Julian Sebastian, Juris Doctorate

© 2017 TheCycleCode.com. All rights reserved.


Option trade returns over 100% are regularly possible in just a few trading days.  They require the formation of large amplitude cycles in highly liquid option markets – a phenomenon occurring regularly in most free-traded markets.

Applying the following five steps to the SPY index in 2015 resulted in 7 trades with an average return of 179% with only two losses.  Another 10 trades qualified in the TLT (i-Shares 20+ year U.S. Bond) in the same period, with half winning an average of 175%.

Here are the 5 steps to 100%+ option returns:

Step1

Every stock market has at least one dominate composite cycle unique to its market fractal or price-time period (e.g., a market’s daily, weekly, monthly, or even intraday price-time chart).

Young GannA stock market cycle is precisely calculated by the rules developed by legendary 19th century cycle analyst W.D. Gann. They are measured with diagonal lines (vectors) from cycle swing endpoints – oscillating up and down.

When properly measured these vector diagonal trend lines precisely measure and define long and short trends within the cycle.

Vector lines oscillating up and down create cycles.  One vector in one direction plus one vector in the opposite direction equals one complete cycle – either measured from the high to the low back to the next high making a “\/”, or measured from a low to a high back to a second low making an “/\”.

Three vectors contain two complete cycles both sharing the middle vector in their individual cycle.

W.D. Gann has proven throughout his legendary career that cycles move with amazing mathematical harmony to the point where they can be regularly – and highly profitably – forecasted and traded.

Leveraging trades with options in highly liquid option markets make regular, high-probability 100%+ trade returns possible.

THE RULES TO MEASURE AND DRAW VECTORS

According to 19th Century cycle legend W.G. Gann, cycles have regularly recurring mathematical harmonies when measured with nature-based time charts.  The daily bar chart is one natural time chart, because it measures the entire price movement of a market for one complete revolution of the Earth on its axis.

vectors

As long as price bars continue to make higher highs and higher lows, the trend is long.  During a long vector, the trend continues long as long as price does not make a (1) lower high and (2) a lower low in the same price bar and (3) a close lower than the low of any bar in the previous long trending vector.

The same is true for short vectors/trends.  A short trend continues until price breaches the high of the previous price bar, makes a higher low in the same price bar, and confirms (in the same bar, or a subsequent bar) a close above any price bar in the entire short trending vector.

Applying these rules percicesly, the vectors may be drawn on the SPY index for January, 2015 defining the first five cycles of 2015 in our first chart, above.

Step2

Once you master the rules for tracing out cycle vectors and their cycles, creating forecasts is pretty straightforward.

Mind you, these cycles from swing extremes are all over $7.50.  That may only be about 3.5% of the SPY, but by trading options you can leverage the change in price to over 300% using weekly expiring option.

To forecast any upcoming short vector, project the exact price-time trend line between the last two cycle tops from the intervening swing bottom.

In January, 2015 the first two cycle tops were made on 12/29/14 and 1/9/15.  In the following chart the blue line is the top-to-top trend line connecting these two tops.  The intervening cycle swing bottom between these two tops formed on 1/6/2015.

The exact price-time trendline between these two cycle tops, moved intact and projected from the  first 2015 intervening swing low produced the next short vector projection of exactly $196.31 on exactly January 16th 2015.

As soon as the second cycle swing top of 2015 was confirmed, we had an exact forecast of how far in price, and how long in time, the upcoming short vector would go.

The forecast was able to be made as soon as the close of January 12, 2015 – the first time price made a lower high and a lower low with a close below a bar of the previous long trend.  While the forecast overshot the price, it nailed the projected swing low date down to the exact daily bar:


1st Forecast

Next, after the swing low of January 16th formed and reversed trend (the 2nd swing low on the chart, above), we can forecast the next upcoming long vector.

The price-time trendline between the January 16th cycle swing low, and the previous cycle swing low of January 6th equals .31 cents in eight days or price-time bars.

You can use charting software like FCharts (free, by spacejock.com) to draw and drag trendlines.  Or, you can just subtract .31 from the intervening swing high of January 9th, 2015, ($206.42 – .31); and add eight bars to arrive at our next long vector forecast of $206.11 on January 22, 2015.

This forecast was superb, as the cycle made a swing high on January 22, 2015 –  the exact date of the forecast, with a price just .15 above our forecast:


2nd Forecast

Forecasting our next short vector for January 2015, we take the difference between the high of January 22, 2015 ($206.26) and the previous cycle high of January 9th, 2015 ($206.42) which is .16 cents and, like the prior cycle (cycles commonly repeat in time and price)  there is a difference, again, of exactly 8 bars in time.

Subtracting .16 cents  from the intervening swing low of January 16th, 2015, and adding 8 bars, gives us a short vector forecast of exactly $198.39 on exactly January 29, 2015.

Price made its ultimate low two days after our forecast exceeding our forecasted low by .83 cents (in a swing high-to-low cycle price amplitude of $7.87 – the forecast underestimated the cycle by just 10.5%):

3rd Forecast

Our final vector forecast example, and second forecasted long vector, is exactly $205.57 on exactly February 5, 2015 – made, again, by taking the difference in price and time between the two last swing cycle lows and projecting that difference on the intervening cycle swing high.

What's happening here is we are taking the last complete cycle and projecting that exact same price-time energy into the next forming cycle's vector.  Cycles form in such rhythm and harmony so as to make the projection more accurate and dynamic than any other method I have ever encountered.  And the accuracies of the forecasts are truely amazing.

Our final forecast was another home run.  Just one bar shy, our forecast again sliced the tip off the swing high of February 6, 2015:

4th Forecast

Step 3

In order to maximize profits and limit risk, only enter trades at a time when the market is forecasted to change trend.  That is, only enter trades at a time when the-then current vector is forecasted to end (within a bar or two).

Next, enter trades when price opens inside the previous day’s price range and then proceeds to tick past the previous day’s price extreme in the new traded trend direction – a very good and early signal of a change in trend.

In a newly forming long trend to be traded, enter the trade when price ticks past the extreme price high of the previous bar indicating a change of trend at the timing withing the cycle's expected forecasted change of trend.

In a forecasted short vector trade, enter the trade when price ticks past the previous bar’s extreme low price, as long as the day’s price has not exceeded the previous bar’s high price (in which case the current bar would be forming an “engulfing bar pattern”).


entry

StepNo4

To maximize profits exit the trade in the earliest of the following two scenarios:

  1. price reaches its forecasted price, or,
  2. if, before price reaches its forecasted price, and you can exit with any profit at all (don’t exit with a loss), then exit if and when price ticks past the previous day’s price extreme in the opposite direction than the expected traded trend direction (an early high-risk reversal signal).

StepNo.5

Weekly options are very volatile and and not good candidates for stop losses – they lose and regain their value too quickly for stop losses to be practical.  Therefore, the expected return on option trades must be commensurate with the risk of losing the capital invested in each option trade.

While your option trade losses are limited to 100% of the capital invested, your wins have no such limitation and can and will provide returns well past 100%, and, in some trades, many multiples of 100%.

In order to gain a statistical long term trading advantage, only make trades that have the forecasted opportunity to make a 150% gain in a call or put option trade.

Also, limit each trade to the same reasonable percentage of your high-risk trading capital, e.g., 5-15%.

This money management limits the amount of money you will trade following any losses – but expands the amount of capital traded following wins.  This will exponentially grow your trading capital smart and safely, while avoiding placing an inordinate and unwise amount on any one trade.  Never “double down” on losses.
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 100%+ Return Opportunities On Large Amplitude Cycles


 
 
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  • How To Calculate Cycles
  • How To Forecast Cycles
  • How To Trade Cycles
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    • how to exit trades
    • stop losses
    • best markets
    • trade cost averaging
  • How To Use Options
  • Why Markets Are Cyclical
    • composite cycles
    • amplitude vs. trend
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