 Good evening, everyone. Welcome to the webinar. My name is Hari Swaminathan. Today, we're going to talk about the proprietary options systems. We can see the title slide here. All of these systems gives options traders an edge on every trade. It's very important that we have an edge on every trade. There's a very important reason for that. And so the systems that we're going to talk about today is something that will give you an edge. No system can be 100% perfect. However, we're talking about methods. How do you approach certain trades, certain strategies, especially with options? As we know, in the options market, we are dealing with a market maker. So this is very different from the stock market. We'll cover that. And this is the reason that we need an edge. Whenever you place trades, you want to make sure that you have some kind of an edge in the trade. You just place a trade arbitrarily. It doesn't matter if it's a calendar or an iron condor or a debit spread or a credit spread. If you simply place a trade and then don't think about how you can get an edge from that trade, most likely, or at least statistically, over 10 trades, you'll find yourself losing more times than winning. So that's what we're going to talk about. This edge is very important. And how do we get this edge? All right, so let's get right into it. My name is Harish Swaminathan. I'm the founder of OptionTiger.com. I've been an options trader for about eight, nine years now. And I have a bachelor's degree in engineering from India. And I have an MBA from Columbia Business School in New York. I mentioned I have about eight, nine years of options trading experience. And anybody that has gone through options will find the first couple of years fairly challenging, fairly frustrating. And it was no different with me. Many things I've learned by making mistakes. Many things I've learned by trying to really get deep into the market structure itself, which reveals a lot of things about options. And so a lot of this, it's all coming from personal experience. And when you say personal experience, when you learn by mistakes, it goes without saying that you learn by losing money. And so that's very critical to not lose too much money when you're learning, when you're in the learning curve. And unfortunately, we are going to lose money in the beginning. But the trick is to keep those losses as low as possible because you want to learn the game. And options trading is a game. It is a game of skill. It is a game of skill that is no different from chess. It is a game of skill much higher level of skill is required than poker. Poker is also a game of skill. However, it has an element of chance to it also. Whereas the options are entirely a game of skill. So it is no different from chess. So we'll get into some of this also. So let's get started. And in general, let's talk about the options market. Now many of you may have quite a bit of experience in the options market. And so some of the stuff you may already be aware of maybe you have not realized a couple of things even if you're experienced traders. And if you're a beginner or fairly new to options trading then this is very important information for you. When you look at the options market, there is one very significant difference between the options market and the stock market. In the stock market, most of the time, 90%, 95% of the time you're dealing in a peer to peer network. So meaning you have stock trading platforms, whether it's E-Trade or Charles Schwab or whoever it might be. If you put in a buy order, the broker tries to match your buy order with the sell order from another customer, another trader. So it's a peer to peer system. Whereas in the options market, that is not the case. In the options market, we always, always deal with the market maker. So every one of our trades is not against another trader. It is against a market maker. So this makes the options market no different from a casino. So when we walk into a casino, we play against the house. There are very few games where you play against each other. I think poker may be one of them, but most of the games in a casino like Blackjack or Roulette or Craps or whatever it might be, most games are designed where you play against the casino. So the casino is legally allowed to have an edge. And you know, that's not some earth shattering news. We know that we know that the casino operators have an edge because if they don't have an edge, why would they be in that business? Why would they spend so much money creating this fantasy land and having all these entertainment options and all of that if they did not have an edge? So the fact is they have an edge and it's no different with the market maker. The market maker is a market maker in the options market for a reason. And that reason is obviously because the regulators have allowed them to have some kind of an edge. Obviously, the edge has to be within reason. Otherwise, the regulators won't allow it. And the same goes for a casino as well. However, they are allowed to have an edge. And so in the options market, the market makers have two ways of having that edge. One is we know very clearly they set bid ask prices. So whenever we make a trade, we will face slippage on the bid ask spread. The second way they have an edge is they have considerable flexibility in setting option prices. The way they calculate volatility, the way they set option prices, they have considerable flexibility. And then obviously the market will have a supply demand dynamic and then it will go from there. However, they do have considerable flexibility in setting option prices. By these two methods, the market makers have a statistical edge in the long run. So in the long run, we are talking hundreds, thousands, tens of thousands of trades. The market makers are there. They are there every day and they have deep pockets. So even if they have bad days, they can come back and make that up. No different from a casino. When we go to a casino, we can have a great day sometimes. You might win a lot of money. However, what you really have to look at is the long run statistical edge and that unfortunately is on the other side. Whether we are talking about casino operators or the options market, market makers, the statistical edge is on the other side. And that's why whenever we take trades, we think we are making good trades. And so by definition, that means that the market maker is taking a crappy trade. But they still take crappy trades all day and they still win. You can know if anybody is following all these big Wall Street banks and trading companies, trading profits are just skyrocketing for all of these companies. And so they all have proprietary trading desks, which then creates markets for all of these products, all of these stocks. And trading has become a very profitable venture for all of these companies. So net bottom line is we traders face a problem of consistency. And if you've traded options for any length of time, you know that this is true. When we say consistency, meaning we can have two great trades, three great trades a day, four great trades, or over a period of a week we'll have five or six or seven great trades. But one trade will come and it'll hit you. And when it hits you, you realize that you give up a lot of the profit, if not all of the profit that you made on the previous trades. And that's the problem. There's a couple of reasons for this. And all of this is coming from my personal experience, my personal studying of what is happening in the options market. What are the mistakes we make? And believe me, we make a lot of mistakes. We take off trades at the wrong time, we adjust at the wrong time, or we make the wrong kind of adjustment. Then we have transaction costs that work against us. So there's a lot of things that are going against us traders when we enter the markets. And all of this over the long run, over a period of a few months or a year or two, it creates a problem of consistency. And we are constantly fishing also. Today we try some trades, tomorrow we try different adjustments. What I call in constantly in a fishing mode. And so all of this actually works in the favor of the market maker. The market makers are never fishing. They know exactly, they don't even think, they are pretty much acting like robots when an order comes in. Because they look at the Greeks, they look at their risk numbers, and they only go with that. So they're actually acting pretty robotically and that's really the way to win in the markets. We traders need to act just like the market maker. So we have a method, you follow a method, and that is what will put the edge on our side. They say in a casino, the casino has maybe a 52, 48 edge, maybe 53, 47. In the options market, if you look at all of these factors, I think, although it's not some scientific study or anything, but I think the options market have, the market makers have a much larger edge than even the casino operators. Now the only difference is, we know how well the casinos do because their assets is very visible to us. And in the case of market makers, we really can't see how much money they're making, but they are making money. All of these, like I said, these Wall Street companies are all, every quarter they are producing 100 million, 200 million, 300 million, or more than that in trading profits. I'm only talking about proprietary trading. So there's a lot of money they're making which we can't see. It's behind a firewall. We cannot see it, but they are making a lot of money. So bottom line, we traders need to find a way to be consistent with our trades. And so the only way we can put consistency on our side is we have to have an edge on our trades, and that's what the MAC systems are all about. In the case of a calendar or a diagonal, we would also include double calendars and double diagonals as well into this product. There is a certain way to get a significant edge. And if you've ever seen a calendar or a diagonal, you have these tent poles and the profit is maximized at those tent poles. Now granted, the probability of something expiring exactly at that tent pole is very low. However, if it happens just once or twice out of five trades or at least close to the tent pole, then your reward to risk ratio becomes about five is to one. It can become even up to five is to one. And so there's a way we can construct these calendars and diagonals to be able to come close to achieving that. And so one trade, one winning trade, as you can see, may make up for two or three losing trades, and then the reward also is much, much higher. So the calendar MACs exploits these tactics and creates an edge for every calendar trade, every diagonal trade, and eventually it might be converted or adjusted into a double calendar or a double diagonal. This is a very powerful strategy. It's a very underrated strategy. And I think it's one of the best strategies we can use in a low volatility environment. And that's because it's a Vega positive trade and it's also a theta negative trade. So you have time decay and you have Vega positive. So that is a very unique feature of calendars and diagonals, and there's a specific way we can exploit that. Thanks.