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Disclaimer: The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment investment. Rather Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHERSLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDERUNDER OR OVER-COMPENSATED OVER COMPENSATED FOR THE IMPACT IMPACT, IF ANY ANY, OF CERTAIN MARKET FACTORS FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. The Connors Group, Inc., 15260 Ventura Blvd., Ste. 2200, Sherman Oaks, CA 91403 Copyright The Connors Group, Inc., 2007.

IN CASE OF TECHNICAL DIFFICULTY: Due to technical problems associated with the site we are broadcasting from, there is a small possibility that our transmission will be interrupted. If the transmission freezes for over two minutes or if you are unable to hear the presentation, we will switch to the back up conference call line. To access the conference call line follow these steps: 1. Dial 866-212-0875 or 978-964-0049 2. When prompted, dial the participant code: 2181957# 3. You will be admitted after stating your name and pressing the # key. 4. Next, obtain the slides in PDF by going to this link: http://images tradingmarkets com/temp/vixclass pdf http://images.tradingmarkets.com/temp/vixclass.pdf If you have any questions regarding how to access the presentation, please email eorozco@cg3.com eorozco@cg3 com or call us at: 1-888-484-8220 ext. ext 1
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VIX Options Trading Course CourseAgenda

1. What is the VIX? 2 Short VIX Signals (Fear) 2. 3. Long VIX Signals (Complacency) 4. Multiple p Signals g 5. Daily VIX Stretch Matrix 6. VIX PowerRatings 7. Trading the Options 8. Additional Strategies and Research 9 Questions and Answers 9.
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VIX Options Trading Course Bonus S&P Market Timing g

VIX Options Trading Course

Whatisthe VIX?
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CBOE VOLATILITY INDEX (VIX) OPTIONS

Symbol: VIX Underlying: U d l i TheCBOEVolatilityIndex morecommonlyreferredtoas"VIX" isanuptothe minutemarketestimateofexpectedvolatilitythatiscalculatedbyusingreal timeS&P500Index(SPX)optionbid/askquotes.VIXusesnearbyandsecond nearbyoptionswithatleast8dayslefttoexpiration,andthenweightsthemto yieldaconstant,30daymeasureoftheexpectedvolatilityoftheS&P500Index. Multiplier: $100. StrikePriceIntervals: Minimumstrikepriceintervalsofnotlessthan$1.00arepermissible,subjectto certainconditions.(SeeCBOERule24.9,InterpretationsandPolicies.01formore completeinformation).Otherwise,strikepriceintervalsshallnotbelessthan $2 50 $2.50.
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CBOE VOLATILITY INDEX (VIX) OPTIONS

Strike(Exercise)Prices: In,at andoutofthemoneystrikepricesareinitiallylisted.Newstrikescanbe addedastheindexmovesupordown. PremiumQuotation: Statedinpointsandfractions,onepointequals$100.Minimumtickforseries tradingbelow$3is0.05($5.00);above$3is0.10($10.00). ExpirationDate: TheWednesdaythatisthirtydayspriortothethirdFridayofthecalendarmonth immediatelyfollowingtheexpiringmonth. month HerearetheexpirationdatesforVIX optionsthatmaybelistedthroughDecember2007:(VIXoptionswithexpiration datesinBOLDexpireontheWednesdayafterthe3rdFridayofthemonth.) August22,2007 September19,2007 October17,2007 November21, 21 2007 December19,2007
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CBOE VOLATILITY INDEX (VIX) OPTIONS

ExpirationMonths: Generally,uptothreeneartermmonthsplusuptothreeadditionalmonthson theFebruaryquarterlycycle. ExerciseStyle: European CBOEVolatilityIndexoptionsgenerallymaybeexercisedonlyonthe ExpirationDate. LastTradingDay: TheTuesdaypriortotheExpirationDateofeachmonth. SettlementofOptionExercise: TheexercisesettlementvalueforVIXoptions(Ticker:VRO)shallbeaSpecial OpeningQuotation(SOQ)ofVIXcalculatedfromthesequenceofopeningprices oftheoptionsusedtocalculatetheindexonthesettlementdate.Theopening priceforanyseriesinwhichthereisnotradeshallbetheaverageofthat option'sbidpriceandaskpriceasdeterminedattheopeningoftrading.Exercise willresultindeliveryofcashonthebusinessdayfollowingexpiration. expiration The exercisesettlementamountisequaltothedifferencebetweentheexercise settlementvalueandtheexercisepriceoftheoption,multipliedby$100. 9

CBOE VOLATILITY INDEX (VIX) OPTIONS

PositionandExerciseLimits: Nopositionandexerciselimitsareineffect.Eachmember(otherthanamarket maker)ormemberorganizationthatmaintainsanendofdaypositioninexcess of f100 100,000 000contracts t t i inVIXf forit itsproprietary i t account torfor f the th account tof fa customer,shallreportcertaininformationtotheDepartmentofMarket Regulation.Themembermustreportinformationastowhethersuchpositionis hedgedand,ifso,adescriptionofthehedgeemployed.Areportmustbefiled whenanaccountinitiallymeetstheaforementionedapplicablethreshold. Thereafter,areportmustbefiledforeachincrementalincreaseof25,000 contracts.Reductionsinanoptionpositiondonotneedtobereported.However, anysignificantchangetothehedgemustbereported. reported

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CBOE VOLATILITY INDEX (VIX) OPTIONS

Margin: Purchasesofputsorcallswith9monthsorlessuntilexpirationmustbepaidfor infull.Writersofuncoveredputsorcallsmustdeposit/maintain100%ofthe option ti proceeds* d *plus l 15%of fthe th aggregate t contract t tvalue l (current ( tindex i d level l l x $100)minustheamountbywhichtheoptionisoutofthemoney,ifany,subject toaminimumforcallsofoptionproceeds*plus10%oftheaggregatecontract valueandaminimumforputsofoptionproceeds*plus10%oftheaggregate exercisepriceamount.(*Forcalculatingmaintenancemargin,useoptioncurrent marketvalueinsteadofoptionproceeds.)Additionalmarginmayberequired pursuanttoExchangeRule12.10. CUSIP: 12497K TradingHours: 8:30a.m.to3:15p.m.CentralTime(Chicagotime).CBOEVolatilityIndexoptions willnotopenuntiltheSPXopeningrotationiscompleted.

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What is the VIX?

TheVIXisapopularmeasureofstockmarketvolatility.But,more importantlyit'susedtomeasurefearandcomplacency. Whenthestockmarketrises,theVIXusuallydropsinvalueasmarket participantsfeelsafe. Whenstockpricesdrop,theVIXusuallyrises,asfearbeginstotakehold.

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What is the VIX?

Thegreaterthefear,thehighertheVIXgoes(asweve we verecentlyseen). Thisiswherethebiggeredgesandpotentialforgainhaveoccurred. Eventuallythough,theVIXrevertsbacktoitsmean.Inotherwordsit returnstopreviouslevels.Thishasbeenprovenbytheacademicworld, andisseeninourownstatisticalresearch.TheCBOEVIXoptionsallow traderstopotentiallyprofitfromthedirectionoftheVIXandtoprofit frommarketvolatility.Theyalsogiveyoutheopportunitytohedgeyour portfoliotoprotectyourselffrommarketdeclines.

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Whats the Best Way to Trade the VIX?

ReversiontotheMean Volatilityrevertstoitsmean.Thiswasshownintheacademic worlddecadesagoanditholdstruetoday.Whatdoesthismean? Itmeansthatwhenvolatility(theVIX)movestoofarawayfrom normallevels(especiallyshortterm)ittendstoreversebackto normallevels. Optionstraderscanusethisinformationtobuyandsell overpricedandunderpricedoptions.AstheVIXmovesfrom extremelevelsbacktonormallevels, ,theoptions p oftenmove accordingly.

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VIX Options Trading Course

VIXStrategies
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

ShortVIX St t i Strategies
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V1Short EntryRules 1.S SPY's sclose c oseis sabove abo eSPY's S s200 00dayMA 2.SPY'sRSI(2)isbelow10 3.VIXclosesatleast5%aboveits10dayMAfor threedaysinarow Cover/Exit C /E it 1.SPYsRSI(2)closesabove75
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V1ShortExample4/11to4/18

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V1ShortExample4/11to4/18

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V1Short NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 28 9.42% 5.93 92 86% 92.86% 10.89% 9.72% 9 72% 14.19
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V2Short EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 SPY 2. SPYs sRSI(2)isbelow30 3.VIXsopenishigherthanitsyesterdayclose 4.VIX VIX's sRSI(2)isabove90 Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V2Short3/13to3/20

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V2Short3/13to3/20

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V2Short NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 87 5.99% 5.92 88 51% 88.51% 9.57% 21.58% 21 58% 3.66
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V4Short EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 VIX 2. VIXs scloseishigherthanyesterday yesterday,for5daysin arow 3.SPY SPY's sRSI(2)isbelow30 Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V4Short NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 13 9.55% 4.69 84 62% 84.62% 12.03% 4.1% 4 1% 21.24
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V7Short EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 VIX 2. VIXs scloseishigherthanyesterday yesterday,for4daysin arow 3.VIX VIXs sopenishigherthanitsyesterdayhigh 4.SPY'sRSI(2)isbelow30 Cover/Exit 1.SPYsRSI(2)closesabove75
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

V7Short NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 21 8.84% 4.81 90 48% 90.48% 10.35% 5.54% 5 54% 23.91
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

PercentB Definition: PercentBdenotesthedifferencebetweentheclose tothelowerBollingerBand, Band dividedbythe differencebetweenthetopBollingerBandtothe bottomone. Averagingperiod=5;Standarddeviation=1.

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

PercentB1 EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 SPY 2. SPY's sRSI(2)isbelow10 3.PercB<0twodaysinarow Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

PercentB1 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 73 7.57% 5.99 89 04% 89.04% 9.87% 11.09% 11 09% 9.77
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

PercentB2 EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 PercB<.2 2. 2threedaysinarow 3.SPYclosesinthebottom25%oftodaysrange 4.SPY SPY's sRSI(2)isbelow65 Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

PercentB2 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 53 9.14 5.91 90 57% 90.57% 10.72% 5.96% 5 96% 19.36
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

Down1 EntryRules 1.SPY'scloseislowerthanitsopen,forthreedays inarow 2.SPY'scloseisaboveSPY's200dayMA 3.SPYclosesinthebottom10%ofitsrange 4.SPY'sRSI(2)isbelow65 Cover/Exit 1.SPYRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

Down1 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 36 8.02% 6.06 94 44% 94.44% 9.77% 21.75 21 75 7.44
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI1 EntryRules 1.SumofSPY'sRSI(2)forlastthreedaysisbelow 50 2.SPY'scloseisaboveSPY's200dayMA 3.SPY SPY's sRSI(2)isbelow65 Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI1 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 52 8.12% 5.42 90 38% 90.38% 9.80% 7.60% 7 60% 14.29
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI2 EntryRules 1.SumofSPY'sRSI(2)forlasttwodaysisbelow40 2 SPY 2. SPY's scloseisaboveSPY's SPY s200dayMA 3.SPY'sRSI(2)isbelow65 Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI2 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 119 4.97% 5.74 83 19% 83.19% 8.23% 11.17% 11 17% 3.78
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI3 EntryRules 1.SumofSPY'sRSI(3)forlasttwodaysisbelow45 2 SPY 2. SPY's scloseisaboveSPY's SPY s200dayMA 3.SPY'sRSI(2)isbelow65 Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI3 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 73 8.72% 5.81 90 41% 90.41% 10.63% 9.33% 9 33% 13.1
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI4 EntryRules 1.SPY'sRSI(2)isbelow4 2 SPY 2. SPY's scloseisaboveSPY's SPY s200dayMA Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI4 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 32 9.80% 6.31 90 63% 90.63% 11.68% 8.38% 8 38% 16.26
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI5 EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 SPY 2. SPY's sRSI(4)isbelow25 3.SPY'sRSI(2)isbelow65 Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI5 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 74 9.04% 6.22 89 19% 89.19% 10.75% 5.10% 5 10% 19.96
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI6 EntryRules 1.SPY'scloseislowerthantheclose8daysago 2 SPY 2. SPY's s2periodRSIishigherthan8daysago 3.SPY'scloseisaboveSPY's200dayMA 4.SPY SPY's sRSI(2)isbelow15 Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI6 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 10 11.06% 4.9 90% 12.32% 0.28% 0 28% 549.39
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI7 EntryRules 1.SPY'scloseislowerthantheclose2daysago 2 SPY 2. SPY's sRSI(2)ishigherthanitsvalue2daysago 3.SPY'scloseisaboveSPY's200dayMA 4.SPY SPY's sRSI(2)isbelow30 Cover/Exit 1.SPYsRSI(2)closesabove75

52

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI7 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 36 6.04% 5.53 83 33% 83.33% 8.85% 7.99% 7 99% 6.57
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

DMI1 EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 SPY 2. SPY's sPlusDI(3)isbelow5 3.SPY'sRSI(2)isbelow65 Cover/Exit 1.SPYsRSI(2)closesabove75

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

DMI1 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 77 7.35% 5.47 87 01% 87.01% 9.24% 5.31% 5 31% 13.92
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

DMI2 EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 SPY 2. SPY's sPlusDI(2)isbelow3 3.SPY'sRSI(2)isbelow65 Cover/Exit 1.SPYsRSI(2)closesabove75

56

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

DMI2 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 114 6.61% 5.68 85 96% 85.96% 8.98% 7.96% 7 96% 8.92
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

DMI3 EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 SPY 2. SPY's sPlusDI(2)isbelow10fortwodaysinarow 3.SPY'sRSI(2)isbelow65 Cover/Exit 1.SPYsRSI(2)closesabove75

58

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

DMI3 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 146 5.12% 5.71 81 51% 81.51% 7.50% 5.34% 5 34% 7.28
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

DMI5 EntryRules 1.SPY'scloseisaboveSPY's200dayMA 2 SPY 2. SPY's sPlusDI(2)isbelow15forfourdaysinarow 3.SPY'sRSI(2)isbelow65 Cover/Exit 1.SPYsRSI(2)closesabove75

60

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

DMI5 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 88 5.60% 5.18 86 36% 86.36% 7.29% 5.07% 5 07% 10.78
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR2 EntryRules 1.VIX'sRSI(5)>70 2 VIX 2. VIX's sRSI(5)today<yesterday 3.VIXclosesbelowits10dayMA 4.SPY SPY's scloseisaboveSPY's SPY s200dayMA Cover/Exit 1.VIXclosesbelowits10dayMA

62

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR2 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 18 5.56% 5.17 94 44% 94.44% 5.95% 1.13% 1 13% 113.12
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR3 EntryRules 1.VIX'slowisgreaterthantheVIX's10dayMA 2 VIX 2. VIX's scloseisatleast10%aboveits10dayMA 3.SPY'scloseisaboveSPY's200dayMA Cover/Exit 1.VIXclosesbelowits10dayMA

64

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR3Example

65

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR3 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 61 5.81% 6.62 86 89% 86.89% 10.52% 25.33% 25 33% 2.76
66

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR6 EntryRules 1.TwooutofthelastthreedaystheVIXmakesa new20dayhigh 2.SPY'scloseisaboveSPY's200dayMA Cover/Exit 1.VIXclosesbelowits10dayMA

67

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR6 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 47 8.44% 5.64 89 36% 89.36% 10.13% 5.74% 5 74% 17.93
68

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR8
Definitions Step(1)TheVIX's10dayEMAminusVIX'syesterdayvalueof10day EMA Step(2)TheVIX's VIX s100dayEMAminusVIX's VIX syesterdayvalueof100day EMA Step(3)=Step(1)minusStep(2) EntryRules 1.Step(3)>0.2 2.Step(3)valueisthehighestoverthelast40days 3.SPY'scloseisaboveSPY's200dayMA Cover/Exit 1 VIXcloses 1. l below b l its i 10day d MA
69

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR8 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 45 6.81% 6.22 86 67% 86.67% 11.56% 24.08% 24 08% 3.08
70

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR11
Definition Step(1)TheVIX'syesterdayvalueof3dayMAminusVIX'syesterday valueof10dayMA EntryRules 1.VIXhighisthehighestoverthelast10days 2.Step p( (1) ) > 1 3.SPY'scloseisaboveSPY's200dayMA Cover/Exit 1.VIXclosesbelowits10dayMA

71

VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

CVR11 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 39 7.02% 5.49 89 74% 89.74% 9.15% 11.66% 11 66% 8.89
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI80 EntryRules 1.VIX'sRSI(2)isabove80threedaysinarow 2.SPY SPY's scloseisabovetheSPY SPY's s200dayMA Cover/Exit 1.VIXsRSI(2)closesbelow25

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI80 Example

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

RSI80 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 53 7.71% 5.64 90 57% 90.57% 8.93% 4.07% 4 07% 22.62
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

4HC EntryRules 1.VIXscloseishigherfourdaysinarow 2.SPY SPY's scloseisaboveSPY's SPY s200dayMA Cover/Exit 1.VIXsRSI(2)closesbelow25

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

4HC NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 56 6.38% 5.38 89 29% 89.29% 7.72% 4.83 4 83 16.69
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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

5HH EntryRules 1.VIXshighishigherthanitshighyesterday,5days inarow 2.SPY'scloseisaboveSPY's200dayMA Cover/Exit 1.VIXsRSI(2)closesbelow25

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VIX Options Trading Course Short Strategy Rules

For all systems: We enter at the close and exit at the close

5HH NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 24 7.04% 5.42 83 33% 83.33% 10.43% 9.89% 9 89% 6.24
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VIX Options Trading Course Long Strategy Rules

VIXLong R l Rules
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

V1Long EntryRules 1.SPY'scloseisbelowSPY's200dayMA 2.SPY SPY's sRSI(2)isabove80 3.VIXscloseisatleast5%belowits10dayMAfor threedaysinarow 4.SPY'scloseisequaloraboveSPY's5dayMA Exit E itRules R l 1.SPYsRSI(2)closesbelow35
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

V1Long NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 25 4.12% 4.48 80% 7.08% 7.72% 7 72% 3.43
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

V2Long EntryRules 1.SPY'scloseisbelowSPY's200dayMA 2.SPY SPY's sRSI(2)isabove80 3.VIXscloseisatleast10%belowits10dayMA 4.SPY'scloseisequaloraboveSPY's5dayMA ExitRules 1 SPYs 1. SPY RSI(2)closes l below b l 35

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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

V2Long NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 24 5.32% 4.63 83 33% 83.33% 7.5% 5.59% 5 59% 5.38
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

Up2 EntryRules 1.SPY'scloseisbelowSPY's200dayMA 2.SPY SPY's sriseoverthelast2daysismorethan3% 3.SPY'sRSI(2)isabove80 4.SPY'scloseisequaloraboveSPY's5dayMA ExitRules 1 SPYs 1. SPY RSI(2)closes l below b l 35

85

VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

Up2 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 29 4.03% 5.10 65 52% 65.52% 8.92% 5.24% 5 24% 2.56
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR2 EntryRules 1.VIX'sRSI(5)<30 2.VIX VIX's sRSI(5)Today>VIX VIX's sRSI(5)Yesterday 3.SPY'scloseisbelowSPY's200dayMA ExitRules 1.VIXclosesaboveits10dayMA

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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR2 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 13 1.51% 7.38 69 23% 69.23% 5.10% 6.57% 6 57% 1.58
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR3 EntryRules 1.VIX'shigh<VIX's10dayMA 2.VIX VIX's scloseisatleast10%belowits10dayMA 3.SPY'scloseisbelowSPY's200dayMA ExitRules 1.VIXclosesaboveits10dayMA

89

VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR3 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 24 3.79% 9.04 58 33% 58.33% 11.94% 7.62% 7 62% 1.97
90

VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR6 EntryRules 1.VIXmakesanew20daylow,twooutofhepast threedays 2.SPY'scloseisbelowSPY's200dayMA ExitRules 1.VIXclosesaboveits10dayMA

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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR6 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 20 2.05% 8 55% 8.14% 5.4% 5 4% 1.51
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR8
Definitions Step(1)theVIX's10dayEMAminusVIX'syesterdayvalueof10day EMA Step p( (2) )theVIX's100day yEMAminusVIX'syesterday y yvalueof f100day y EMA Step(3)=Step(2)minusStep(1) EntryRules 1.Step(3)>0.2 2.Step(3)valueisthehighestoverthelast40days 3 SPY's 3. SPY' close l i isb below l SPY' SPY's200day d MA ExitRules 1 VIXclosesaboveits10dayMA 1.
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR8 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 20 5.84% 9.15 70 00% 70.00% 11.94% 8.39% 8 39% 3.23
94

VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR11
Definitions Step(1)TheVIX'syesterdayvalueof10dayMAminusVIX'syesterday valueof3dayMA EntryRules 1.VIXlowisthelowestoverthelast10days 2.Step(1)>1 ExitRules 1.VIXclosesaboveits10dayMA

95

VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

CVR11 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 28 2.77% 8.29 67 86% 67.86% 8.97% 10.31% 10 31% 1.64
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

RSI20 EntryRules 1.VIX'sRSI(2)isbelow20threedaysinarow 2.SPY SPY's scloseisbelowSPY SPY's s200dayMA ExitRules 1.VIXRSI(2)closesabove70

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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

RSI20 NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 25 2.89% 5.68 76% 6.65% 9.04% 9 04% 1.79
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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

5LC EntryRules 1.VIXcloseislowerthanitsyesterdayclose,five daysinarow 2.SPY'scloseisbelowSPY's200dayMA ExitRules 1.VIXsRSI(2)closesabove70

99

VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

5LC NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 11 4.84% 4.64 90 91% 90.91% 6.56% 12.41% 12 41% 3.81
100

VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

5LL EntryRules 1.VIXlowislowerthanitsyesterdaylow,fivedays inarow 2.SPY'scloseisbelowSPY's200dayMA ExitRules 1.VIXsRSI(2)closesabove70

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VIX Options Trading Course Long Strategy Rules

For all systems: We enter at the close and exit at the close

5LL NumberofTrades: Average%Profit/Loss: AverageBarsHeld: P Percentage t of fWi Winners: WinnerAverage%Profit: LosersAverage%Profit: ProfitFactor: 12 5.98% 5.58 91 67% 91.67% 7.74% 13.34% 13 34% 5.47
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VIX Options Trading Course

MultipleSignals
Themoresignalstriggeringat thesametime,thebetter!

103

VIX Options Trading Course

ExamplesofMultiple Signals(Clusters)

104

VIX Options Trading Course

19cumulativesignals

105

VIX Options Trading Course

6/6/07to6/7/0718cumulativesignals

106

VIX Options Trading Course

DailyVIXStretch Matrix

107

VIX Options Trading Course

IntroducingVIX PowerRatings
Anticipatingthedirectionof theVIXlookingthreemonths out out.
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VIX Options Trading Course

PuttingThisAll TogethertoTradethe Options

109

VIX Options Trading Course

HowtheVIXOptionsTrade 1.Theytendtomoveoffthefutures,notthe outrightVIXitself(thoughthefuturesthenmove astheVIXmoves,butusuallynottothesame extremes). 2 EquityoptioncalculatorsdonotapplytotheVIX 2. donotusethem. 3 Thereisnoconsensusintheacademicworldon 3. howVIXoptionsshouldbepriced. 4.Beflexible.Eachsetofsignalswillpresenta differentopportunity.
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VIX Options Trading Course

TradingtheVIXOptionsWithTheseStrategies 1.Keepitsimple a.Focusonthestrategies b.Focusonmultiplesignals c.Focusonthestretch d.FocusontheVIXPowerRatings 2 Options Focusonthefrontmonth. 2. month 3.Ontheshortside,buyinthemoneyputslookingtopay littletonopremium,ifpossible. 4.Ifpremiumistoohigh(thisissubjective),sellatthe moneycallsornexthigherstrikepricecalls.

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VIX Options Trading Course

SellingCallsWhenPutPremiumsAreTooHigh

112

VIX Options Trading Course

AdditionalStrategiesandResearch

TimingtheMarketwiththeVIXStrategies

113

VIX Options Trading Course

AdditionalStrategiesandResearch

PossibleStrategies 1.LongSPYs 2 LongDeepITMCalls 2. 3.BullPutSpreads 4 ShortPuts(mostaggressive) 4.

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VIX Options Trading Course

AdditionalStrategiesandResearch HedgingwithVIXSpreads http://www.cboe.com/micro/vix/pdf/VIXOptions StrategyReverseCollar.pdf http://webreprints.djreprints.com/17471303596 http://webreprints djreprints com/17471303596 45.html

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VIX Options Trading Course

AdditionalStrategiesandResearch CBOEMarginCalculator http://www.cboe.com/tradtool/mCalc/default.as px

116

VIX Options Trading Course

Questionsand Answers
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VIX Options Trading Course

NextMeeting: MidOctober O t b
Trading MoreResearch NewResearchontheRVXandVXD

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Disclaimer: The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment investment. Rather Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHERSLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDERUNDER OR OVER-COMPENSATED OVER COMPENSATED FOR THE IMPACT IMPACT, IF ANY ANY, OF CERTAIN MARKET FACTORS FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. The Connors Group, Inc., 15260 Ventura Blvd., Ste. 2200, Sherman Oaks, CA 91403 Copyright The Connors Group, Inc., 2007.

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