2) SIGMA: YOUR EDGE OVER WALL STREET’S BEST TRADERS
To truly understand the power of my new “Phantom Sigma” trades…
And to understand why the hedge funds are powerless to exploit them.
You’ll need a little background info. Here it goes.
For years, the pricing of options transactions at the institutional and brokerage level have been based on a model called the “Black-Scholes” formula.
I’ll circle back to why options are important in a moment…
But for now, I want you to focus on what Black-Scholes attempts to do.
Basically, it’s a complex mathematical paradigm for setting prices for options trades that are risk-adjusted for volatility.
In a perfect Black-Scholes world, all of an investment house’s options trades on any given day would cancel each other out…
Winners and losers would balance to the penny – and put the commission fees from all those trades in the managing institution’s pocket.
It’s exactly like bookies taking sports bets.
They adjust the odds as they get closer to game time to try to ensure that the same amount of money is on both sides of a wager…
So they don’t take a bath, no matter what the outcome of the event.
But they pocket all the transactions fees (“juice” or “vig”) on the bets!
Like bookies and ballgames, the Black-Scholes model is designed to factor probable market outcomes into the pricing of options trades…
So that no matter what the market does, no money changes hands in the sum of those trades – except in fees to the options writer. That’s the goal, anyway.
And historically, Black-Scholes has worked pretty well in pricing options on a wide variety of underlying securities: Stocks, futures, and commodities.
The model does a pretty good job of setting options prices to attract about the same amount of money to both sides of any given trade.
However, today’s volatile energy market has exposed a major flaw in the Black-Scholes formula.
Let me show you…
One of the reasons Black-Scholes is effective in markets with typical volatility is that it’s based on a proven model of probability estimation.
You’re familiar with a basic “bell curve,” of normal distribution, right?
So were Fischer Black and Myron Scholes, the economists who first introduced the formula in 1973 to predict market volatility, and to price trades accordingly.
A normal distribution model for just about anything (IQ, weather, average height, or markets) can be established by analyzing a large existing data set…
Then graphing the individual data points within that set based on their divergence from a calculated average (mean) of all the data.
The greater their deviation from the mean, the farther away they are on the graph.
In a typical bell curve, the 68.2% of outcomes clustered on either side of the mean form one “standard deviation” from normal…
Moving that same linear distance away from the mean again should encompass roughly another 27.2% of the data.
Only another 4.2% of the data falls within three standard deviations from the mean.
The shorthand term for “standard deviation” is the Greek letter “sigma.”
As you can see, occurrences beyond “three sigma” are quite rare in a typical dispersion of outcomes.
In the traditional market, volatility of a “sigma three” level happens less than 3/10ths of one percent of the time!
In numbers, that’s a probability of around 0.0027.
Not common at all. But still occasionally possible.
Such occurrences have happened numerous times before in the markets. So Black-Scholes incorporates the possibility into its options pricing calculation.
Now stay with me here – this is the part where you could make huge money.
Because it’s modeled on the frequency and intensity of market volatility in the past…
Black-Scholes is completely unequipped to deal with today’s energy market.
The model literally can’t price options correctly for the uncharted volatility waters this market’s heading into…
That’s because there IS NO historical frame of reference for the volatility we’re seeing in energy today – and will be seeing for at least the next 50 years.
Let me prove that to you right now.
Between April 29th and May 6th of 2011, NYMEX futures for WTI (West Texas Intermediate) crude lost 15% of their value in five straight trading sessions.
In statistical terms, this was a “sigma nine” occurrence.
An event so rare that it’s doubtful anything like it has ever happened in the 110-year history of the oil market.
I’d show you what that looks like in numbers…
But there’s literally no calculator this side of NASA with enough decimal places to compute its probability.
A freak, you say? A once-in-a-lifetime fluke?
Fine. Then explain the fact that just a few weeks later – between July 22nd and August 8th – WTI futures lost 19% of their value in 11 straight sessions…
A “sigma eight” probability event, according to the historical record.
According to the Black-Scholes model, a “sigma seven” level of volatility is mathematically impossible.
Its odds of happening are literally nothing!
Yet within the span of three months this past summer, the energy market saw BOTH a sigma nine AND a sigma eight occurrence…
Neither of which could ever happen, according to the trading model currently in use.
See what I mean?
Energy has really become its own market. It needs different trading methods than what can be applied to any other sector…
One that adjusts for – and takes full advantage of – today’s radically increased “sigma” levels of volatility.
And I’m the only one on Earth who has developed one.
The poetic justice here is that even if the hedge funds had access to my new “phantom sigma” trading method…
It wouldn’t solve their problem.
That’s because my formula doesn’t correct for volatility on a mass scale…
It only pinpoints individual trades that are imbalanced because of volatility.
It detects the most likely “outliers” from the thousands of options trades the hedge funds are trying to shoehorn into a bell curve every day.
In fact, my new method can ONLY really work for individual traders making one or two options plays at a time…
Not hedge funds that must make thousands per day to offset the risks of their mammoth futures positions.
And like I said earlier…
I’ve put everything readers like you would need to know about this strategy into a new “book of secrets” on energy trading my way…
Don’t worry, it’s not really a book.
More like a “Cliff Notes” guide.
Except that it’s FREE, if you act now on what I’m offering you today.
In this guide, you’ll find even more information on the energy market’s volatility…
And why my new trading approach shows you the best chance to make big money (and avoid big losses) in this forever-changed market.
Most importantly, you’ll find out exactly how to position yourself to start making money with my new “Phantom Sigma” trades.
As I’ve said, these hyper-lucrative trades didn’t even exist a few years ago.
But now, by harnessing the power of the energy market’s increasing “sigma” occurrences…
These trades could make you more money, faster, than any other wealth-building tool you’ll ever use in your lifetime.
More money than even the best hedge funds could make you.
I’ve just shown you the reason why that’s true…
It’s because the hedge funds are using a trading model that’s obsolete in today’s energy market!
But they’re not going to abandon Black-Scholes. It’s still the Gold Standard trading model for every other sector.
Nor is it likely they could develop a trading model that compensates for the energy sector’s volatility anytime in the foreseeable future…
So you see, I wasn’t exaggerating when I said my new method could be like another Texas Oil Boom for savvy investors.
For those who take me up on the opportunity I’m offering them today, that’s exactly the kind of wealth I’m talking about…
But remember: I’m only offering you the chance to become one of the newest members of this all-new trading strategy for a very limited time.
And that clock starts ticking right now.
Still not convinced that I could lead you to huge money in the hyper-volatile energy market?
You will be when I show you a bit more about what “Phantom Sigma” trades are.
These specific, targeted trades are the third element of this equation.
And here they are, right now…
3) PHANTOMS: YOUR CHANCE FOR LIFETIME TRADING WEALTH
OK…
I’ve shown you why I believe volatility’s going to rule the energy markets for the next 50 years or more.
And I’ve shown you why Wall Street’s go-to trading model isn’t going to cut it in the energy markets any longer.
Now I’m going to show you exactly how I’m going to put those two facts to work in my new research service that leverages the power of Phantom Sigmas…
The key is targeting a specific kind of “imbalanced” options trade.
Sure, if you knew everything I do about the energy markets, you could make volatility-based gains by investing in stocks…
Or in futures trading, for that matter. If you’ve got a stout heart and deep pockets.
But doing those things would be to play on Wall Street’s field. The deck’s stacked against you from the get-go.
A hedge fund will always know more about any given stock than you will…
They’ve got multi-million-dollar research staffs ferreting out every last detail about whatever companies are in their sights.
And they’ve got supercomputers and proprietary software programs to help them win in the million-trades-per-second futures markets.
But with certain energy options, they can actually be at a disadvantage to individual traders – if you know how to trade them like I do…
And like I’ll show YOU how to do, if you stick with me here.
Don’t worry if you’ve never traded options before.
The actual trades I recommend are very simple to make – for seasoned traders or “options virgins” alike…
It’s finding them that’s the hard part. That’s my department.
I’ll fill you in on those details in a moment. But right now, I want you to pay close attention – this is the whole damned opera right here:
As I’ve told you, the big funds use options to hedge their risks on the mammoth petroleum futures trades they make by the million every day.
But since their way of pricing those options – the Black-Scholes model – has become increasingly obsolete in the dicey energy markets…
And because they’re starting to realize that perpetual volatility is throwing a wrench into their works…
These big trading houses have to price a certain number of their hedging options by the “seat of their pants,” so to speak.
And in so doing, they’ll frequently under- or over-compensate for volatility in the pricing of these options.
In other words: They’ll inadvertently create a gap between the real risk of that options position…
And the risk they’ve estimated into its price!
That divergence is the “phantom” in this equation. It’s an opportunity for huge trading gains that’s completely invisible to Wall Street.
But I see it as clearly as the sun.
That’s because I’ve spent the last two years developing a series of algorithmic formulas for pinpointing these “options variegated distribution aberrations.”
Don’t be thrown by our phantom’s official name.
All it means is that when the big futures players misprice real-world risk into their options hedges…
Following my recommendations could tip the odds of trading success in YOUR favor.
You’ll have information that every individual trader wishes he had – but that few ever get a chance to see.
You’ll actually be gaming the master game-players.
And potentially taking lucrative advantage of the rare mistakes Wall Street makes.
In fact, that’s the whole M.O. of my new trading service:
Identifying mispriced options that volatility forces the big futures trading houses to issue as covering bets…
Then leveraging their potential for HUGE, low-risk gains!
I know of no one else on the planet who’s trading this way.
And it works.
When I “beta-tested” this system within my Energy Inner Circle service in the middle of 2011, I nailed short-term options gains of 132%, 152%, 178%, 220%, 300%…
Even as much as 542% in just 25 days!
Granted, gains like these are unusual occurrences – and not likely to happen a lot.
But they ARE the result of extremely unpredictable volatility in the energy markets. And as such, they prove my method’s potential to make you seriously wealthy…
Here, take a look at the details on a trio of these “phantoms” for yourself:
300% in one month - On June 16th, I recommended that my Energy Inner Circle readers pick up July 2011 calls on an up-and-coming LNG (Liquefied Natural Gas) player I’d recommended as a stock buy…
I’d rightly determined that yet another chapter in the ongoing Greek debt bloodbath had beaten down the energy market far more that it should have been.
I even wrote to my readers that this situation was “… the second time in a little over a month… when volatility hit oil with a downward vengeance beyond what’s justified by the fundamentals.”
It was a textbook “sigma” situation in the making…
The price of these options was way out of sync with my estimation of the market’s true risk.
As you can see, those who listened could’ve pocketed a fast 300% on the nose…
When I issued my “sell” recommendation on July 15th – just 30 days later!
That’s a huge win, I’m sure you’ll agree.
And just a few weeks later, the energy market’s volatility handed us another opportunity for mind-boggling gains…
178% AND 542% in just 25 days - In the midst of the opposite trend (a market upswing), I concluded that the rally was without real conviction behind it…
And that high volatility would remain a major factor in coming market swings.
Nevertheless, the market’s irrational exuberance of the day caused me to write to my readers that “some well-priced options plays are emerging that we should take advantage of now.”
My recommendation was to purchase September call options on two niche energy services companies that have been on my radar…
One of them is a leader in the conversion of vehicles to natural gas, the other is a pioneer in logistics and engineering for in-the-field energy projects.
And just 23 days later, I recommended selling the first of these for a handsome 178% in gains…
But you can see what happened to the second one: Just two days after that, cashing out of that one for an incredible 542% in a total of 25 days!
Unreal, isn’t it?
These are the kinds of wins I’m aiming for with my new options trading service…
The kinds of wins Wall Street wishes it could nail down with regularity.
The kinds of wins that could catapult YOU to lifetime wealth.
Imagine how big and fast these scores could come for you…
Now that I’ve fine-tuned my formulas for pinpointing these mispriced “Phantom Sigma” trades!
Again, I’ve compiled ALL of the details on this new system in a new “book of secrets” guide…
It explains everything you need to know about how to profit from my new system as an individual trader.
After all, that’s whom I’ve designed this new service for – earnest traders just like you who are tired of getting the shaft from the Learjet-and-Hermes crowd.
And as I’ve said all along here, I’m offering you the guidebook to this confidential new system absolutely FREE OF CHARGE…
IF you do just one thing while this brief window of opportunity is open to you.
Here it is right now…
