Podcast appearances and mentions of james as

View sermon series: Bold Living(Book of James) As we begin our new sermon series on the book of James, Bold Living, we look at the process of our faith being proven through trials, and the never-changing promises of God in trials.

James and Angel unexpectedly bump into each other at the University. They talk about their future plans. Tagalog Transcript: Angel : James? Ikaw ‘yan? James : Angel, ako nga. Dito ka rin pala naka-enrol? Angel : Ay, oo. Pangalawang taon ko na dito. Nursing ang course ko. James : Galing, ah! Ako naman Mechanical Engineering ang kinukuha ko. Halika, upo muna tayo. Angel : Sige. Mamaya pa naman ang sunod kong klase. James : Ako, tapos na ang huling klase ko sa araw na ‘to. Angel : Anong year ka na? James : Third year na ako. Pagiging nurse pala ang pangarap mo. Angel : Nurse kasi mama ko. Kaya bata pa lang ako, yun din ang naging gusto ko. James : Yung tatay ko naman nag-abroad para magtrabaho bilang mekaniko. Angel : Mag aabroad ka rin? James : Balak ko sana magtayo kami ng negosyo nila Papa dito sa Pilipinas. Angel : Sana matupad ang mga pangarap natin, James. James : Basta magtiyatiyaga tayo, sigurado ako malayo ang mararating natin. Angel : Kaya kailangan natin pagbutihin ang pagaaral natin. James : Tama ka, Angel. Angel : O, paano? Kailangan ko na mauna. May klase pa ako. James : Uwi na rin ako para magaral. Magkita-kita na lang tayo sa sunod. English Translation: Angel : James? Is that you? James : Yes it’s me, Angel. You’re enrolled her too? Angel : Oh, yes. It’s my second year here. My course is nursing. James : That’s great! As for me, I’m taking Mechanical Engineering. Come on, let’s sit down for a while. Angel : Sure. My next class is still later. James : As for me, my last class for today has ended. Angel : What year are you in? James : I’m on my third year already. I didn’t know you want to be a nurse. Angel : My mom’s a nurse. That’s why even as a child, that’s what also what I’ve wanted to be. James : As for my dad, he went abroad to work as a mechanic. Angel : Will you be going abroad too? James : I plan to put up a business with my dad here in the Philippines. Angel : I hope our dreams will come true, James. James : As long as we work hard, I’m sure we’re going to get somewhere. Angel : That’s why we have to do well with our studies. James : That’s right, Angel. Angel : So, what do say? I’ve got to go. I’ve still got a class. James : I’ll be going home to study. See you next time around.

Friends, I am thrilled to bring you this week's conversation with Tammy Jensen. Tammy is the Dean of Students at Crossings Christian School, wife to John and mom to Mack, Malcom and Hannah. Today we talk about life with a child who has special needs (and ALL the miracles they have seen in Hannah's life!), marriage, parenting and the story of how God brought Malcom to them. Tammy is an inspiration to me in the way she daily sacrifices for her daughter and the way she and John make such a powerful team. (And the day this episode releases happens to be their 24th wedding anniversary!) Grab a tissue, because when she talks about seeing Hannah whole and healed in heaven, I dare you to have dry eyes! ;) Be sure to check out the instagram account they have for Hannah: @lifewithhannahgrace and you can get in touch with Tammy on all the social media channels under Tammy Jensen or on IG: @jensenmom We are both big fans of Orange Theory Fitness! www.orangetheoryfitness.com Scriptures we mention: Psalm 139:14 Tammy loves the book of James __________________________ As always, please give a rating or review - it helps other listeners find our show! And if an episode encourages you, we'd love for you to share it with a friend! ...Now go out and live your one uniquely, beautiful story! xo

Michael: Hello everybody. This is Michael Gross of OptionSellers.com here with head trader James Cordier. We’re here with your March OptionSellers.com video podcast. James, as we head in to March here, what’s on everyone’s mind is the obviously the big development we had here in February. Big stock sell-off, it’s on everyone’s mind right now… stock investors are busy brushing themselves off, wondering what’s next. Over here in commodities, we didn’t really see a lot of movement in the markets themselves, but we had some developments in the option and option volatility. Why don’t we start off this month by maybe just talking a little bit about what happened in stocks themselves. James: Michael, it’s interesting, a couple of years ago we had BREXIT. We had Switzerland leaving the European Union, we also had the election outcome a year and a half ago. All these events didn’t really change fundamentals on a long-term basis, but what they did do is they injected a lot of volatility. The 3,000 point drop in the Dow Jones here just a couple weeks ago did exactly that. It turns out that there’s something called the volatility index in stocks. There was an instrument that was built for people to go short or long on it. It seems as though everyone was way short volatility. In the stock market, that got unwound, it developed a 3,000 point drop in the Dow Jones, and now we’ve got to the stock market recouping quite well. It’s probably going to continue to rally everything as far as we can tell. The U.S. economy looks good, the global economy looks good, stock profits look excellent right now. Volatility spiked in a dramatic way. For ourselves selling options on commodities, we saw volatility index spike as well. Precious metals, energies, and some of the foods did have a spike. In many cases, a lot of the positions we had did increase in value during this large increase in volatility. It’s not always fun when this happens, but it is absolutely a key ingredient in option selling. It allows us to sell options, as you know, 40-50% out-of-the-money. Without that creation that happens every 6-12 months in the volatility index in commodities and in stocks, we wouldn’t be able to do what we do. It’s a key ingredient and it did happen this past month. We’re very excited about the opportunities that it has now in selling options. Michael: It was kind of ironic, James, because you and I were watching this unfold, we were watching the stock market take a nose-dive, and we’re watching our commodities boards and basically nothing is going on. We have gold and silver prices staying silver, the grains and foods were business as usual, crude took a little bit of a sell-off, tied into stocks, but that was really the only one. Over in natural we had to sell off, but that was really already under way. It didn’t have much to do with stocks. Yet, you saw option volatility spill over from that stocks and it increased the value of those options temporarily, but now you’re seeing that come off a little bit. Is that right? James: It is. The volatility index in the stock market is practically to the same level as it was prior to the 3,000 point sell-off. In commodities, it has now come back about 75% of the level that it was at. The fundamentals never really changed at all, especially in commodities, and I think it sets up a great landscape for doing what we do. We’ll find out relatively soon. Michael: You know, a lot of people, they want to get diversified from stocks. That’s one reason why they’re interested in selling commodities options in the first place. You know, it was interesting… on CNBC they had an article about on the biggest day down in the Dow it was down, what…1,075 points or something like that? They ran an article that there was only 7 stocks higher that day and 2 of them were cereal and tobacco. It was Kellogg and one of the tobacco companies- I forget which one. CNBC’s analysis of that was, “well, even when stocks are down, people will still eat and they’ll still smoke”. That’s a point we make constantly is that no matter what’s going on, people still need to eat, they still need to drink coffee, and they still need to put gas in their tanks. James: The breakaway from the correlation from the stock market was very evident on that day. Gasoline and crude oil and soybeans and coffee… business as usual. That’s why a lot of our clients like being diversified away from the stock market. On that occasion, we did see the volatility index increase options on commodities, as well, and that’s just a key ingredient for us doing the business that we do. They did increase while we were in them. We just see, going forward, just a great opportunity to use that additional premium to position clients. Michael: So, we got a little bit of a surge in volatility, that pushed premiums up, and now that’s coming off. The premium is coming back down a little bit, but now we’ll have that historical volatility in the market. One thing you and I have talked about is now that opens up opportunities for us to do some strategies that maybe we weren’t able to do before. James: Right. In 2017, we saw volatility come down steadily the entire year, which really produced a great return for a lot of option sellers last year. Chapter 10 in the Third Edition of our book, we talk extensively about credit spreads. We haven’t had the opportunity to do that the last year or two because volatility has been low. The influx of volatility that happened over the last 30 days now allows us to do this. It is probably the most safe, sound option strategy there is. With the additional premium now, we’re looking forward to positioning in that fashion the next 6 months or so. Michael: Okay. One observation we were making as well is when volatility is up in options, obviously that’s when we want to sell them, but when the volatility is higher there can actually be less risk in selling the options because you’ve already had that surge in volatility. So, often times the path of least resistance is to come back off that volatility after you sold them. James: We saw that the months after the BREXIT, we saw that months after the Trump win during the election of 2016, and, boy, we did quite well right after that period. We expect that to happen again this year. We’ll see if that’s how it plays out. Michael: All right. As we head into March, we’re going to show you a couple ways maybe you can do just that. We’re going to move on to our feature markets segment and we will cover that in just a couple minutes. Thank you. Michael: All right. So, we’re back with our markets segment this month. The first market we’re going to talk about this month is the natural gas market, a market that’s near and dear to our hearts. Natural gas, if you’re unfamiliar with commodities, it’s a great market for selling options. There’s a ton of liquidity there and also you can sell options very far out-of-the-money, so it’s one of the core markets you want to focus on if you’re building an option selling portfolio. One of the first fundamentals that we look at when we look at markets like natural gas is going to be the seasonal tendency. As we know, seasonal tendency charts are not guaranteed by any means, but they do give you an average of what prices have tended to do in past years at different times of year. What we find is there are underlying fundamentals that tend to drive these every year. We’re going to take a look at the ones in natural gas right now. James, do you want to talk about that and why we see this type of movement in gas prices often in the past? James: It’s interesting, Michael. Often, suppliers want to bulk up for seasonal demand in winter, and everyone is basically building supplies going into December, January, and February. If the winter, especially in the Northeast, falls just a little bit shy of expectations or it’s 5 degrees cooler or warmer than normal, the supply actually is more than ample and prices usually start coming down in January and February as we see that we’re going to have enough natural gas and we’re not going to be running out. Again, here in the United States, we’ve had an extremely mild winter. Philadelphia, New York, and Boston, it has been some 10-15 degrees warmer this year than normal, and prices have come down just like seasonally they do. Supplies of natural gas this year are surprisingly low. Right now, we are approximately 23% below the supply of last year. We’re 19% below the 5-year average. That is because we’ve been exporting natural gas, something brand new to the exporting ability right now here in the United States. It’s setting up really nicely for the seasonal rally that we’re expecting. Natural gas right now is near it’s 12-month low here as we end February, often where it is this time of the year. Seasonally, what then happens is suppliers start building supplies then for summer cooling needs, which is like May, June, and July, and that often will give us a price spike starting in March and April. Michael: So, what you’re saying is this is really a factor of distributors accumulating that inventory, driving demand at that wholesale level, which is really what’s pulling prices higher… at least it has in the past. James: Exactly right. If we get through the winter, and it looks like we are again this year, prices usually come down because we are more than well supplied this time of the year. What wholesalers do for summer demand for cooling needs, especially in the Northeast, is they start building supplies and that demand boosts the prices starting in March, April, and May, and it’s setting up quite well to do that again this year. Michael: You know, it’s interesting, James, we talked about stock prices coming down earlier and a lot of people noticed a correlation and said, “oh, natural gas prices came down with stock.” That price really had nothing to do with that move in stocks. Natural gas prices were already coming down as a result of just normal seasonal tendencies. Wouldn’t you agree with that? James: Right. The natural gas market is so liquid. It takes no cues from any other market. The price of Apple stock has absolutely nothing to do with the supply of natural gas, the demand, or the price. It was in a downtrend here in the last few weeks just as the seasonal entails, and it was again this year. Natural gas definitely uncorrelated from the stock market and this year proved it as well. Michael: Let’s take a look at some of the fundamentals of where we find ourselves right now at the end of February, as far as supply goes. First of all, we’re going to take a look at the current chart, which looks a lot like that seasonal one. It looks like we may be at a low right now, technically looks like we’re a little bit set up for a rally here. Is that what you would expect it to look like this time of year? James: Michael, we could almost overlay the seasonal that we were just looking at and it lines up extremely well with this year’s pattern. The market is oversold right now, as the stochastic on the bottom of the chart describes. We really like the idea of the fundamentals being slightly bullish right now. We have nearly 20% below the 5-year average on supplies here in the United States. We’re going to be exporting more natural gas this year than ever before. As we get into the spring and summer cooling season, we do expect a nice bump up in natural gas prices, setting up, what we think, is a very good put sale for new option traders. Michael: Okay, good. That supply situation James was referring to, this shows the last 4 years. You’ll notice this line here is indicating this year where supply levels are. We are, as James mentioned, about 19% below the 5-year average as far as supplies go. So, this is where we are now. It sets up a fairly bullish fundamental supply picture, as you mentioned, James. There’s another side to that equation and that’s also the demand side. Why don’t you talk a little bit about that? James: The country is trying to get away from coal - electric power plants. We’re switching off into more cleaner utilization. Natural gas is going to be a big winner with that. Starting this year, having more so in the coming 3 or 4 years, but we are looking at record demand here in the United States for natural gas, combined with the fact that we are some 20% under the 5 year average on supplies sets up a nice bullish situation here for the next 3-6 months. Michael: I noticed, too, when we were looking at this bump for projected record demand in 2018, that came evenly from both residential and industrial demand sides… possibly speaking to a stronger economy, tax cuts, what have you, that are maybe at least partially driving that in addition to what you mentioned with coal fired plants switching over to electricity. James: Right. Definitely a push for greener production of energy here in the United States, and I think this chart shows it really well. Michael: Let’s take a look at a trading strategy here for those of you that are watching this. You put together a strategy here for, and obviously we’re doing a number of different things in our portfolios, but for the person watching at home that maybe wants to try it out or at least just see how it works… this is the strategy you suggested. James: We like the idea of selling September natural gas puts at approximately the $2.25 level. You can see where we’re trading right now. Often, with a seasonal rally that may or may not take place, we think it will this year, I think it’s set up quite well, natural gas is probably going to head up towards $3… maybe $3.10 or $3.20 this summer. We’re going to be some 30-40% above this strike price. We should have very fast decay in selling the $2.25 put. The market should stay a long ways away from it. The whole idea about trading seasonalities or trading fundamentals using short options is look at the variance you have in the market. This is a very large window for the market to stay above. If we have strong fundamentals and if we have a strong seasonality, can natural gas fall below $2.25? Of course it can; however, we really like the odds of this position going forward over the next several months. Fundamentally, natural gas should not fall below this level. Seasonally, natural gas shouldn’t fall below this level and we have record demand this year. It’s definitely a trade that we like going forward. I think it’s a great investment. Michael: So, what you’re saying for those viewing this at home, yes everything looks bullish here. That doesn’t mean it still can’t come down in the meantime to here, here, or here. That’s why you sell the option in the first place. You’re not trying to pick the bottom, you’re just saying it’s not coming here. So, we can go down here and it doesn’t matter what it does, even if we’re a little early or late on the trade, you still win at the end of the day if it stays above that strike. James: All investors know that timing the market is practically impossible. Trying to pick these small swings in the market are very difficult. All we’re simply doing is saying the market’s not going to fall below this level. As long as natural gas stays here, here, or higher, these natural gas puts expire worthless. Of course, as a seller, we get to keep the premium. Michael: Very good. Let’s go ahead and move into our next market, which will be the cotton market. Michael: Okay, we’re back with our second market this month, which is going to be the cotton market. Before we talk about cotton, there’s something I wanted to point out form our last segment in natural gas and the cotton market. These strikes we’re talking about right now have been made available by that last burst of volatility we got from the stock market. These strikes we are looking at probably weren’t available a couple weeks ago. When we’re looking at them now they are. So, this is kind of the fruits that option sellers can benefit from, from these little inputs of volatility into the market. So, let’s talk about cotton. It’s our next market for this month. The first thing we’re going to look at is the seasonal tendency for cotton. Obviously, we tend to see a rally up through the springtime months and then we see a sharp drop off. James, do you want to explain that or why that has tended to happen historically? James: Michael, this chart you can almost mirror over the grains of the United States. Basically, corn, soybeans, and wheat often planted in the spring and then harvested in summer and fall, and as the angst of the weather problems subside, so does the price. Cotton is planted in the south and, of course, it’s planted early in the year. So, as we’re planting in February, March, and April, there’s possible excitement about not exactly perfect weather. Users want to get insurance and they want to purchase cotton prior to planting season. As we reach April and May, we have a very good idea about how much cotton we’re going to be producing that year. End users get to stay off as far as needing to get a lot of cotton around them. So normally, once the commercial buying stops, the market usually starts coming down in May, June, and July. Interestingly, this formation so far has mirrored almost perfectly with what’s going on so far in 2018. We have a really nice setup looking just like this with a decent rally that started about 3 months ago. It’s starting to look like this already. Michael: Similar to that natural gas trade where you have the seasonal pattern tending to line up very closely with what we’re seeing in the actual price chart this year. Let’s take a look at where our fundamentals are this year as we look at the cotton market. The big story, ending stocks, stock/usage ratio… looks like they’re pretty healthy levels this year, James. James: They are. Cotton supplies in the United States are going to probably be exceeding the 10-year level that we had. In other words, we have cotton stocks that are going to be highest since 2007. Supplies look more than plentiful. We’ve planted just a great deal of cottonseeds so far this year in the south, and we’re probably going to have a bumper crop, the weather looks ideal, and planting went extremely well. With supplies in the United States at a 10-year high, the chance for a large rally going into harvest seems quite low. We really like the idea of selling calls. Michael: Yeah, that stocks/usage ratio at 30%... if you’re unfamiliar with the importance of these 2 figures, ending socks and stocks/usage ratio in agricultural commodities, we do have a piece on that on our website. It’s a tutorial. It’s at www.OptionSellers.com/agriculture. There’s just a brief video but it shows you the importance of these 2 figures. They’re the core measurements of supply and demand. They’re both baked into these things. With the highest in 10 years and, James, you alluded to it, next year, if they harvest all the acres they’re planning on putting in the ground this year, we could see these numbers even climb more. Outlook for cotton is somewhat bearish fundamentally, lining up well with that seasonal. Let’s go to the strategy we’re talking about this month. You’re recommending a call selling strategy. Do you want to talk a little bit about that? James: We are. We have cotton trading in the middle 70’s right now as planning season starts wrapping up. We’re probably looking at price pressure in the 3rd and 4th quarter. We really like the idea of selling cotton as high as the $0.90 level. The fact that we’re going to have practically a record supply and a record production this year at a time when supplies are nearing a 10-year high, the chance for approximately 20-25% rally going into harvest seems quite small. Cotton can fall, it can stay the same, it can actually rally quite a bit between now and harvest season. It has certainly a long way to go before we get to our strike price. This option at the $0.90 call strike price is trading around $700-$800. We think that is a very low hanging fruit for later this year and we think that we’ll probably be covering that position around $100 well before option expiration. The decay on that option looks terrific and the odds of cotton reaching that level is quite miniscule. Michael: Excellent. Part of the benefit if you’re using seasonals when you’re deciding which option to sell, these 2 things are almost perfectly matched because seasonals are not a perfect recipe. For right now, the seasonal tendency for cotton, it may not start declining until March or April, if it does at all. Even if you’re here and even if it does rally a little bit more and you’re not right at the beginning, that’s okay because, as James is saying, your strike is way up there at the $0.90 level and you’ve got plenty of wiggle room here to be wrong for a while, so to speak. James: That’s exactly right. That’s why we sell options on commodities and we don’t try and predict the small moves, just based on fundamentals, levels that the market cannot reach and will likely not reach. We’re not correct all the time. Every once in a while, the market might move in that direction, but selling options that far out-of-the-money using the fundamentals is a very good long-term strategy. Michael: If you’d like to read more about our research pieces on these 2 markets, of course they’ll be available on the blog. You’ll also want to make sure you get this month’s Option Seller Newsletter. That should be out at the end of this week, which would be March 2nd. The newsletter will go in the mail and that’s when the e-copy will go out. We will be featuring the natural gas market and trade strategies there. The cotton market will be on the blog, so if you want to read more about those be sure to get them. Let’s go ahead and move into our Q and A section and we’ll answer some questions for our viewers. Michael: We’re back with our Q and A session for this month. Our first question comes from Rob Reirick of Ithaca, New York. Rob asks, “ Dear James, you refer often to credit spreads in your book; however, I rarely hear you mention them in your market segments. Do you still recommend option credit spreads and, if so, why not features on them?” James: That’s a very good question. The layout and the description of our trading philosophy in our book is very detailed. When we’re giving examples for option sales in crude oil or cotton or anything else, we’re basically just laying out primary examples of where we think the market probably won’t reach. We often don’t talk about a more elaborate trade, which is a credit spread. We feel that credit spreads are probably the most opportune way to take advantage of high premiums and, at the same time, have a very conservative position where it locks in certain types of risk as involved with not just being a naked put or a naked call. We are looking at the next 5-10 years of utilizing credit spreads. We don’t talk about them a lot. They are something we’re going to be utilizing a lot in the future. Basically, when we’re talking about examples for option selling, we’re basically talking about straight fundamentals and levels that the market won’t reach. We are absolutely huge proponents of credit spreads and for our clients we will be doing those often now and in the future. Michael: This isn’t the only letter we got on this, James. Because you may want to read more about credit spreads and see examples, maybe we will start incorporating some of those into some of our examples in the future and showing you, the viewer or the reader, how to actually do it. James: As our viewership gets more further along with understanding option selling, I think that’d be a very good idea to elaborate a little more on the actual positioning that we do at home for our clients. Michael: Let’s get to our next question here. This is from Kevin Woo over Cupertino, California. Kevin asks, “Dear James, with the outlook for inflation growing, do you see a favorable outlook for commodities ahead?” James: Good question. As a basket of commodities for 2018 and 2019, we do see it in uptrend in primary prices. Basically, picking out a particular one that might outpace the other ones, I think that’s difficult to do. We’re looking presently at some of the best demand for raw commodities that we’ve seen for probably the last 10 years… from China, from Europe, from the United States. Of course, there’s some infrastructure spending ideas that are coming down the pike here in the United States. We do see commodity prices probably increasing this year anywhere from 5-15%. That might be led by precious metals, that might be led by energies, but, as a whole basket, we do like commodities going forward in the next 12-24 months. Of course, as option sellers, it doesn’t really matter if the market has inflationary factors that do increase commodity prices; however, if we do see that developing and we do see that on the horizon, we simply change our slant to a slightly more bullish factor as opposed to selling calls that are going to be out-of-the-money that are probably not going to be reached. We might utilize more 60% of our option selling as a bullish structure. In other words, selling puts under what we think might be a slightly higher commodities market in 2018 and 2019. I think that’s a great question and we are somewhat favorable on commodities. As a general theme, we do see the market going slightly higher this year and next year. Michael: That’s a great point you made there as well, James. I’m glad you addressed this, because this is a question we get often… “What do you think commodities will do? Is it a good time to be investing in commodities?” The point you made is as option sellers it doesn’t really matter if it’s a bullish or bearish year for commodities. We’ve had some of our best years in bear markets. James: Absolutely. Michael: It kind of goes back to one of those points we’re always making about diversifying your assets. If you have some of your assets in equities, real estate, or what have you, most people invest by buying assets hoping for appreciation. It goes back to that importance of diversification, not only of asset class into that commodity asset class, but also diversification of strategy, where as in what you described, you can benefit even if prices are moving lower, so you have a strategy equipped even in a bear market and you can potentially benefit from that. The importance of diversification is strategy. James: As option writers, you can be diversified to where part of your portfolio is looking for a slight uptick in prices while other markets that, whether you’re in stocks or commodities, and then other commodities might have bearish fundamentals and you might take a slightly bearish stance to those 2 or 3 markets. The idea of being diversified and having a portfolio that doesn’t necessarily need the stock market to rally, the commodities market doesn’t have to rally, this really gives a lot of versatility for a client or ourselves to diversify a client and have them be profitable, whether the stock market or commodities market goes up, down, or sideways. Often the market does go sideways. Right now, we have a very strong stock market, but over the last 10 years it normally doesn’t do that. In commodities, we normally have 1 or 2 really banner years out of 10 but, for the most part, commodity prices realize fair value, and selling puts and calls far above those markets can be very fruitful as we found out. Michael: Of course, if you want to learn more about the entire option selling strategy, you’ll want to read our book The Complete Guide to Option Selling. It’s now in its Third Edition through McGraw Hill. If you want to get a copy at a discount, or you get it at Amazon or in bookstores, you can buy it through our website… that’s www.OptionSellers.com/book. Thanks for watching our Q and A session, and we’ll now wrap up our podcast for the month. Michael: We hope you’ve enjoyed this month’s OptionSellers.com Podcast. James, we have in March, coming up, possibly our first interest rate hike. Do you have any comments on that or things investors might want to watch out for in the upcoming month? James: I think the realization of interest rates going up is going to really hit home. In March, we’re going to have the first rise of interest rates in 2018. There’s a lot of debate whether it’s 3 rate hikes or 4 rate hikes. It’s not going to matter that much. The dollar should be on more firm footing after the 1st hike, and then we’ll see where it goes from there. Higher interest rates are in the future and, we think, the U.S. economy and economies around the world are probably very well ready for that to actually take place. We think that’s going to create more opportunities in some of the strategies that we’re implementing. We’ll see. Michael: For those of you that are considering managed option selling accounts with OptionSellers.com, you probably saw the announcements over the month that as of May 1st, we will be raising account minimums to $500,000 for new accounts only. So, if you currently have an account under that level it’s quite all right. You’ll be grandfathered in, but as of May 1st, all new accounts will have to have $500,000 as the minimum. We are almost fully booked through April, so if you want to grab one of those last consultations through April to try and get in ahead of that minimum change, you can call Rosemary at the office. The number is 800-346-1949. If you are calling from overseas it’s 813-472-5760. Of course, you can always send an e-mail as well to office@optionsellers.com. If you’re watching our podcast today and you like what you read, be sure to subscribe to our YouTube channel. You can also get us on iTunes and, of course, you can subscribe to our mailing list on our website at www.OptionSellers.com. If you request any of our free materials there you’ll automatically get on our list and we’ll send you a notification any time we have new videos or podcasts. Thank you for joining us this month. James, thank you for your analysis on the markets this month. James: Likewise, Michael. Always happy to. Michael: … and we will talk to all of you in a month. Thank you.

Michael: Hello, everyone. This is Michael Gross from OptionSellers.com here with your August edition of the Option Seller Podcast and Radio Show. James, welcome to the show this month. James: Hello, Michael. Glad to be here and always fun to do. Michael: We find ourselves here in the middle of summer and, of course, summer weather often times can take headlines in the agricultural commodities. That’s what we’re going to talk about this month. We have several things going on in some of our favorite agricultural markets. In the Northern Hemisphere, of course, we have growing seasons for crops, such as corn, soybeans, and wheat. Down in the Southern Hemisphere, we have winter time, which is actually an active time for some of the crops they grow down there because you have crops like coffee and some of the other countries, cocoa, that aren’t planted every year. There’s trees or bushes that tend to bloom every year, so winter can often be a time to keep an eye on those, as well. James, maybe to start off here, we can talk a little bit about weather markets themselves, what they entail, and why they can be important for option writers. James: Well, Michael, many, many years ago, my introduction to commodities investing/trading came along in the summer. There was an incredible hot spell and dry conditions in the Midwest in the United States right during pollination time. That was my introduction to commodities and commodities trading. Weather markets, especially in sensitive times like July and August for the Northern Hemisphere, certainly does bring a great deal of volatility to prices and great opportunity for a weather market to grab hold of particular prices, and that was my introduction into the commodities trading. I’m quite sure that, as summer heats up, of course, here in the United States, so does trading and certain commodities and it looks like we’ve hit that start up again in 2017. Michael: Okay. Being in these markets as long as you and I have, we’ve seen our share of weather markets. After a while, most of them tend to follow a typical pattern. You see a weather scare, you see prices rise in some commodities, and prices tend to immediately price-in a worse case scenario and then you get the real report or then it rains or whatever happens, and then prices tend to force the back-pedal… not always, but most of the time that tends to be the case. If there is a price adjustment upwards necessary, prices will often do that, but often times that spike often comes in that initial wave of buying, and that tends to have an affect on some of the option prices. Would you agree? James: Well, certainly a lot of investors who trade seasonally, or perhaps had taken advantage of weather rallies years before, they will look at the option market. Generally, they are not futures traders, so what they might do is they’ll say, “Well, if the price of cotton or the price of corn or soybeans might be going higher because of dry conditions, lets see what options are out there for me to buy.” I would say that the biggest spike, not only in prices, but in prices for call options, particularly, often happen during these weather phenomenons, and so be it. The call buying that comes into the market during these weather patterns. Usually, as you mentioned or alluded a moment ago, it usually winds up being the high as the public pours into the market. It has happened many times in the past and seems to repeat itself time and time again. Michael: Yeah, that’s a great point, too. You’re talking about that you have a lot of the general public who love to buy options, the media loves to pick up on weather stories and the public reads it, and it tends to feed on itself, and you have public speculators coming in that are buying up options, often times deep out-of-the-money options. These are often times that people who know the fundamentals want to take a look at that and say, “We could take a pretty good premium here with pretty reasonable risks”, and that’s obviously what we are trying to do and what people listening to us are trying to do. So, why don’t we go ahead and move into our first market because we do have a few other markets to talk about this month. First market we’re going to talk about is, actually a couple markets, is the grain markets as a whole, corn, soybeans, wheat, all being affected to some degree by some of the weather. These aren’t raging weather markets, it’s not on the national news, but they’re enough to get those option values up and certainly enough for people listening, or our clients, to take advantage of. When we talk about these, I think we’ll probably focus on soybeans and wheat for this session. As we talked about in our newsletter and in our blog, there has been some drier weather, especially in some of the northern growing regions up in the Dakotas. Recently, I read a little bit about it possibly moving down into Illinois and further into Nebraska. So, they’ve had some dry weather and this has had a particular affect on wheat, but also on soybean prices. Maybe you can just explain how that worked and what transpired there to push those prices higher. James: Michael, it seems that a weather market can come in just practically any portion of the United States. Years ago, Illinois, Indiana, and Iowa, that was the extent of the corn-belt, with fringes of Wisconsin and Minnesota. With high prices in commodities over the last several years, some of the other areas of the United States, people started planting corn, soybeans, and wheat, as you mentioned. This year, the extreme heat and dryness is in the Dakotas, usually not an area that moves the market as much, but this year it did. I know the media really got a hold of the dry conditions and discussed North Dakota and South Dakota, some of the hottest, driest conditions in over half a century. I know I had CNBC calling practically every day to talk about the weather. That is what gets these markets moving, and it usually happens this time of the year. You alluded, once again, to something that happens often is you’ll have these headlines really create havoc with some of the markets and pushing them higher, but, lo and behold, some 95% of the crop is really untouched as it is in decent growing areas as far as the weather goes. As you get into harvest time, a lot of that talk is now behind them and people forgot about the weather in North Dakota and South Dakota 6 months later. That seems to be developing again this year. We’ll have to wait and see how that plays out. Michael: That’s a great point. Probably we should point out here the backdrop of what this weather market is operating in. Exactly what you described is happening, of course, you have speculators buying soybeans off of the dryer weather, buying call options off the dryer weather. As of the last USDA report, 2017-2018 ending stocks are pegged at 460 million bushels, which is going to be the highest level since 2006-2007. So, we’re going into this with a pretty burdensome supply level. Now, if there is some reduction in yield, yes, that could come down a little bit - something to keep an eye on. You also have global ending stocks 93.53 million tons. That’s pretty substantial, as well. You’re operating on it being a pretty hefty supply environment. At the end of the day, when we go into harvest, prices tend to decline, regardless of what the actual supply is because that’s when the actual supplies are going to be the highest regardless. We’re fighting that big picture of, “We already have hefty supply and we have a seasonal working against the prices here.” So, two reasons why people listening may want to consider selling calls when you do get weather rallies like this because the bigger picture is not that bullish. Secondly, one thing to point out here is we’ve had problems with dryness up in North and South Dakota, possibly coming a little bit further south, latest weekly crop condition report is a 4% decline in good-excellent rating. They’re starting to reflect some of that damage, but one thing to remember is this happens often. It happened last year. It happened a couple years before that where it was dry in July and everybody was talking about weather. Then, they’re talking about pushing yields back a bushel or two an acre and then it rains in August, then all the sudden we have above average yields. So, you have prices right now that can, you can get a little pop or you can also see them roll over. I know you have a favorite strategy for playing markets like that. James: Well, Michael, we wait for volatility to come into the different markets that we follow. Certainly, a weather market in summer is one of those. Probably the best way to approach selling options, whether it be calls or puts in a weather market, is to do it with a covered position. Basically, a strategy that we cover in Chapter 10 in The Complete Guide to Option Selling: Third Edition, it’s really an ideal positioning for weather markets. Basically, what you’re doing is you’re selling a credit spread where as you are selling whatever item you think that the market can’t reach, for example, soybeans this year trading around $10 a bushel based on supply and demand probably won’t be reaching $12.50 or $13 a bushel. What you might look to do is do a credit spread where you buy one call closer to the money and sell 3, 4, or 5 calls further out. The one long position is basically insurance on your shorts so that while the weather is still in the news and while there is still quite a bit of jitters as to how much crop potential we might lose this year, that holds you in the position. You’re basically short with just a little bit of protection and that really does a great job in riding the investor through weather markets and if you are fundamentally sound on your picture of what the market will likely be, as you mention, we have some of the largest ending stocks in some 10 years, you do want to be short this market at harvest time. By applying a credit spread in July and August is a great way to get involved with the market and protect yourself while you’re waiting for the market to eventually settle down. Michael: When you’re talking about and referring to the ratio credit spread, that really eliminates the need to have perfect timing. Of course, all option selling you don’t really need perfect timing, but that really helps out. If you do get a rally, those can be opportunities for writing spreads just like that. If you’re already in it and the market rallies, you have that protection, a lot of staying power there, and when the market eventually does turn around there is a number of different ways you can make money with a ratio spread. Of course, at the end of the day, we want them all to expire. Talking about soybeans right now, this does not look like any type of catastrophic yield loss or anything like that. This looks, at the most, if we get something, they might get a few bushel break or reduction prices may need to adjust a little bit higher, but in that case sometimes a ratio spread can work out even better. Is that correct? James: Well, Michael, it’s interesting. Your long position, for example, in soybean calls or corn calls or wheat calls, there’s a chance that that thing goes in-the-money and your short options stay out-of-the-money. That certainly is an ideal situation for the ratio credit spread, where, basically, the market winds up being between your long options and your short options. That happens rarely, but, boy oh boy, is that a great payday when it does happen. That’s not why we apply the ratio credit spread, but every once in a while you get quite a bonus. That describes one extremely well. Michael: All right. Let’s talk about wheat just a little bit. A lot of the same things going on in wheat, but wheat is affected a little bit differently than the beans, primarily because we have a lot more wheat grown up in those regions where they’re having the trouble. In fact, I read here, as far as the drought goes, North and South Dakota, I don’t have the stat here in front of me, but it’s somewhere between 72-73% of the acreage up there is considered in drought right now. So, a lot of wheat is grown up there. At the same time, that’s one of those markets that may have priced in a worse case scenario and now backing off. What do you think? James: You know, the wheat market probably, it does have different fundamentals than corn and soybeans, clearly, it has rallied over $1 a bushel, which would have been about practically 25% when a lot of the discussion about the Dakotas was taking place. The wheat market looks like it’s priced, you know, the heat and dryness already in. Of course, one thing about the wheat is it’s grown in so many locations around the world that if you do have a loss in production in the Dakotas in the United States, there are many places around the world ready to fill in for any loss in production. All around the world wheat is grown in probably near 100 countries… certainly different than corn and soybeans. Michael: You made a great case for that in the upcoming newsletter, too, the piece about wheat, where all this talk about loss of yield to the spring wheat crop, but that only represents about 25% of the overall U.S. crop. Most of the crop grown here is winter wheat, which wasn’t as heavily affected. The bigger point is the one you made just now. This thing is grown all over the world. The United States only produces about 9% of the wheat grown in the whole world. Right now, world wheat ending stocks are going to hit a record level in 2017-2018. So, again, you’re looking at a little news story here, but when you look at the bigger picture we are going to have record world supply of wheat this year. Again, these can be opportunities for writing calls for when those bigger picture fundamentals start to take hold. It can certainly help your position. James: Exactly. This year, I think, was another great example of that. Ending stocks possibly being records. It’s almost an ideal situation when weather problems arise because later on that year, lo and behold, we have more wheat than we need and the price goes back down. Weather rallies, whether it’s the Southern Hemisphere or Northern Hemisphere, really often plays into the hands of option sellers because the buyers come out of the woodwork and normally, you know, holding the short end of the stick come harvest time. Michael: We should find out where everything plays out in the next USDA supply/demand report. I believe that is on or around August 10th. That’s really going to reflect what the real picture is, if there was yield loss, and how much of it was. If it’s less than traders thought, prices probably roll over and we’re probably done because you have soybean podding in August and markets typically start declining after that anyway. If we do get a little bullish surprise, we’re not saying the market can’t rally if you’re listening at home and saying, “I need to go hands-in short right now”. The market can rally, especially on or around this report if you get a bullish surprise. What we are saying is those can be opportune times to write options, because that’s when that volatility will jump and, overall, the bigger picture fundamentals remain bearish. James, we’re going to talk here a little bit about our next market, but before we do that, anybody listening to our conversation here about the grain markets this summer, you’ll want to read our August issue of the Option Seller Newsletter. That comes out August 1st. It will be received electronically and it will also be available on hard copy newsletter in your mailbox if you’re on our subscriber list. We have a feature article in there on wheat. We talk about credit spreads, some of the things James and I just discussed here, and how you can apply them. It is a great strategy for this time of year and you can read all about it in the August newsletter. If you aren’t a subscriber yet and you’d like to subscribe, you can subscribe at OptionSellers.com/newsletter and read all about it. James, we’re going to move into our next market here this month, which is one of your favorite markets to trade, that is, of course, the coffee market. I know you’ve been doing work with Reuters World News this month back and forth on the coffee market and what’s going on there. Maybe give us an overview of what’s happening in the coffee market right now. James: Michael, it’s interesting. As all of our intelligent readers and watchers already now, as temperatures heat up in the United States, they are definitely cooling off in the Southern Hemisphere, Australia and Brazil for example. What so often happens for traders in the coffee market, they look at winter approach in the Brazilian growing regions and they remember back to when coffee supplies were really cut based on a freeze that developed in Southern Brazil. During those periods, some 1/3 the coffee crop that Brazil makes each year was grown in very southern areas of Brazil, which are prone to cold weather. Chances are freezes don’t develop in the coffee regions of Brazil, but just like the dry weather in the United States a lot of investors and traders want to trade that idea of it happening. That’s what’s going on recently as we approach the coldest times of the season in the Southern Hemisphere. Traders and investors are bidding up the price of coffee and, likewise, buying calls in the coffee market, planning on maybe some adverse weather taking place. I think we all hear about El Niño and La Niña and what that can do to temperatures, both north as well as south, and a lot of investors, if something like that takes place, they want to be in on it. Often, how they do get involved with that is by buying calls in coffee, cocoa, and sugar, and it looks like that’s what’s pushing up some of those soft commodities today. Michael: Okay. So, they’re buying it primarily on freeze-type thing… same type of thing going on here in reverse. Instead of hot weather, they’re betting on cold weather. Talk a little bit about the bigger picture there as far as what supplies are like, what they are buying here. James: Well, Michael, it’s kind of interesting. It’s almost like a carbon copy of what we just discussed on the grain and grain fundamentals. Coffee supplies in the United States, which, of course, is the largest consumer of coffee in the world, are counted each month. Here in the United States, we have something called green coffee stocks. Obviously, that is the coffee that is then sent to roasters. Roasters roast the bean and then turn it into everyone’s favorite morning brew. Green coffee stocks in the United States are at all-time record highs. That fundamental is something that just is very discernable and is not going to go away no matter how many coffee shops spring up in your city or your town. We have record supplies in the United States. As far as the fundamental of new production, especially in Brazil, last year we had a rally in coffee prices because it was dry conditions during some of the cherry season in Brazil, and this year is just the opposite. We’ve had extremely favorable weather conditions. We have an excellent coffee crop that’s being harvested right now in many parts of Brazil and Columbia, and coffee supplies that will be coming in from the producing nations will be more than plentiful as we get into August, September, and October when those harvests wrap up. So, we have practically record supplies around the world, we have excellent growing conditions in the largest producer in the world, being Brazil. This year is what’s called an off-cycle year. A coffee bush, if you will, produces more cherries on one year and then slightly less the following year. This being an off-cycle year, still we are expected to have a record production figure in Brazil for an off-cycle year. There are already estimates for next year’s crop being in excess of 62 million bags, which would be an all-time record. For those of you who are unfamiliar with what 62 million bags of coffee might represent, Columbia, always thought to be the largest coffee producer in the world, they only grow approximately 10-12 million bags each year. So, all of the extra demand for coffee recently over the last several years from all the coffee shops springing up, Brazil has taken care of that and then some, just basically blanketing the world with extra coffee beans. That is what has kept coffee prices, really, trading near-low levels. Many commodities have increased with Chinese demand that everyone is familiar with over the last several years, but coffee is not the case. Record supplies here in the United States and record production down there from our friends in Brazil. Michael: Yeah. I saw that, too. Brazilian Ag-Minister was 62 million bags. That’s a huge crop. Another thing I should probably mention there is that coffee has a seasonal, as well. It tends to start coming off into when harvest starts and our springtime as they head into fall, which is March-May period. Is that correct? James: It is. Generally, the coffee crop is so large and so widespread there the harvest lasts practically 4-5 months. Basically, what you’ll see them do is often sell coffee twice a year in great strides. One is as the end of harvest approaches and then when we’re looking at next year’s crop, May and June, when they can get a handle on how large that crop is going to be, they will then start forward selling that year’s production. So, really there’s two waves of selling from coffee producers in Brazil. Usually it’s August-September for the current harvest and then May-June for the upcoming harvest. Really two large swaths of sales from Brazil, something we’re expecting to happen probably for at least the next 2 years and then we’ll have to take a look at how the conditions look after that. The next 24 months, we’re going to see a lot of coffee hit the market twice a year, those 2 times especially. Michael: I did notice, this year the coffee market does appear to be following seasonal tendency. You know, we started seeing this last round of weakness right about March and it has dropped, so far, into June. We get a little bouncier now maybe just because prices were just so oversold and then we had the weather issue that you spoke about, as well. I know, right now, with prices in the position they are similar to what we talked about in wheat and soybeans, where you had a little bit of a weather issue at the same time big picture fundamentals still looking pretty bearish. What type of strategy are you looking at in coffee right now? James: Well, Michael, we have coffee prices in the mid 1.30’s, approximately $1.35 per pound. Chances are we are going to be rallying maybe 5-10 cents as we go further into the winter season in Brazil, as some investors take a chance on coffee price rally. We could see coffee prices in the mid $1.40 going into August and September. We are targeting contracts 6 months out- 9 months out to take advantage of the long-term bearishness. We never want to play a market on a short-term basis, we don’t want to predict where coffee’s going to go the next 2-4 weeks. What we want to do is take our long-term fundamental analysis of the coffee market, the production and supply that we’re looking at here the next 24 months, we’re going to take a long-term view of coffee… a long-term bearish view. We are able to now sell coffee calls at $2 a pound if you go out a little bit further, another 30-60 days, you can sell coffee options at $2.20 a pound. If we do get a decent rally here in the next 30 days, which is possible, we’ll be looking at selling coffee calls at $2.40 and $2.50 a pound. Later this year, we do expect coffee prices to be around $1.20-$1.25, and there’s a pretty good chance the options we sell are going to be double that level, certainly something we’re extremely comfortable with and we think is going to work out quite well. We’ll have to wait and see. There’s no guarantee in this market or any other, but we do like our chances at selling coffee at that level, for sure. Michael: That far out-of-the-money is exactly the target options that we talk about in The Complete Guide to Option Selling. It’s our third edition of our flagship book. If you would like to get a copy of that, you can get it at OptionSellers.com/book. You’ll get it at a discount to Amazon or bookstore prices. James, for our lesson today, I’d like to directly address a question that we get periodically from newsletter readers and listeners to this show and some of our other videos. I know a lot of people listening to this, they’re watching what we talk about and then they are taking our trade and trying to do it on their own. That’s certainly fine and there’s nothing wrong with that. That’s part of the reason we’re here, is to help people learn what this is and how to do it. A question we get is, “I saw your video/read your article and you talk about selling a strike, and I went and looked at that strike and it’s not the same premium you said,” or, “ I went and looked at it and there’s no open interest there”, or “That platform doesn’t have it. I can’t see it. How are you selling these things?” There’s a couple different answers to that. I’m going to give one and I know you probably have a better one, but one of the first reasons is a lot of the platforms they’re on they don’t carry options that far out. I know some people have mentioned Thinkorswim platform or TD Ameritrade where they only go a few months out with the commodities options. So, first and foremost, you need to get yourself a better platform so you can get further out strikes, and secondly, James, the one thing you pointed out clearly in this month’s newsletter is a lot of times when you’re talking about these things, whether here or on your bi-monthly videos is, you’re giving examples of how this could work, how it should work, what might happen if prices rally, these are the areas we target. We’re not here to give specific trade recommendations for people to take and trade tomorrow. These are examples for people to learn either if they want to invest their money this way or if they want to take the information and think and reason it on their own what to do. So, when we talk about a strike, that could be a trade we’ve already done, could be that it’s passed now, or it could be a trade we’re hoping to do if the right situation sets up. So, you just gave some pretty good examples right now and you probably agree with me there, but there’s another reason that we can target those type of strikes that other people might not be able to do, and maybe you want to talk about that. James: Michael, that is a great point that you bring up. When I’m speaking to new clients, when they first open their account, the one question that seems to come up very often is, “James, I understand how this works, I’ve read your book, I’ve read your material, but who in the world is buying these options?” That is certainly a question we often get. By no means do I claim to experience the very best way in selling commodities options. I’m not sure what the very best way is. I just know what works for us and really being the option selling leader, I certainly believe we are, we are selling options in quantities that practically no one else in the world is. We have the luxury of selling gold options to banks in London and New York, we have the luxury of selling options in the crude oil market to energy companies, and it’s quite possible that when we’re selling options distant strikes coffee, we are likely selling them to coffee companies, like Starbucks and the such, a lot of popular names that a lot of people now. When you’re selling to contracts for your particular own personal account, you’re probably not going to get a chance to deal with London banks or other large coffee companies, but when you’re selling options in very large gross volume, these companies do want to work with you and they do want to listen to you. That opens up these strikes to us. Michael: That’s a great point. Maybe for just some of our listeners that may not be familiar with how that is, it’s not like James is getting on the phone and calling somebody in London and Citi Bank and asking them if they want to buy our options. These are still going through registered exchanges, it’s just a different path we are taking through them where we are working through specialized order desk. These people have relationships with other brokers for these organizations, but the trades are still done on the registered exchange, correct? James: Yes, they definitely are. It’s just relationships that our clearing firm has established and it’s something that, I feel, just the pinnacle of option selling… having those relationships in place and when you need and want to sell options that are further out in time, as maybe some of our listeners or readers have asked about, that’s something we have the luxury to do and we certainly want to take full advantage of that by selling to some of the largest banks or some of the largest companies that are maybe end users in coffee or in sugar or in soybeans. It’s quite a luxury we have working with those relationships that our clearing firm has already built for us. Michael: Something our listeners might want to consider, as well, we are usually here to help people learn how to do this. Whether you want to do it on your own or whether you are considering having it managed, one aspect of managed option selling, and excuse my little advertisement here, but it’s true that if you’re in a managed portfolio, such as this, you do get the advantage of economy of scale, where if you’re trying to sell 2-3 options on your own you could have them sitting out there all month and nobody ever looks at them. When you’re with an organization or a managed situation like this where you could be selling thousands at a time, those not only can get filled but often times at better fill prices than you’re going to get electronically. I know that’s something you have experienced first hand. James: Michael, there is no question that we’re not market timers. We don’t know the exact time to get short soybeans, coffee, or get long some of the precious metals, but what we do want to have is just the best absolute liquidity available, the tightest bid-ask on these markets, and if that can change your entry by, say, 10%, which it often does, once again, it takes the need to be perfect timing entering these markets, which no one has, nor do we, but when you can get a fill 10% better getting in and then possibly getting out, that makes a world of difference. Michael: All right. We’ve covered a lot of ground this month. I think we’ll hold up there for the month. We will be updating the coffee market and some of the other things we’ve talked about here over the next month and on our bi-monthly videos and also on our blog, so you’ll want to stay posted to that. If you are interested in learning more about managed accounts with OptionSellers.com, you can request our free Discovery Pack at OptionSellers.com/Discovery. As far as new account waiting lists, we are well into September right now as far as the waiting list goes for openings, so if you’re interested in taking one of those remaining openings for September you can contact Rosemary at the main number to schedule a perspective client interview. Those will be taking place during the month of August. You can reach her at 800-346-1949. If you’re calling from outside the United States, you can call 813-472-5760. James, thank you for a very insightful commentary this month. James: As always, Michael, all 12 months of the year are interesting, but July and August certainly are one of our favorites. Michael: Excellent. Everyone, thanks for listening and we will be back here with our podcast again in 30 days. Thank you. James: Thank you very much.

Another episode of tales at sea. Following on from the mysterious tales of the Dark Gentleman, we find another curious passenger on board…although will they turn out to be any less disturbing to the crew? Music: Creepy — Bensound.com.   Andrew: Here are some Totally Made Up Tales, brought to you by the magic of the internet. This week: The Stowaway. James: Martin, the First Mate, thought he knew everything about this ship, as First Mates really ought to. Andrew: It was not the largest ship the world had ever seen, but nevertheless it contained many nooks and crannies and corners that men who had served on it across journeys of several months had still not managed to explore. James: Martin, however, knew them all. But something was not quite right. Andrew: There was a strange energy on board the ship, that was quite different to the masculine peace that settled aboard the boat once the shore was safely left behind. James: It reminded him of the one or two times when they'd transported families from Southampton across to the New World looking for a new life. Andrew: It was not as strange as the time when the famous occultist traveled with them and disappeared halfway across the ocean, but it was still something not quite right. James: Martin didn't like it when things weren't quite right, it upset the smooth running of the ship and it made the men grumble, and that was one of the worst things to contend with. Andrew: He decided that he would determine for himself whether there was anything untoward going on, on the ship, but he would do it in a subtle and determined manner. James: He drew up a schedule where he could regularly walk every turn and every corner of every deck, both above and below. Andrew: He began his exploration and very soon began to have an even more acute sense that there was something either just ahead of him or just behind him, but it was as if, whenever he turned his head, the thing it was that was following him or that he was following — and he could not be sure which it was — had disappeared, and he was left once more alone. James: He had first had the sense a day or two out of port, and it continued for a full week, gradually making him more and more frustrated, until one day, Timothy, the old cook, came to him. Andrew: Timothy was a grumpy man, perpetually red in the face with irritation, and missing his right leg. He had adapted his kitchen galley successfully so that he could navigate his way around, but in all other areas of the deck he moved on traditional sailor's wooden crutches. James: He came to Martin with a complaint about theft. Andrew: An entire barrel of biscuits, which he had been intending to use later that week, had disappeared from the kitchen, lock, stock, and barrel. James: Martin knew that none of the men would have tried to secrete an entire barrel anywhere else about the ship, it was a ridiculous and foolhardy notion that you could even get away with it, and so he continued his pacing about the decks until he discovered the barrel, now empty, in one of the smaller holds. Andrew: Scattered on the floor around the barrel here and there were biscuity crumbs. James: Martin spent some time checking the rest of the hold, looking behind the crates and boxes, and underneath the tarpaulins, but he could not find any indication, other than the barrel and the crumbs, that anything was amiss. Andrew: Later that day, in the evening, he sat down with the Captain for dinner, and the Captain turned to him with his customary question and said, "Well then, First Mate, what are the news?" James: He recounted how Timothy had come to him and his investigation and what he'd discovered, and the Captain looked at him with suspicion crossing his face, "Have you felt a presence onboard ship?" he asked. Andrew: "Well sir, as it happens," Martin replied, "I have felt a rather different atmosphere on the ship than usual… it has seemed that there has been something here." "What do you make of… this?" said the Captain. He opened the draw of his work desk and took out a piece of paper covered in a strange childish scrawl, and laid it out in front of the First Mate. James: "Was that? It looks like it was drawn by a child, sir." Andrew: "Yes, it could be a child or possibly a madman, or I'm not entirely sure. I dismissed it entirely of course, read it through for me." James: "I can't make it out at all, sir. It doesn't seem to be written in English, or indeed any other language as I recognise." Andrew: "Yes, I thought that," said the Captain. "But here, look, when you hold it up to a mirror, now try." James: "Oh my word," said Martin. "You're right. It's a diary." Andrew: "Yes, that's right. A page from a diary. A diary that's been kept while on this ship. I found it fluttering along the passage outside the door to the hold." James: "Do you really think so sir? We have a stowaway?" Andrew: "I think we should consider the possibility. Nothing has been quite right on this ship since the time that mysterious man disappeared after saving us from pirates, and I wonder if the forces of the occult have returned to haunt us." James: "I shall organise the men to do a thorough inspection, sir. I'm sure we will catch them." And indeed Martin was sure that he would catch the stowaway. Andrew: Duly assembled, the men set out in groups of two around the various passages of the ship in search of the mysterious diary writer. James: Creeping down the passageways, hunting through the holds, peering into the dark corners, the men gradually covered every inch of the ship. Andrew: Each pair in their turn, returned from their searching to the main deck to report to the First Mate, and came back empty handed. Not a sign, not a scrap, not the slightest clue as to the writer of the diary had been found. James: Two by two, Martin ticked them off in his head until there were five pairs still out, then four, then three, then two. The last pair that had gone down into the holds below reported that they could see nothing out of the ordinary, and he was just wondering how the other pair was getting along when the sound of a struggle came from the cabins that they had been searching. Andrew: The cries and thuds muffled by the several layers of decking nevertheless could be heard and stirred an immediate call to action in the First Mate. He grabbed two of the pairs nearest him, his trustiest men, and set off down the hatches to go and investigate for himself. James: He burst in, the men hard behind him, on an amazing scene. Andrew: Inside the passengers' cabin, standing quietly and unassumingly in the centre of the passenger cabin was a small elfin faced girl with close cropped hair, beaming at them with her hands on her hips. Lying on the ground of the cabin in front of her were the two burly sailors, out for the count. James: A thought flashed through Martin's mind, wondering how on each how such a small child had managed to overcome such large men, but he was too well trained to voice this concern. "Seize her!" he cried. Andrew: The men who had come down with him and to whom his order was addressed looked at the girl, looked at their fallen comrades, looked nervously at each other, and hesitated upon the threshold. "Didn't you hear me, men?" said the First Mate, "in and seize her!" James: Greg looked at Harry, and Harry looked at Greg, and neither of them wanted to be the one to make the first move. So Martin reached forward and grabbed the girl by the scruff of the neck. Andrew: At once, she burst into tears, and paying no heed to her bawling, Martin dragged her through the passageway, dragged her up onto the deck, into the Captain's cabin, where he threw her roughly to her knees in front of the ship's commander. James: "Good work, Martin," said the Captain. "And what are you, eh?" Andrew: The little girl looked at him, sobbing, wide eyed, and said, "oh please sir, please, have mercy on me." James: Martin nudged her with his foot. "Captain asked you a question," he said. Andrew: "Oh, oh, I am ..." The girl took a deep breath in and looked directly at the Captain imploringly and said, "I am but a poor child, sir. My father was a sailor of many years standing and spent his life at sea and one day in a tragic accident was killed when his ship caught fire. My mother was unable to support herself, me and my brother, and my brother signed up to sail to the New World in the Navy and I decided that the only way forward for me was to follow him and so I ended up here on the first ship I was told was sailing to the New World and I hid in the hold." James: The Captain looked at her sternly. "I cannot just let stowaways use my ship as free transport between the continents." He said. "We cannot throw you overboard, we're in the middle of the sea, but if you are to remain here, you must work to earn your keep." Andrew: "We have no use for you on deck, this is man's work requiring a man's strength, but the kitchen is short of a boy, you shall serve there for the remainder of the voyage. Go, at once. You will be directed by Timothy the cook." James: And so Martin took her down to the galley, and introduced her to Timothy, and Timothy immediately put her to work scrubbing the Brodie stove to keep it clean or at least as clean as Timothy deemed necessary for basic sanitary food production purposes. Andrew: With a dedication and an application and a thoroughness that seemed uncharacteristic for someone that looked outwardly so delicate, the little girl scrubbed at the stove, scrubbed and polished and shined. Bucket after bucket of dirty water was emptied over the rail into the sea, until the Brodie stove was as good as new. She turned to the cook and said, "sir, I have scrubbed the stove. What would you have me do next?" Tim looked at her and said, "sir? I'll have no sir in my kitchen! I'm Tim the cook, and what's your name?" James: In a small voice, Elsie introduced herself and told her story of how she had come to be on the boat. In return, Timothy gave her a history of the vessel, including some of the rare goods that they had transported and the confusing and perplexing tale of the Master of the Dark Arts, who had recently bought passage with them to the New World. Andrew: Over the days that followed, Tim and Elsie built up an extraordinary rapport. The cook, who was usually one of the grumpiest and least sociable fellows aboard the ship, had taken a shine to this little girl, and she to him. The atmosphere in the kitchen changed from one of shouting and swearing to one of laughter and camaraderie, and the quality of the food rose remarkably as a result, raising the morale of the rest of the crew. James: Over dinner one night at the Captain's table, the Second Mate, Will, turned to the First Mate, Martin, and mentioned sotte voce that perhaps they should have a stowaway on every voyage. Andrew: They laughed, looking at their empty plates wiped clean by freshly baked bread, when suddenly they were interrupted by a cry from the lookout tower. "Ship ahoy!" James: Coming onto the deck, the Captain looked at the lookout, who was pointing hard astern. Behind, somewhere in the darkness, there was a light. Andrew: A half a mile off or so it seemed, there was a ship shaped object bobbing backwards and forwards with the motion of the waves with an eerie glow that seemed almost otherworldly. James: Slowly, the shadowy shape was gaining on them. Andrew: The Captain summoned the crew to their action stations, called for the sails to be hoisted full up, and observed the mysterious shape still gaining on them. James: The faster they went, the faster it pursued. As the spectre came closer, the lanterns from their own ship, and the light inside it, gradually made the shape clearer. Andrew: The First Mate turned to the Second Mate and, furrowing his brow, said, "this is going to sound like a very strange thing to say, but does that look to you like a ship made out of smoke?" James: "Not any ship," said the Captain. "That is the ship that we saw burn to the waterline." And it was true, the superstructure looked identical, the rigging, the position of the masts and sails. It was the pirate ship that had chased them so recently. Andrew: And as it came closer, the mysterious glow that had revealed it when it was at a distance to the lookout resolved into the flickering embers of the final burning pieces of wood floating on the water underneath the smoky shape. James: "Can we even fight that, sir?" asked the Second Mate. Andrew: "Do we need to fight it, sir?" said the First Mate. "What's its intention? It's just smoke." James: "It's evil," said the Captain. "Prepare the cannon." Andrew: "How do you know it's evil, sir?" said Will. James: "I just have a feeling," said the Captain. "The feeling that evil has been dogging us ever since that ship burned." Andrew: The cannon trundled forward on its heavy wheels to the ship's rail and was being loaded by the men responsible for it. They turned to the Captain and said, "Ready to fire, sir", and the Captain said, "Very well, fire at —" But before he could finish the command, a small tug on his elbow revealed that Elsie had come up to the deck and was looking at him with a serious face. "Please sir," she said, "don't fire on the vessel, it's me that it's come for. Please let me go and speak to it." James: Agog, the Captain let her pass. Elsie walked right up to the rail and held her hand out towards the ship that was now only a few dozen feet away. Andrew: Out of the swirling mass of smoke that made up the shape of the ship, with its amorphous and shifting edge, there seemed to solidify an additional shape of a man standing opposite Elsie, face to face, where the rail of that ship would be if it had a rail, and it seemed to that an arm came out from his smoky body and extended across the water and gently, gently, gently made its dark tendrily way to her hand until it touched it. James: As soon as it did, the smoky ship started to dissolve and waft away on the fresh breeze coming in from the ocean behind it. "Daddy," she called out gently. And in response, a deep thrumming sound seemed to make the word "Elsie" from across the water. Andrew: With the contact between the two having been made, the form of the smoke ship dissolved and it became once more the mists that roll over the seas at night and ceased to have any shape or solidity. James: And as it dissolved, so too did Elsie's form gradually fade away until the Captain, the First and Second Mate and the crew members could see plain through her. Andrew: As she was on the verge of disappearing before their very eyes, she turned looking at the crew in turn and taking them all in with her penetrating gaze, finally her eyes rested on the Captain and she said, "thank you" — and vanished. There came from the hatch leading down to the galley a sobbing which caused the First Mate to turn and there to his surprise he saw Tim with his face buried in his cook's apron, uncharacteristically emotional. James: The crew were quiet for the rest of the journey, less banter and less grumbling than usual. In the Captain's cabin, a number of hushed conversations over dinner attempted to discern just what Elsie had been and where she had gone — but without coming to any conclusions. Andrew: The only thing that everybody could agree on was that the quality of the food had improved, and from that day forward it remained the best on the high seas.

The book of James As we Continue our Travel through the Bible, we come to a very special portion of Scriptures, "James" is a book about *Practical Christian living that reflects a genuine faith that transforms lives. Stay tuned for a great discovery in God's word. For more information and to stay up to date with Pr. Lucas Rodrigues and The Snowball Church Family please visit https://www.facebook.com/snowballchurchla/ or connect with us on Instagram @snowballchurchla @pr.lucas_rodrigues Become a Partner with us: Your generosity and financial partnership with us is how we are able to help expand the kingdom. 1. Text "Snowballchurch" to 77977 2. Download our Church App/the Pushpay App. Or 3.Go to our link: https://pushpay.com/pay/snowballchurch/2q_K1iZlIKkFQdVE_6abSg

In episode 6, we finish the story of the Rosewood Unicorn, along with meeting Theresa who runs a comforting bookshop, and seeing what happens when the Dean Drops In. Music: Creepy – Bensound.com.   James: Here are some totally made-up tales brought to you by the magic of the internet.     We start with the Dean Drops In.   Andrew: The head librarian looked up from her desk at the sound of a knock of the door of her wood panelled office.   James: Perhaps, she thought, it was her assistant with the soup for lunch. But, no, standing in the doorway was the Dean of the University.   Andrew: "May, I come in?" he said in his patrician drawl that he had spent years perfecting.   James: "Of course, Dean," she said drawing a chair for him on the other side of her immense desk.   Andrew: "I wondered if I might speak to you about the little subject of books?" He said.   James: "Ah, yes, books," said the head librarian, "they are indeed in my remit."   Andrew: "Yes," he said, "I was wondering if that is really the most efficient way for us to work? Do you think we might re-visit the whole topic?"   James: The head librarian thought for a moment. This was a familiar pattern with the Dean, walking in and sparring with members of his faculty, threatening to take away certain responsibilities or authority. But this, she felt, was going further.   Andrew: Books had always been at the heart of University life and at the heart life and at the heart of learning and culture and damn if she was going to lose them.   James: Although the library contained a large number of things that were not by any stretch of the imagination books, she felt that reducing herself to only looking after those would inevitably see the library become part of some other faculty, such as languages or perhaps the modern hearts.   Andrew: She turned over in her mind the best way to conquer this threat to her domain. What could she do?   James: Smiling gently at the Dean, she walked around the large desk flicking open a small drawer as she went and withdrawing a jewel-encrusted dagger.   Andrew: This she delicately plunged into his back behind the middle of the rib cage, up into his heart and withdrew it wiping it on her handkerchief.   James: "Chelsea," she called for her assistant, "file this under D for dead things."     And now: Part II of the Rosewood Unicorn.   Andrew: The day dawned bright and fair. There was not a cloud in the sky. It was the 17th birthday of the Princess Caroline.   James: She rose early and was dressed in the most sumptuous clothes by her maids and prepared for the full day of celebration before her.   Andrew: In the morning she toured around the capital city meeting, greeting, receiving birthday wishes from the loyal subjects of the king among whom she was so popular.   James: At lunch there was a great banquet with many of the princes from surrounding kingdoms vying for her hand in marriage, not knowing, for the king had never disclosed to anyone the deal he had made with the Man in Black.   Andrew: The afternoon she had for recreation, for it was her birthday after all. She went for a pleasant walk in the gardens and played a game of tennis.   James: And just before the evening meal, as she had for so many years, she played briefly with the unicorn toy that she had been given so many years ago. Although it was no longer alive, she still loved it with a strange passion from her past.   Andrew: After a busy day, her birthday ended with a simple meal for the most immediate members of the royal family in their private dining room. They had a delicious, but not extravagant meal, and had come to the end of it.   James: There was a knock at the door to the royal suit.   Andrew: "Who could that be?" said the Queen. "This is a very late hour for us to be interrupted by an urgent message or an embassy from a foreign power."   James: The King signalled to one of the servants to open the door and inquire who it was at this late hour.   Andrew: The double doors were flung open and framed in silhouette against the flickering candlelight from the corridor behind, was the Man in Black.   James: "I have come," he said, "as we agreed."   Andrew: Well, there ensued a rather complicated conversation. The King had a great deal of explaining to do. The Queen was unhappy. Princess Caroline was unhappy. Tears were shed, voices were raised, but the Man in Black was implacable and the King was a man of his word. There was no way around it other than Princess Caroline should immediately pack her things and leave.   James: Tearfully she looked around her rooms deciding what she would take with her. There was no need, perhaps, for many of the things that she normally liked to wear or many of the books that she usually read from. She packed a small bag, taking with her only a couple changes of clothing and the unicorn.   Andrew: The Man in Black had a fine black horse, strong and sturdy waiting in the courtyard, steam rising from his nostrils as it stamped its hooves and shook its head. "Climb aboard," he said.   James: She swing herself up behind him. The bag pressed between the two of them. Almost as a wall between her and, as she thought of him, her captor.   Andrew: They rode through the night. Across lands that the princess had never seen before and had barely known existed. Across forests and fields, mountains, valleys, they forded rivers, until at length they came to the far off land where the Man in Black ruled.   James: A dark, sinister castle thrust itself out of the naked rock. Towers twisting towards the sky. Around it a dark and menacing forest stretched as far as the eyes could see. As the Man rode his horse, Caroline behind him, down the single, narrow path through the forest, she, tired from their journey, gradually slipped off to sleep.   Andrew: The next day, the princes awoke. At first, she was aware of being in a comfortable bed so familiar to the one that she had slept in for many years. But soon she realised that, no, she was not in the bed chamber that she had grown up in, but she was in a different castle in a different land starting a new life.   James: She crept out of her bedroom and started to explore around the castle very soon finding the main hall where the Man in Black was taking breakfast.   Andrew: "Ha-ha, my dear, you are awake," he said with great charm and courtesy. "We'll you join me for breakfast? I have all the goods that one could possibly want to eat."   James: As he spoke, she realised that she was hungry and sat down to eat some of the most delicious fruits and meats that she had ever tasted.   Andrew: The spread was vast and she ate her fill and was sitting in quiet contentment when her husband spoke.   James: "Now you have come to live here you will, of course, have all of the benefits of my country. The best food, the most delicious wine, the most compliant servants; however, I do regret that you will never be able to go back and see your family again. That is just the way that these things work, I'm afraid."   Andrew: The princess was heartbroken. She said nothing and left the table and returned to her room, tears brimming in her eyes.   James: She threw herself down upon the bed attempting to smother her tears in the pillow. Before long she felt a touch on her arm. She started, looking down her arm she noticed the unicorn and it tossed its head.   Andrew: "What on earth," she exclaimed looking down at the toy from her childhood. "But all those years ago you, surely you, I remember ..."   James: It nudged her with its horn gently and then cantered up to her face.   Andrew: "Oh, you've come back to me just at the moment which I needed a friend. Thank you, thank you, thank you," she said, kissing it on its back.   James: That night Caroline waited until she was certain that all in the castle were asleep before taking the unicorn in her pocket and creeping down to the great hall.   Andrew: There, she gathered up the things that she would need for a long journey and made her way outside through the kitchens.   James: The circle of the trees of the dark forest surrounded the castle and she could not see the path. So thinking that any direction was as good as any other, she picked one and started walking.   Andrew: The forest at night was strange and eerie but she was a confident young woman and with her trusty unicorn and her provisions, she strolled ahead without fear.   James: She walked through the night and as the first hints of dawn started to be visible through the dark trees, she finally came across a clearing and in the centre of the clearing was the castle.   Andrew: She was bitterly disappointed. "Oh, I must have taken a wrong turning somewhere or followed a path that came around. What a foolish mistake to make." But she realised that it would be futile to try and leave again during the daytime when she could be seen by everyone in the castle and she returned to the great hall for breakfast.   James: The following night she tried again. Once more as dawn started to creep across the land, she found herself back at the castle.   Andrew: She made several attempts over the following nights to escape. Each time taking a different path, recording the path that she had gone down by making a mark on the barks of the trees, but each time it brought her back to the castle at daybreak. Then while sitting down to breakfast the Man in Black addressed her.   James: "I told you, but you did not believe me. There is no way that you can leave this place and see your family again."   Andrew: "And indeed why would you want to? Here you will have a life of complete contentment. We have a peaceful land where we are unchallenged in our rule. You will have a life of ease and joy. You should accustom yourself to it and not seek to escape."   James: Caroline ran from the table up to her room and threw herself down on the bed in despair.   Andrew: "Oh, what shall I do?" she said to the unicorn as they played together. "What shall I do? It is comfortable here and life could be easy and it is impossible to escape, but I oh I miss my family so. What shall I do?"   James: That night she did not try to escape and as she lay sleeping the unicorn thought.   Andrew: The unicorn was a sensitive beast and hated to see the mistress who it loved in so much pain and discomfort. "How can I help?" it thought. "How can I help her to escape?"   James: The unicorn understood the magic that controlled the forest and the routes through it. The unicorn made of rosewood from the great tree that stood at the centre of the forest, was well aware of exactly how the Man in Black's magic constrained the Princes Caroline. The unicorn knew that this particular spell was powerful and woven through the very fabric of the castle and the forest itself and that only one thing could cause it to fail.   Andrew: The unicorn, a magical animal, understood the ways of the occult and knew that the only way to break the spell and to transport the princess back to her childhood home where she so longed to go, was to burn a part of the magical forest that formed that the impenetrable boundary around the castle along with an item from the desired destination of the traveler. The unicorn rooted around through the possessions that the princess had brought with her from her home and found one of the scarves that had been given to her in her childhood.   James: Now all of the unicorn had to do was to burn this with part of the rosewood heart of the forest. But now the Princess Caroline never went outside. She always wanted to stay within her room and play and the unicorn could not deny her that.   Andrew: Although it bided its time hoping for an opportunity to be taken outside so that it could collect something from the forest, the days turned into weeks, the weeks turned into months and the princess was beginning to waste away with sadness and despair.   James: Seeing her condition, the unicorn knew that it could not wait and that its chance to get outside into the forest might never appear. It took the scarf, wrapped it around itself and when the princess was not looking, cantered into the fireplace where it burned completely.   Andrew: The day dawned bright and fair. There was not a cloud in the sky. It was the seventh birthday of the Princess Caroline.   James: She woke excited for the day's festivities ahead and as she always did, she started her day by playing with the delicate and beautiful swan that she had been given for Christmas. Made by the finest toy maker in the land.   Andrew: The door of her bedroom opened and her kindly aunt and uncle beamed down on her. "Come my child, let us have a celebratory breakfast on this your special day. A happy birthday to our beloved child and the most special girl in all the land."   Alternating: Theresa was a pleasant lady who ran the bookshop in town. Every time she wanted a breath of fresh air, she would walk outside into the square and sit on a stone bench beside the fountain. One day while perambulating, she encountered a small boy who was without his parents. He looked lost and sad. "Are you okay?" she asked. "No," he said, "I've lost my mummy." Theresa took him by the hand and went inside the bookshop. She picked him a book to read and made some tea. As he read to himself, she patted him on the head. He sighed contentedly. "I'm not scared any more."   James: I've been James and I'm here with Andrew. These stories were recorded without advanced planning and lightly edited for the discerning listener. Join us next time for more totally made up tales.  

Michael: Hello, everybody. This is Michael Gross from OptionSellers.com, here with your August Option Seller Radio Show. I’m here with founder and head trader James Cordier and we’re going to talk a little bit about the markets here and things going on as we start September, back to school month, or, for a lot of investors and financial professionals, it’s back to work month. A lot of people go on vacation in August and when we get back in September it’s back to business. A lot of people start focusing on some of the stories they may have overlooked over the last month or two. James, welcome to the show – a lot to talk about this month. James: Thank you, Michael, there certainly is. Both markets moving, instruments happening, as well as the stock market, of course, the Federal Reserve is always interesting, and new highs in the stock market. We were talking recently about a couple articles that have some of the largest, most well known investors in the world saying that not only is the stock market going to pause but go into a bear market, then it continues to rally. Its just really interesting times right now with both the Federal Reserve and what a lot of people are considering with the stock market what it might do over the next year or so. Michael: You know, we’re going to talk about oil here in a little bit, but some of the stories coming out of OPEC talking maybe about a production freeze, and some people think maybe that’s helping the stock market, too, a little bump in oil here. James: It really is. This is so interesting how the oil market, especially, is a great example of a market that has extremely soft fundamentals. In the United States, we have all-time record supplies. We have Iran and Iraq and Saudi Arabia who are going to just duke it out for market share starting in October and November. What is OPEC come up with going into the soft demand season? Well, we are going to talk. We’re going to come up with some ideas and we’re going to try and freeze production. The part that is so interesting about freezing production, as we all know, is that productions are at record highs right now, so the market really is trying to grasp onto anything it can to try and get insight on what the market might make the next move. What’s so interesting is, as all OPEC discussions over the last few years, each country needs a specific amount of money to run their economy and if oil goes down to 40 or 38, they’re going to need to pump that much oil and everyone really knows it. This buying the market because of OPEC discussions coming up, that’s going to be a feudal end. I’ve seen it before the last several years and when the market rallies up because Iran is now going to join into the talks, they know that all they’re doing is jawboning. When push comes to shove and demand is low in winter, they’re going to be pumping oil like never before. Michael: Yeah, that’s a great point and we are going to talk about that in a second, too, because we have a big seasonal coming up in crude. I know you’re eager to point it out as well. September, as we discussed earlier, is a big month for seasonal tendencies. If you’re listening and you’re unfamiliar with seasonal tendencies, these are the type of things that happen at different times of the year - fundamentals in these underlying markets that can have an outside impact on price. So, being aware of what the seasonals are can really have an impact on your trading, really give you some direction when you’re starting to identify trading opportunities. It’s certainly where James and I start when we’re looking at markets and being aware of that underlying seasonal. September is a huge month for seasonals and one of those markets, in particular, is one of your specialties, James. That is the coffee market. As we end the Brazilian growing season here, we are at the end of harvest, some certain things happen when that harvest is done. Do you want to talk about that a little bit, James? James: Well, what’s interesting is a lot of investors were pointing to whether that wasn’t exactly perfect in many growing areas of the world for cocoa or sugar or coffee. But, in Brazil, we have a record harvest that just took place for Arabica beans. Those are the sought after variety that we drink here in the United States and through most of the western world. We have a record supply coming in. Harvest right now is about 95% complete and you’re going to see co-ops in Brazil wanting to turn those beans into cash. They’re going to try and hold back and they are going to make all kinds of discussion about how we’re going to have a retention plan and we’re going to wait for higher prices, but the bottom line is that they only have so much room for that coffee and it has got to go. As they say, bills have to be paid. If you’re in a third-world nation like Brazil and your cash crop is coffee, you need to turn that into the market. We expect those supplies to start hitting market channels in September and October as the harvest wraps up. Lo and behold, the United States, the largest consumer of coffee, we are currently sitting on the highest coffee supplies of green coffee stocks in the United States for the last 13 years. We don’t really need to bid up coffee prices to get the beans to get here. Coffee roasters can be very picky because we’re sitting on so much coffee here in the United States. With Brazil trying to find a home for their coffee, the United States has all the coffee they need. This seasonal for a downward move in java prices looks quite certain for September, October, and November, so we will be looking at selling coffee calls with both hands here in the next 30 days. Michael: James, that’s a great point. You’re talking about records Arabica production. Total crop out of Brazil, the latest estimate I saw, correct me if I’m wrong, but I believe they’re looking around 56 million bags, which isn’t a record but it is near a record. What you brought up, and maybe just a way of restating it to help some of our investors listening grasp it, is as these supplies hit the market, that excess supply is Economics 101. As supplies go up, price tends to come down. What tends to happen in the fall, if you look at a seasonal chart for December coffee, you hit the first of September and prices typically start declining. That doesn’t mean it is going to happen every year, but over the years that tends to be the cycle. It is something that we are expecting this year. An investor listening to this, you know, it sounds probably Chinese to somebody who just traded stocks and doesn’t know a lot about commodities… you’re talking about how we’re going to be selling options with both fists. How does an investor sitting at home grasp that? How does he take advantage of this? He sees coffee prices where it is right now and he’s looking at a chart. Maybe just kind of walk them through what he would do. James: Certainly. For anyone listening to our commentary today who have read our books on The Complete Guide to Option Selling and have read chapters that concern, for example, historic volatility, namely in the coffee market, years and years ago we had a large rally in the coffee prices because of a freeze that took place in southern Brazil, which caused coffee prices to jump dramatically. In southern Brazil, coffee plantations have migrated north. The chances of freezes that have caused prices to go up in the past are negligible. They no longer exist. However, the historic volatility that is still in coffee options will still be there and it does exist. We actually have the ability to go short coffee at double the price of its current level. In other words, we have a seasonal factor that should cause prices to go down in October, November, and December. The strikes and the coffee calls that we will be selling for clients, or someone listening to us today can do it themself, you are looking at selling coffee calls double the current price. As you mentioned a moment ago, will coffee prices slide 10 or 20 cents a pound this fall? It is really not that important. What we are positioning ourselves and our clients to do, is that we are wagering the fact that coffee won’t double during this price. Historic volatility gives us the ability to sell coffee calls at a very high price and at strikes that are almost double the current price. Michael: Yeah, coffee currently trading just above $1.50 per pound in that range. Good explanation there, James, of why you’re able to sell so deep out-of-the-money. I think that’s a big question a lot of investors have, is why can you sell so far our in commodities and not in stocks. A lot of it has to do with the leverage and the way commodities are priced, but it also has to do with fundamentals that may have changed over the years but that volatility is still in the market. Great, great example there. Selling calls into a harvest in a lot of markets can be a good strategy to pursue. That’s going to take us into another market that we are watching here in September. The grain markets are all big markets that have seasonals in the fall. In the United States, we harvest soybeans, corn, and wheat in the fall. As those supplies come in from harvest, historically speaking, that has tended to pressure prices because as that supply builds, it’s going back to that Economics 101. Higher supply tends to pressure price. That tends to happen in the fall as the new harvest comes in. Not always, nothing is guaranteed, but historical tendencies, however, have tended to drift that way. James, soybeans are another market we’ve been watching lately, we’ve already had kind of a drop-off there, but heading into a harvest now, talk a little bit about the crop there and what you see happening. James: Well, in corn and soybeans in the United States, it seems as though farming just continues to get more and more improved. Not only is Brazil able to produce more coffee beans, but here in the United States and places like Argentina and Brazil, growing more soybeans on the same number of acres here in the United States. We are looking at a huge crop in soybeans and corn that the Unites States is going to be harvesting starting in September and October. Once again, as you mentioned, too much supply and not enough demand certainly sets up ideas for shorter prices and going into this fall. Any rallies that we would have in corn and soybeans over the next 30 days, we would certainly be very interesting in selling call options on those, as well. I know that there is a lot to be made about something that’s called stocks to usage, which actually compiles how much demand there is worldwide versus how much supply there is. I know next year, Michael, you might want to refer to this a little bit, but from what I’ve been hearing, next year’s supply versus demand is going to be gigantic. Selling calls in that environment, I think, is a great addition to someone’s portfolio, as well. Michael: Yeah, you know, we talked about that this spring. We were looking at pretty big acreage this year. We did get a pretty big rally in June because we had some weather concerns, but once that crop was made, prices, especially corn, the corn prices just fell off the cliff since June. One of the reasons we are talking about soybeans right now is that they’ve fallen, but not quite as far as corn. The seasonal tends to kick in at the beginning of September, so we have some pretty good timing. In talking about the soybean crop, we are looking at the largest U.S. harvest ever. We are looking at a projected yield or crop size of 4.1 billion bushels. That’s an all-time high. If this comes to pass, our 2016-2017 U.S. soybean ending stocks are going to be at 330 million bushels, stocks to usage at 8.2%. Both of those will be the highest in a decade. When we talk about bearish fundamentals, that’s bearish fundamentals. That is a pretty big weight on the market. It doesn’t mean that market can’t rally, as you always talk about, but it certainly hinders rallies and certainly casts a bearish shadow, often a great setup for call sellers. It’s one of the reasons we’re watching beans right now – looking for those types of opportunities. James: Well, it’s interesting Michael, something that you and I referred to quite often – we may not know where the price of soybeans is going to go next week or two weeks later, but what we’re calculating and what we’re betting on is where it’s not going to go. That’s all we have to do is get that part right. Michael: Exactly. That is a good segway to talk about the crude market here. You started off talking about crude. You got a lot of media coverage lately… a couple of appearances on CNBC, you’ve had a lot of calls from the media on your call on crude oil because back at the beginning of summer everyone was bullish, you were bearish – you’re still bearish, and you’re still looking at that as a great option selling opportunity. So, maybe share with some of our listeners what you see setting up there and why you like it so much. James: Anyone listening to this right now who is thinking the idea that crude oil is going to continue rallying because of OPEC discussion or slightly smaller production here in the United States, I think you would be really well served to do a little research and find out how much supply is actually out there. In the United States we have record supplies. We have cars that now get 40 miles to the gallon instead of 20 miles to the gallon. We have Iraq, Iran, and Saudi Arabia that are producing record amounts of oil all at a time when we’re going into the weakest demand season of the year. September, October, and November, demand in the United States, the largest consumer, it falls off the table. We really like the idea of crude oil prices heading to softer levels, possibly in the 30’s and then bottoming out around November and December. This is one of the greatest seasonal plays there is, is being short oil going into late summer and early fall. Lo and behold, when the holidays come around, we get into December, we’re going to have some very low oil prices, at least that’s the way it looks from my desk. Then, the other seasonal kicks in and that is to go long when everyone is so fearful that the market is going to go down. So, we have two of our greatest plays as far as building a core position in crude oil, that come up now and then come up again in the 4th quarter of the year. It’s certainly something that has been a great addition to our portfolios over the last several years and we think it’s going to be again this coming year. Michael: James, you bring up a great point there on supply. When you’re talking about crude supplies here in the United States, the last report we are at 521 million barrels. That’s an all-time record for this time of year, as you said. 37% higher than the 5-year average for this same time of year. A key point here, it’s 14% higher than last year at this time. As you know, last year, we saw crude prices dip below 30 down into the high 20’s. We are headed into a seasonal time of year now with supplies 14% above where they were last year and if anybody listening to James talk about the seasonal tendency, you’ll be able to see a chart of that seasonal tendency in the September newsletter. It should be in your mailbox next week by the 1st of the month. You’ll see a crude oil seasonal chart there. I want you to take a look closer at what tends to happen to crude prices at the beginning of September. James hit on it pretty good there – this is why we look to build positions in markets like this that have strong fundamentals that don’t tend to change quickly. They tend to take a while to change why you build things called a core position, James, and I think a lot of our listeners might be interested to hear what that is. You talk about something like a core position and building a portfolio. That’s not something that people read about in books. That’s something that often comes from experience. Do you want to share that with some of our listeners? James: Michael, it is interesting because, for those of us that watch CNBC, Bloomberg, and Fox, you would think that there’s a bull market and a bear market in these different commodities and different stocks every 30 days, but there really isn’t. When the market moves 2 or 3% it gets so much fanfare if it’s going up and it gets so much depressed looks on TV if it’s going down. The options that we sell when we are building core positions, as we like to refer to them, they are 50 and 75% out-of-the-money when we sell calls and puts on these positions. So, when gold or silver or crude oil, in this instance, moves 2 or 3%, it gets so much fanfare. With the OPEC talks recently, they are going to bring one oil analyst or oil company CEO onto the set daily talking about oil getting to 55-60 this year and 65-70 next year based on nothing. You mentioned a really important point, and this is something we discuss often when we’re building core positions, crude oil supplies in the United States is 14% greater than last year. Last year’s low in oil was $27 a barrel. Fundamentals is the key to price projections in commodities. We like to project out 6-12 months and that is what we talk about when building a core position. The fundamentals in a market that is over-supplied won’t change in 30 days or 60 days or 90 days, so what we will do is when we get out of the high-demand season, which ends in May and June, we will sell calls for several months out. As we get into December and January, which is normally the low price-point for crude oil, we will then sell puts 6-12 months out based on the idea that the market will then bottom. Core positioning is basically the meat and potatoes of someone’s portfolio. I know we are not into the holidays yet, but commodities like gold and oil and coffee, these are core-building positions because the fundamentals don’t change and they have huge volatilities from the past. What we then like to blend in with them, it’s almost like Thanksgiving meal. You have the meat and potatoes, which will be things like gold and oil, and the cranberries, the gravy, and the dressing will be soybeans and cocoa and sugar. It’s interesting. Being diversified like that gives a portfolio a lot of staying power and the ability to withstand small movements in the market. So many people, Michael, as you know, look at commodities as a highly speculative, incredible form of gambling, and that may be true for investors who are trying to time the market. As we discussed earlier, we are building core positions at levels that the market cannot reach or very likely will not reach. Like options do, they expire worthless some 80% of the time, building core positions that last the entire year. Basically, that’s hitting singles for 12 months. Michael: Yeah, you talk about that quite a bit in the upcoming newsletter – that concept is a recipe for building a portfolio, structuring a portfolio, and if you’re listening and interested in that type of concept, you’ll get a pretty good dose of it in the September newsletter. While we’re on that subject, I wanted to mention that some of these markets we talked about today, such as the seasonal tendencies and soybeans, seasonal tendencies and coffee. If you missed those articles they are on our blog. You can go back and see those seasonal charts and see how some of these prices tend to perform different times of the year. If you’ve never traded commodities before, it’s a real eye opener to try and get a feel for maybe what some consider an invisible hand behind prices and getting kind of a peek at some of the things really affecting price in different commodities. While we’re on the subject of the upcoming newsletter, James, I want to talk about this for our listeners and readers. We have coming up, as I said – you’ll probably get this at the end of next week, we have an article called 3 Reasons to Love Commodities Now and we kind of go into why commodities are such an attractive investment at this point in time. We talk about some of the warning signs we’re seeing for stock prices right now. As you mentioned at the top of the show, a lot of big names getting pretty bearish on stocks, a lot of big investors thinking the prices are getting a little scary now with what’s going on in the world, so they’re looking for alternatives. We really dig into that a little more this month. Something we also have is a crude oil piece that you talked about here briefly, but we outline a little more detail in the newsletter. We also have a guest column this month by former commodity hedge consultant Don Singletary. James, I know we talked about Don and looking for ways to maybe work with him a little more. Don spent 25 years advising a lot of these big commercial hedgers on hedging hundreds, millions, and even billions of dollars worth of product, whether they are harvesting corn or hedging their oil or gasoline. He kind of came to the same conclusion we did as far as option selling – he came at it from a different angle, though. He came at it as he played, pretty much, to these individual investors. It is tough to compete with these pros, but here’s how they did it. He kind of came to the same conclusion we did and he talks a lot about the same philosophies that we do about selling options. Great piece in our newsletter this month - You don’t want to miss it if you have an interest in that. Let’s talk a little bit about our lesson this month, James. I know we talk a lot about fundamentals in this month’s lesson. We want to talk a little bit about technicals because that’s not something we discuss a lot when selling options, but we still use them and I think some of our listeners might be interested to hear how you use them when you are looking for a trade. James: You know, Michael, when we have very discernable bearish fundamentals, we are watching for a market to rally and reach over-bought conditions. Watching technical indicators, like Stochastic Bollinger Bands and RSI, basically that’s going to help us with timing. It is certainly not necessary, but when we see the oil market rally on short covering, for example, if you were to look at open interest in crude oil you can see that this entire rally was based on investors that were short and were forced to cover. That is an extremely important tool to have in your toolbox is watching open interest in a market that’s trending against its fundamentals. You can almost see by watching open interest when the market is rallying against its fundamentals or its falling against its bullish fundamentals, you can almost see when the last bear got out of his position. It’s not splitting atoms, it’s nothing that the average investors can’t do for himself, but it’s something to be cognoscente about. When open interest balloons to all-time highs in crude oil on the short side, you know what’s coming. Everyone who wanted to be short is already sold the market and the least amount of bullish factors that hits the market will cause the beginning of a rally. By watching open interest, you can see when the last guy got out of his short position. That just happened in crude oil here over the last few weeks. Watching fundamentals gives you the idea of which position you want to take and sometimes, being very cognoscente of the technicals, it can tell you when to get in. We’re not trying to be market timers, but when technicals and the fundamentals line up that is when we put our tuxedo on and jump in. Michael: You know, that’s a great point you bring up because a lot of people watch technicals and maybe they can time a little blip in the market or time a little turn around in the market for a short term, but the big point you make, and it’s one we make often in a lot of our writing, is that knowing the fundamentals is what tells you if that blip in the market is the start of a change in trend or is it a buying or selling opportunity on a correction. That’s what the importance of the fundamentals is knowing that big fundamental picture. I know that’s something you stress a lot. James: Well, Michael, these 8-10 markets that we often discuss have been my friends for the last couple decades. They have personalities and they have seasonal tendencies. You can tell when they get a lot of hype on TV and you can tell the difference between hype and fact. The more you trade these the more you get used to them. They are kind of like friends you keep in your back pocket, and when they are over-bought or over-sold against the fundamentals that is when you add to your core position and making building portfolios so much fun. Michael: As a trader, James, portfolio manager, I know a lot of people have their technical indicators. Maybe talk a little bit about the top 1 or 2 we like to watch in our office. You and I know what they are, but maybe our listeners would be anxious to hear just out of curiosity what we like to watch. James: As far as technical indicators, Bollinger Bands is one of my favorites. Putting a Bollinger Band calculation on a weekly chart, and it really helps you understand what the exact outer limits on what a market can reach simply on short covering or news item or headlines that often push the market because that generates computer buying and computer selling. I would suggest to anyone listening to us today who wants to get more averse with technicals, I would look at weekly charts instead of daily charts. I would look at things like Bollinger Bands instead of simply Relative Strength Index. We look at weekly charts because during the time that we are in a trade or in a position, it’s going to get several buys and sells and the fundamentals never budged. The name of the game is patience. The name of the game is fundamentals. We get paid to wait, and following weekly charts allows you to do just that and the noise in the market doesn’t affect you because you’re looking at the big picture. Michael: Well, what a great synopsis there. This has been quite an information-packed radio show, don’t you think, James? We’ve covered a lot of ground here! James: Michael, you started out by saying September is one our favorite months, and you and I talk about that because we’ve experienced so many Septembers selling options on commodities and we expect this September to be quite a lot the same. Michael: I agree. Well, everyone, I believe that is going to wrap up our show this month. For those listening, our September account slots are closed for this month, they are all filled, there’s no availability this month. We still do have a few slots remaining for October. If you’re interested in pre-qualifying interview for one of those slots, you can contact Rosemary at the office at 800-346-1949. For the rest of you, have a great month. We’ll be updating you on portfolio progress in the bi-weekly videos if you’re a client. Have a great month of premium collection. James, thanks for all of your great information this month. James: My pleasure, Michael. I enjoy doing these and look forward to doing them again many, many times. Michael: Great! Everyone have a great month, and we will talk to you at the end of September. Thank you.

Welcome to the second episode of Totally Made Up Tales, an experiment in improvised storytelling in the digital age. We hope you enjoy our tales of wonder and mystery. Let us know what you think! Music: Creepy – Bensound.com.   James: Here are some Totally Made-Up Tales, brought to you by the magic of the internet.   This is the story of Dr. Rich. Andrew: Once upon a time, there was a doctor who specialized in curing diseases only of the very rich. Inevitably of course, they were in some way or other. James: He would travel round in his large, black car made specially for him by Mercedes-Benz himself, and visit them one by one, his rich clientele, ringing on the doorbell and asking, "Are you ill?" Andrew: In fact, one of the things that he had identified, and the reason why he himself was so successful, was that he realized that money did not in fact make you happy, but filled you with a deep sense of malaise. James: In fact, to put it simply, money made you ill. Andrew: His expertise was to remove money from the rich in order that they could feel better, and indeed many of his patients who were bankrupted by his bills went on to lead happy, fulfilled, virtuous lives. James: Even before they'd got to that state, merely at the point that he presented them with the bill for having cured their sniffle or subdued their pox, or whatever it is that he had been called upon to do today, they felt better, relieved, as if the air was flowing more freely through their lungs, as if the blood was moving more smoothly through their veins. Andrew: The problem was that over the course of his long and successful career, he himself became extremely wealthy, deeply unhappy, and died. James: There was no one who could minister to him in his last days. He was as ill as you could possibly get from money, and indeed was quite capable of diagnosing himself as dying of wealth, and yet, without having trained an apprentice or one to come after him, there was no one who could cure him. He died sad, despondent, very, very wealthy, but utterly ill.   Josephine Andrew: wanted James: children, Andrew: but James: her Andrew: husband James: was Andrew: emperor James: of Andrew: France. James: "Not Andrew: tonight," James: he Andrew: said James: repeatedly. Andrew: The James: end.   Keyhole Andrew: surgery James: is Andrew: performed James: using Andrew: keyholes, James: which Andrew: are James: available Andrew: from James: B&Q Andrew: and James: similar Andrew: retailers.   Judith James: went Andrew: to James: Cardiff Andrew: for James: her Andrew: sister's James: wedding. Andrew: It James: was Andrew: a James: beautiful Andrew: weekend James: full Andrew: of James: dancing, Andrew: sunshine, James: and Andrew: happy James: bridesmaids. Andrew: The James: bride Andrew: herself James: was Andrew: sick, James: and Andrew: vomited James: all Andrew: over James: the Andrew: vicar. James: The Andrew: end.   Victor James: went Andrew: to James: war Andrew: and James: fought Andrew: bravely James: time Andrew: and James: time Andrew: again. James: When Andrew: he James: returned, Andrew: he James: discovered Andrew: his James: country Andrew: had James: changed Andrew: and James: he Andrew: no James: longer Andrew: belonged. James: The Andrew: end. James: Now, Abigail the Mistress Milliner. Andrew: Abigail was a milliner, and made the finest hats in the kingdom. James: She was renowned from city to city. The aristocracy would always use Abigail's hats, or risk the disapproval of their peers. Andrew: She was totally dedicated to her craft. It was her life's work, and every fiber of her being, every drop of her blood was dedicated to the making of hats. James: Since she had passed from apprentice to journeyman to master hat maker, she had had one perfect master work in mind; the ultimate hat. Andrew: It was a hat that she knew once she had made it, there could be no better hat made by human hand until the end of time. James: She had resolved at the tender age of twenty-two to dedicate her life to creating the best hats she always could while always striving towards the perfect hat. Andrew: It was rumored that she kept in her safe at the back, behind the box in which she kept her money and other valuables, a small box in which she was working on a secret project. James: Many rumors were started about the project. Many rumors were started about the safe and about the other things that she had done to protect her most vital and important secrets. Andrew: Other milliners throughout the kingdom were jealous, suspicious, and met together one evening in the back room of a dusty tavern to discuss their suspicion. James: One of them, Brian the Hatter, was convinced that she had already created the ultimate hat, but was withholding it for fear that others would copy her work. Andrew: "There is only one way for us to find out, brothers and sisters," he said, "and that is, we must take possession of the box within the safe." James: So began the most delicate planning. Milliners around the country contriving a way to steal a box from within a sealed safe that even the most dedicated cat burglar would have had difficulty getting near. Andrew: "Let us hold a festival," they proposed. "Yes, let us hold some kind of celebration, some distraction, some occasion on which everybody's back will be turned." James: They worked their connections long and hard, and finally were able to persuade some lady of the court, and through her some gentleman of the court, and through him some knight of the court, and through him, some lady of the bedchamber, and ultimately to the king and queen themselves that there should be a grand banquet where all the greatest people of the land would come, and of course the desire for the best hats would be unrivaled throughout history. Andrew: So it was that in the following days and weeks as the banquet was made ready that there were queues around the block to every suit maker, every boot maker, and every hat maker in the kingdom as more and more finery was demanded so that everybody could appear at their very best at this once-in-a-lifetime feast to be given by the royal family. James: Of course, nowhere were the queues longer nor more densely packed than outside the shop of Abigail the Milliner. For many months, she serviced the next person who came through the door, measuring them, measuring their head, considering the weight of their brow and the movement of their lips and of their nose, and taking into account the other clothing that was being made for them. Day and night, she would work in the back, making hats from the measurements she had taken. Andrew: Each customer demanded a hat finer than the one that the customer before had received, and so it was that after a lifetime of training, even she was nearing the end of her store of creative energy as each masterpiece, slightly better than the one before, went out the door in its beautifully wrapped box. James: Meanwhile, Brian the Hatter and his cohorts were plotting how to get inside the safe. Andrew: "Would it be better for us to cut a hole in the wall and slide it out into a side street, or cut a hole in the floor and let it down into the vaults of the cellars or the sewers below?" James: "Perhaps we should cut through the top of the building and employ a crane or some small children with rope to haul it up high into the gables and from there escape across the rooftops of the city." Andrew: "May I make a suggestion?" Came a voice from the back of the room.   "Of course, go ahead brother. Tell us your suggestion."   "What we should use is the psychology of the artist." James: Well, they were all very impressed with this idea, even though most of them didn't really understand, and they voluntarily gave up control to the owner of the voice, Mr. Jim Blacklock. Andrew: "The true artist is only satisfied when his or her craft is applied as close to the standard of perfection as it is possible for human endeavor to reach. Each person has demanded a hat more superior than the one before. How many more hats can this woman make before she is forced to reveal the greatest hat of all time?" James: The hatters, from their conniving congregation, went out back into the land and plied their connections and persuaded the lords and ladies who had got early hats from Abigail the Milliner to go back for better ones now that there were better ones available to their peers. The line once more became long and winding throughout the city, and Abigail, working as hard as she ever had, wracked her brains for more ideas to top the last ones that she had put out. Andrew: Finally, when the line had dwindled to one person, and that person had been handed their finely-wrapped box and left and the door swung closed and the little bell rang and she was left alone, she knew that she was spent. She had no more hats available for her to make. It would be impossible for her to service another customer, and indeed there were no more customers. Everybody owned a hat of hers who had a head to wear a hat on. James: Just then, there was a knock at the door. Andrew: "Who could this be?" She thought to herself. "A customer who had left behind a pair of gloves, or wanted a duplicate invoice for tax purposes." James: She got out of her chair and felt her way across the dark shop front and opened the door. In front of her was the king. Andrew: "Your majesty." She said, and curtsied low, for she was a very correct lady. James: "Abigail," began the king. Andrew: "If your majesty has come in search of a hat, I'm afraid I must disappoint you, for I have no more hats left to make." James: "Come, come," said the king, for he was a kindly man, but also used to getting his own way. "Come, come, you would not disappoint your monarch." Andrew: "It would pain me to do so, sir, but I really do not see how I could supply a hat finer yet than any that I had supplied without ... " James: There Abigail stopped. Andrew: "Without ... ?" Said the king. James: "I should not have spoken." Said Abigail. Andrew: "Yet you did speak," said the king, "and now you must surely explain yourself." James: "The only way, your majesty, that I could hope to top the previous hats that I have made for all in the land and to satisfactorily clothe your royal head, would be to open the book that I have been keeping these last forty years as I have worked on perhaps an impossible dream of the perfect hat." Andrew: At this, the king's eyes lit up, for he was a man who liked the finest things, and the idea of owning the most perfect hat that had ever been made or could ever be made appealed very deeply to his regal heart. James: "I must have it." He said, and left. Andrew: Abigail wept, for she knew that the hour had come where either she must make the most perfect hat of all time, or she must leave this place that she called home, abandon her shop, her career, her profession, and begin a new life somewhere else, for no one had ever successfully denied the king his wish and lived. James: Uncertain of what her choice would be, she stole back to the back room and opened the safe, and within it moved past the money boxes and the certificates of birth and death and the other precious objects that were necessary for a satisfactory and legal life in this complicated time, and at the back pulled out a small tin which contained folded paper of her notes over the years. Andrew: She reviewed the scraps, shuffled them, paced, lit a fire, made tea, stoked the fire, paced, shuffled the papers, and so continued through the night, all the way through to the crow of the cockerel and the rising of the sun. James: She was still pacing when her young apprentice entered the shop in the morning, expecting to be up and at the business before she was. He was surprised, and did not attempt to hide it. Andrew: "Mistress Abigail, whatever is the matter? You seem troubled, agitated, as if you haven't slept." James: "I haven't!" She cried. "I can't sleep. I cannot sleep until I ... Until I at least try." Andrew: So it was that they embarked together on making sense of the diagrams that she had drawn, and little by little began to compose the finest hat that had ever been made. James: There was every conceivable material, Andrew: and yet somehow, even though it was composed of parts as diverse of silk and leather, it formed a beautifully coordinated whole in which every part was neither too much nor too little, but in perfect proportion and place. James: Spent, they sat on the floor and looked up at the perfect hat. The ultimate hat. The end, indeed, to millinery itself. Andrew: As to the rest of the story, well of course the king collected it and wore it and achieved universal admiration. The great feast was, exactly as it promised to be, huge, memorable, spectacular, once-in-a-lifetime experience, and Abigail was, as you would expect, done. Done with her career. There was no way that she could continue now. James: As for the other hat makers, well, walk down a high street in your town any day you like and try to find a milliner's shop. They're all gone now. All gone.   I've been James, and I'm here with Andrew. These stories were recorded without advanced planning and lightly edited for the discerning listener. Join us next time for more Totally Made-Up Tales. Andrew [outtake]: "Would it be better," they said, "if we cut a hole in the floor and let it down into the core of the earth?" No, no, that's a ludicrous idea. Sorry.

Michael: Hello, everyone. Welcome to the monthly Option Seller Radio Show. This is Michael Gross here with James Cordier, coming to you from Tampa, Florida- our main office. We’re going to talk a little bit about the markets, a little bit about trading this month. Quite a bit going on, including what could be the final game of the series between the Tampa Bay Lightning and the Pittsburgh Penguins. My colleague, James Cordier, happens to be a Tampa Bay Lightning fan, and, being from Pittsburgh originally, I’m a Pittsburgh Penguins fan. James, what do you think on the series possible finale tonight? James: Well, it’s interesting, Michael, we’re using our backup goalie and he had little butterflies the first game or two. He wasn’t getting any support from the other players, and finally he is, and certainly a great series right now. We’re ahead 3-2. We being the Tampa Bay Lightning. For your sake, I hope it goes a little bit further. For our sake, hopefully we get to win tonight and we get to watch for a day or two before the Lightning hopefully take on the San Jose Sharks. We have a couple clients in the San Jose area and it would be fun to get a little friendly bet going there, too. Michael: By the time our listeners here this, they’ll know the results. They can visualize our reactions, I suppose. What a lot going on in the markets this month. Volatilities are subject of the month as an options seller. Volatility is obviously a very good thing, and probably the best place to start this month. You’ve been talking a lot about volatility in some of your videos, and I know we’re talking about it in the newsletter this month. Maybe just kick off, we’ve seen a lot of pick-up in the last 6 months across many sectors in commodities in volatility. What are some of the macro-reasons or why are we seeing this rebound? James: The rebound in volatility is coming from the uncertainty, especially from the FED. Earlier this year, as we described, they were going to have four rate hikes in 2016. That got backed off to maybe one. Now, the Federal Reserve, one governor is being walked out after the other in front of the microphone, talking about possibly three or four rate hikes again. This back and forth is really gyrating currencies around the world, and certainly the currency play is directly affecting gold prices, silver prices, and oil prices. Volatility right now is through the roof, and this is certainly low-hanging fruit for option sellers. I know not everything applies to option selling however, because there is a world outside of this, but the volatility right now this is certainly a by-product of what’s going on, and certainly that does help what we do immensely. Michael: Yeah, and a good point to make as an option seller, a lot of people asking now “Are they going to raise rates? Are they not going to raise rates?” People positioning on one way or the other are really gambling on a decision, and, as an option seller, you don’t have to do that. In fact, it really ushers in some of the strategies we talk about in our book as far as credit spreading. I know it’s one of your favorite ways to sell options. Maybe talk a little bit about that, how volatility does favor credit spreads, what advantages come to an investor for using a credit spread in this type of environment. James: Michael, this environment, as we are referring to, certainly has the large volatility, which is blowing out premiums on option prices. In times of low volatility, in order to get decent premium, you do have to sell naked calls or puts based on if you’re bullish or bearish. Being naked is certainly not our first choice. Certainly we sell naked options because we don’t have the premiums available that further out strikes. Right now, it’s available by being able to sell protection against your short position, slow and steady option decay is what we’re after. Now, this environment offers that luxury to do that. Michael: Yeah, you not only get the protection aspect of it, but a thing a lot of investors don’t always realize is, often times because you have that protective aspect, your margin requirement drops. There are certain occasions where credit spreading can even offer a higher ROI than selling naked. Would you agree with that? James: It does. Not only does it help you stay in your position through ups and downs in the market, but it offers smaller margin requirements and it allows you the ability to participate in practically all the opportunities you see in the different markets. Often, if volatility is too high, selling naked just doesn’t allow you to protect assets like you’d like to. Smooth and steady is what the goal is, and having the ability to buy protection against your short position is the utmost performance year’s end. What we’re always looking for is slow and steady currently, and the only excitement we’re looking for is on December 31st reading statements. Michael: Very good then. Let’s talk a little bit about volatility in particular markets. We’ve seen a little burst of volatility in the soybean market here over the last several weeks. We had talked last month about selling calls in soybeans, and we had a big move up in that market. It’s a good market to address because I think you can’t just assume that every option you sell is going to slowly decay to zero. Sometimes, the market moves against you. Maybe talk to our listeners and clients right now about how we reacted to that and how we recommend reacting to a market like that. James: That is true. We’re selling options in eight different markets, and, from time to time, the market exceeds our expectations. A lot of what’s going on in commodities right now is headline driven. There are so many hedge funds and money managers right now chasing performance and chasing return, and they’re looking at eight commodities like we are. They see headlines for the gold market or for the soybean market or they’re having problems in Argentina getting soybeans to the market. That kicks in buying or selling form computerized generated funds, and that’s what happened to soybeans the last two or three weeks. There were headlines from Argentina and China was buying a little bit more soybeans than a lot of people anticipated, and soybeans rally an extra dollar probably above their fair value. As we talked about recently, later this fall, I think the United States is going to be producing a great deal of soybeans, probably in excess of what we need. The headline news really moves the markets and that is what happened over the last week or two. We did cover some of our short positions. We rolled up some of them to higher strikes, and we’re still holding a short position there, but from time to time the market exceeds your expectations and you know you have to take evasive action from time to time, and that’s what we did last week. Michael: Sure. You’re talking about headlines; the big headline driving the soybeans was the May USDA report. The number that really jumped that really caused the spike is, not this year’s ‘15-‘16 ending stock, but the USDA is looking at next year, ‘16-’17 ending stocks. The trade pretty much had them coming in around 400 million bushel, and USDA says it’s only going to be 305, which is a pretty significant drop. It’s interesting, because the harvested acres are, more or less, the same as last year, but they knocked down the yield estimate. Not really sure why they felt they needed to do that yet, but they also bumped up demand substantially for next year. That, at least for now, they’re looking for substantially low ending stocks. I know you and I had talked earlier that we thought they would have to increase acreage because we’ve had a little bit of a wet spring, and that can cause them to shift some of the corn acreage over to soybeans. So, the jury is still out on that. The market has backed off since we got the big spike, but when we talked about defensive strategy, taking evasive action, so we’re short the calls and the market rallies, maybe explain the strategy we executed there to deal with that. James: Well, we are selling calls earlier this year, based on the fact that we are going to have a very large crop come this fall. Quite often, soybeans will have a weather rally, a spring-summer rally. This year’s rally was based on a very large cut from the USDA, as far as ending stocks. We did cover some of our shorter positions. We rolled them up to higher strikes. That’s a trade that is going to not perform the way you hoped it would, but they don’t always do that and that was certainly one of them. Michael: Yeah, and you had emphasized this previously, but the reason we roll strikes up like that is, often times after a big rally like that, that’s when the volatility is the highest, that’s when the premiums are highest. The fundamentals did shift a little bit, but they didn’t shift that much to where those higher strikes we felt would be threatened. In fact, as you mentioned, they were so far out that it was a difficult opportunity to pass up. So, often times, even if you’re in a market, you get a big move like that, the volatility that’s created by that move can often make it an optimum time to be selling options in that very same market. That’s one benefit of the roll. James, let’s move over and talk a little bit about oil prices. You have been in high demand this month from various media sources. You had an appearance on CNBC earlier in the month, and you’ve made a pretty bold prediction there on oil prices. Let’s talk a little bit about where prices are now and where you see them going later in the summer. James: Michael, similar to headlines that have been driving a lot of the different markets, crude oil certainly is included as being one of those. There were some difficulties in Canada where some of the fires there were actually keeping production down. They’re looking at 2 million barrels a day in certain regions of Canada, which was knocked down to just 1 million barrels per day, simply because workers couldn’t get to the oil fields. That is going to be a situation that is going to be calming down in the coming days and weeks. That was a headline, there were some headlines out of Nigeria, Saudi Arabia has been making noise about getting away from production of oil as their main economic resource. All of these headlines will not change the fundamentals in oil going on later this year. As driving season, we’re into now, starts wrapping up a little bit later this year, investors and traders alike start looking at global supplies. Right now, there are tankers that circle each other just off the coast of China, just waiting for the phone call to come into port and unload their oil. There is so much oil right now floating on the Seven Seas, it’s record breaking. As this little bit of euphoria that’s right now developed in oil because it has finally rallied. When that subsides, and we think it will this fall, I think we’re going to see oil prices back down into the 30’s. Right now we’re trading in the upper 40’s, and we think this is a great opportunity based on fundamental availability of oil later this year. Supplies are going to be in a glut situation again, and selling calls right now in oil is one of our favorite opportunities, we feel. Michael: It’s a pretty solid fundamentally based case, and I know when places like CNBC and Fox come calling, they typically want you to make a call. A lot of times, they don’t understand that we do that for them but we don’t necessarily have to do that in trading and the way you trade- you’re selling options. But, when you’re talking to reporters like that or you’re on camera, do you ever get a feel that they’re pulling one way or the other for what they want you to say? James: That’s interesting, Michael. CNBC, I think, is probably notorious for bringing people on when the markets are rallying and they want to talk bullish. When oil is falling, they want to bring analysts on that are talking bearish. I think CNBC is probably the biggest culprit for simply frenzied, if you will, interpretation of what the market is doing. Rarely do they want to hear an analyst or trader talk about it’s a good time to buy oil when it’s falling. I remember back in January and February, we were on CNBC and saying this route in oil is probably almost over. Our girl in Los Angeles who helps us get on to the different television stations when they call us, they simply didn’t want to hear about buying oil back in January. Finally, they thought maybe we should take another perspective, and CNBC rarely wants to put someone on that has a contrarian view. I think they’re learning a little bit. Back in January, we were talking about going long oil and the whole world knew it was going to zero. Lo and behold, the market did rally. Now, recently, we were asked to be on CNBC, reluctantly, talking about bearish oil factors later on this year. So, you know, we talked about how we feel about the market. We’re not “Ra-Ra” cheerleaders when the market’s going up or down. We look at the base fundamentals and we make predictions on 3-6 months out. I know CNBC loves talking about what the market’s doing today and what it’s likely going to do tomorrow. As we know, no one knows these facts. If, in fact, a person that comes on CNBC knows what the market’s going to do tomorrow they wouldn’t be on CNBC, they would be on an island right now eating cracked crab, like they did at the end of Trading Places. Can’t we have both? Michael: I know when they’re shooting you remotely, they’re shooting you from the studio here in town, but you’ve been in the studio right there with them before, as well. Do they ever talk when the camera goes off? Do they ever say, “I think it’s going this way” or “I wish you would’ve said that”? James: I think one of the most interesting memories I have of being in New York and being on set was, I think, when we were interviewed on Bloomberg. They probably have several hundred people walking through the lobby, going in and out of the offices, going in and out of the green rooms, making sure that you have everything you want. When you see the anchors walking through the lobby at Bloomberg, they’re like gods there. When you’re sitting in the green room you’re also like a god, because everyone’s job at Bloomberg resides on providing great content. So, when you’re going to be on for a half hour-an hour, they’re looking at you like “Dude, don’t screw up. I hope you do something really interesting and speak intelligently, because my job relies on great content”. I think Bloomberg walking through their offices there was very memorable. We’re going to be invited to do that again this fall. We’re going to be on set there for probably a very long segment. I think Bloomberg, which is a fantastic operation, I think they cover the fundamentals more than anybody else. Some of the Fox, not as much, but CNBC, they’re “Ra-Ra” stations. Bloomberg actually gets down to the nitty-gritty. They actually talk about the fundamentals, the markets that are actually moving for fundamental reasons. It’s so much fun being on Bloomberg and that operation, I’ve found, is just a Class-1. It’s just fantastic being on there and to walk through the lobbies there, you have your credentials and people are looking at you like “Yeah, you’re the man”. It’s pretty cool. Michael: That’s an interesting point. You know, in this month’s newsletter we interview Mark Sebastian. One of the many things he does is he’s a writer for the Street and Mad Money, and he works a lot with Jim Cramer. One of the things he said in the interview is that Cramer is a really smart guy, but he can’t always say what he thinks on the show because the network has certain rules or guidelines they have to abide by, or I don’t know the reasons- he didn’t really go into that. But, he says if you really want to know what he thinks you have to read what his blog on Real Money… I’m not going to spoil the interview. He was kind of speaking to that same thing, where they have a framework of where they want you to go and where they don’t want you to go, and it sounds like Bloomberg gives you a little more freedom to explore the fundamentals. If you do want to see that interview amongst our other items we’re covering in this month’s newsletter, you will be getting it next week. I think you’ll find that a very interesting interview. Mark brought some things to my attention that I was not aware of that takes place up there. James, we started off the show today talking about credit spreads. I know, we’re going to spend a little time here talking about one of your absolute favorite credit spreads that you describe as the “Maserati of option spreads” in our book, The Complete Guide to Option Selling. Maybe talk a little bit about what this spread is and how it works. James: Of all the option trades that we do, a credit spread generally buying one against selling three, buying one against selling four, gives us an incredible amount of flexibility to be in the position for slow and steady decay. If in fact we see a market that we determine to be fair valued, we’re actually going to sell a credit spread on both sides of the market. Anyone who has read the Third Edition: The Complete Guide to Option Selling, I really suggest you take a look at chapter 10. It talks all about the “Maserati of all option sales”. Basically, what is does, is it allows the investor, whether they’re clients of ours and we’re managing the portfolio for them, or if you’re doing it yourself, it gives you an incredible amount of flexibility to stay in the position, allow your fundamental analysis of the silver market or the coffee market to actually play out the way you thought it would. So often, investors get involved in commodities or in Apple Stock or what have you, and the gyrations of the market simply take you out of your position. The “Maserati of all option sales” is a credit spread that’s done sometimes on both sides of the market, and it gives you an incredible amount of staying power to allow you to be in the market when your options expire or at the time that you want to pull profits and close out the position. Being in a credit spread, sometimes on both sides of the market, allows you to adjust the position, at the same time, keeping 80-90% of the premium that you sold your options for. Quite often, the protection that you buy you only need for 30-60 days. Sometimes, you want to keep it on until the end of the position, but the idea is for all of your options to expire worthless. Anyone reading chapter 10 in our book the Third Edition: The Complete Guide to Option Selling, can learn and understand the greatest trade in option selling that there is. If you do it yourself or if you want to manage an account that we do for you, I think you’re going to find that it allows you to stay in the trade and allows you to see the end of option expiration on the positions that you have. It seems to be boring, it seems to be slow, it really locks down your position, but, in essence, that’s what you want. More often than not, at the end of the year, having this credit spread on, you’re going to be very happy with the results if, in fact, that’s the way you traded throughout the year. Michael: James, for those that haven’t read the book yet or read that chapter, you’re referring to the ratio credit spread where you’re selling maybe 2, 3, 4 options out-of-the-money, and then for every 2, 3, or 4 that you sell, you’re buying a closer-to-the-money option for protection. The reason you do that is it protects your distant calls, but it’s one of the only option spread that I know of, if the market moves the wrong way you can actually end up taking a higher profit on that. Is that correct in some circumstances? James: There are some circumstances where your long protection actually goes in-the-money, and the further out options that you sold stay out-of-the-money. It is truly designed to hit singles and doubles all year long. If the market does make a slightly more dramatic move than you first anticipated, that long option can actually turn out to be extremely profitable. Of course, your options on the other side of this strangle, if in fact that is the position that you’re implying, that expires worthless and your one long option can actually go in-the-money. That is more than a single or a double. That’s not how we have positioned, that’s not the rationale for doing it, but if you are selling 10. One of those options can go in-the-money and just dramatically increase the profitability of this trade. The long options are there for insurance, they’re there for stayability in the position. The ability for this option trade to produce profits in extents of what you first anticipated is there, but primarily it keeps you in the trade and allows you to be there when the options expire, preferably worthless. Michael: Again, for those of you that would like to read about it, that’s in chapter 10 of The Complete Guide to Option Selling. You’ll certainly want to take a look at that if you’re interested in it. That’s all we have for this month. We do recommend you look for the newsletter next week in your mailbox and/or e-mail box. If you’d like more information on accounts this month, learn all about what’s available, the different programs we have, you can get a full information pack at www.optionsellers.com/discovery. We also do still have some new investor interview consultations available in June. James, I don’t believe you have any account openings left in June, but do you know or do you have to check with Rosemary? James: Rosemary said we are full for June. Michael: Okay. We do have consultations available in June for July account openings, so if you would like to book one of those, feel free to call Rosemary at 800-346-1949. Have a great month of premium collection, and we’ll look forward to the outcome of the hockey games over the next 2-3 days. We’ll talk to you all next month. James: As we say here in Tampa, “Go Bolts!” Michael: Have a great month, everyone.

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