A review of Radioactive Trading’s “Blueprint”

“I have discovered how to truly put the odds on the side of the individual investor. It uses a principle that has been in front of our eyes all along, but is rarely used or understood.” – Kurt Frankenberg, The Blueprint

Before I get started, if you haven’t read the two other reviews on Radio Active Trading yet, I highly recommend those prior to this one. You can find them here:

A Review of Radio Active Trading – Part 1: Generating income without blowing up your account

“How to Limit Risk and Leave Your Upside Open” – A review of Radio Active Trading’s “The Sketch”

 

Our life is crazy right now.

Not like every day kids running around crazy. More like the lid just blew off the blender while a horde of squirrels just burst into your house and the dogs are chasing them crazy.

We make Walker and Texas Ranger from Talladega Nights look tame which is why it’s been a bit since I last wrote.

My family and I just finished moving and life is finally moving back to normal. However, I’ve finally found some time to sit down and fill you in on what you get with Radio Active Trading’s flagship product, the Blueprint, and how my first trade using this system went.

Recap

Let’s do a quick time warp back to the last couple of posts on the Radio Active Trading to refresh your brain on the main concept behind the system: utilize a married put to reduce and define your risk.

This is the foundation upon which the entire Radio Active Trading system is built. When you pair this with one or more of the 11 income methods Kurt provides in the Blueprint you can reduce the total risk of your position.

The ultimate goal?

Become “bulletproof” by reducing your risk to zero and then creating a profit.

What $339 (plus shipping) gets you

Unlike most products today, the Blueprint is a hardcopy product. It actually reminds me of some of the real estate investing courses I’ve bought in the past and it’s a behemoth.

Over 282 pages of information are packed into a black 3” binder. Take a look at the picture below.

Radioactive Trading Binder - The Blueprint

Radioactive Trading Binder – The Blueprint

The binder is broken down into 20 different sections. These sections include an introduction to the Blueprint system, the setup of the married put, details on the 11 income methods and supporting information.

There’s tons of information and it’s unlikely you’ll read and comprehend it in a full day.

Luckily (or unluckily depending on how you look at it), I got sick the night before the Blueprint landed on my doorstep so I had the next two days of sitting at home to take it all in.

So, making the best of my situation I dug into the Blueprint.

Interpreting the Blueprint

The introduction and basics are very similar to the Sketch. Many of the basic principles of the Radio Active Trading system and the married put setup are rehashed in the first few sections of the Blueprint.

Though the Sketch covers the wave tops of the concepts fundamental to the Radio Active Trading system, the Blueprint provides the in-depth study of the topic you really need to understand the system.

A full 87 pages are devoted to getting the initial setup of the married put correct. Various examples explain how to examine your risk involved with your setup. Additionally, concepts such as leverage and money management are explained.

Beyond the introduction is where you get into the heart of the Radio Active Trading system, the Income Methods.

Eleven methods in all are described in detail with multiple examples discerning the implementation of the income methods. Each method is explained and analyzed, providing the reader a good understanding of the setup of each system and how it relates to the married put.

Beyond the income methods are multiple sections covering a variety of topics to which augment the core of the system.

Though all of the Blueprint is intended to provide value to the buyer, the sections on income methods should be the emphasis for all readers and that’s where we’ll turn our attention next.

Becoming Bulletproof

Each description of an income method begins by outlining the potential market conditions you’d look for to implement the particular income method using the CEGA model; Conditions, Expectations, Goals and Actions.

This model isn’t applied to a specific stock or anything, but it does give you the “big picture” items you should look for. For example, in Conditions you may see something like “the stock is moving up”. Generic but enough to give you a picture of what you’re looking for, how you think it should act in the future, what you’re shooting for and what you do to get there.

After a brief explanation of the market conditions for a particular income method, Kurt goes into a detail explanation of how you use the method to reduce your risk and create value with your married put position.

Though I’m not a what you’d call a math person, I really appreciate how Kurt lays out how the math works in your favor. This allows you to see how your risk is reduced and drawing you closer to the holy grail of becoming bulletproof.

Of course all of this is great on paper, but how does it work when real money is on the line? Let’s take a look at my first trade.

An examination of my first RAT trade

As with all the trading systems I’ve purchased or tested, at some point I have to stop reading and put the system into action.

USO caught my eye late last year and earlier this year as it began to tumble down and became more small account friendly for selling puts against. It began to level off around the beginning of May and stayed in a nice channel between $19 and $21 or so.

Perfect.

This sideways movement would give me the opportunity to put the RAT system to the test. So on June 17, 2015 I entered into the following trade:

Strategy Underlying Option Entry Price Exit Price Commission $ Gain/Loss % Gain/Loss # Contracts/Shares
RAT USO N/A – Stock $20.64 TBD $9.03 TBD TBD 100
RAT USO Jan 2016 $21 Married Put $2.28 TBD $5.04 TBD TBD 1

 

When you look at the trade here’s how the math works out w/commissions:

                USO stock purchase:                      $2064

                Jan 2016 $21 Married Put:            $228

                Commissions:                                   $14.03

                Total Investment:                            $2,306.03

                Total Insurance:                               $2100

                Total Risk:                                           $206.03 or $2.06/share or 8.9%

8.9% risk is a little high compared to what Kurt suggests. I would’ve preferred something closer to 5-7% risk, however this is the trade I chose to make based off some of the suggestions in the Power Options trade filter (you get a free Power Options trial when you purchase The Blueprint).

In an attempt to quickly begin my Bulletproofing journey, I sold a call against my position at the same strike as my married put. On 25 June, 2015 I entered into the following trade and closed it out on July 6, 2015 with the following results:

Strategy Underlying Option Entry Price Exit Price Commission $ Gain/Loss % Gain/Loss # Contracts/Shares
RAT USO Aug 15 $21 Call $.50 $.10 -$10.09 $29.91 59.8% 1

 

With this trade closed my total risk now looked like this

                Total Risk:                                           $206.03 or $2.06/share or 8.9%

                Covered Call Proceeds:                 $29.91 or $.29/share

                New Adjusted Risk:                        $176.12 or $1.76/share or 7.6%

Huh…a single trade dropped my risk by 1.3%. Not too shabby!

Unfortunately, the honeymoon with USO was to stop there.

As it would seem with every time I’ve bought stock since beginning my options trading journey, USO decided to take a triple axle (is that diving or figure skating?) straight down. If you take a look at the chart below, you can see what I mean.

USO Radioactive Trade

USO Radioactive Trade

What to do when you’re down

One of the many bits of advice Kurt gives is to never sell a call against your position which is below your married put strike. You could get assigned and end up selling your shares for less than your insurance, which kind of makes your insurance a moot point.

So like a good little trader I waited. Surely USO would stay down for long…

So I waited…and waited…and waited…

And gave up.

On 11 August, 2015 I exercised my put and closed out my USO position. This was the first time I’ve actually exercised an option and it was fairly painless on OptionsHouse. When all was said and done I was unable to reduce my risk in the position any further.

The trade ended in a loss of $180.11 when I added in the commission for exercising the married put.

Now, on the bright side USO closed on that day at $14.48, which would have been a $616 loss without the married put. Sound familiar? Both my CLF and TRN odysseys began this way. So, while I can’t say I’m happy I lost money on the trade, I can say I’m happy I didn’t lose as much as I could have.

Wrapping it up

I wouldn’t judge the Radio Active Trading system by my single trade.

On a whole I’m happy with the product I purchased and the trial with Power Options. As with all things options trading, however, this is just one way to slice the game.

I still prefer to sell cash secured puts and covered calls as my primary method of trading. However, if I decided I wanted to own shares of a company, perhaps for dividend income purposes, I’d definitely consider the Radio Active Trading system as a means to pursue zero cost insurance on my purchase.

I’m not quite convinced with my limited trial with Power Options if I’d continue to subscribe to their service. As with all screeners, they only take into account the numbers and trends of the underlying security. In my case with USO, there was no ability to take into account all the qualitative factors within the oil industry at the time.

Sure I should’ve done the analysis myself, but if I’m going to do that I think I can also easily look at a chart and tell if the underlying meets the criteria for the Radio Active Trading system model.

All-in-all, I’d suggest the Radio Active Trading Blueprint to traders with a caution to pay close attention to the underlying you’re trading against. Though the system is built to reduce risk, losing a few hundred dollars at a time can quickly become disastrous to small account traders.

I hope you enjoyed this review of the Radio Active Trading Blueprint. I’d love to get some feedback on this review or your own thoughts if you’ve used the system personally.

Thanks and happy trading!

Patrick

“The Blueprint”, Radioactive Trading and Power Options are registered trademarks or the property of Power Financial Group, Inc.

Join the discussion 6 Comments

  • Daniel says:

    Patrick, thanks for the write-up, well done! How has your trading been since then? I too tend to trade short Puts but I’m starting to move more into Vertical credit spreads. Anyway, I’d be interested in making a friend who’s also trading options and would like to share info and experiences as we learn.
    Regards,

    Daniel

  • Mike says:

    Married put is not risk less your risk is the PUT premium ! ” wonder why he keep referring to trades as Riskless! it is miseading I don’t see all this much diff than those so called “Gurus” selling Covered Call writing as a magic wand! If there was such a thing as “Riskless” pthe person knows it would be trading it not selling the magic wand!

    • Patrick says:

      Mike,

      I agree. There’s no such think as a “risk free” trade. There is always money at stake. I think a more accurate way of stating this is you can reduce the amount of risk you’re taking on the trade by employing a married put in the way the Radioactive Trading “Blueprint” suggests.

      Have you used married puts in your trading?

      Patrick

  • I agree with the “riskless” wording. I do enter into “riskless” trades, and I’m in one right now. I do this with dividend paying stocks that pay near or over $1 each time they pay out. Right now I am in one on Boeing (BA). How did I make it “riskless”? Boeing is going to pay out 2 dividend payments over the next approximate 100 days. The first is next week on August 10th when it goes ex-dividend and the next is on approximately November 4th. 2 days ago I bought and did a “collar” at $135 on Boeing at a time when it was trading about $132. I paid $136.30, meaning that I paid an extra $1.30 above the price of the collar strkes to put on the collar. This is because the next 2 dividends are priced into it. Each dividend is $1.09. That means I will get $2.18, so the trade is riskless, but low yield if I held through he 2nd dividend payment and sold. However, I never do that. stocks and options usually move around a lot the days before and after a dividend, so I look to get out with about $.50 cents, by putting in a GTC order each morning starting on ex-dividend. I am usually out within a few days, and do it again on another dividend stock, and do this multiple times each year. Sometimes I actually get the dividend and a small profit on the collar on ex-dividend date. It is not a get rich quick strategy, but it’s nice to have nothing at risk, and worse-case having to wait 90-100 days to get out, It is not terribly hard to use this strategy and make 10%+ per year risk free. That is because I am usually not holding long and the small profits add up.

  • Patrick says:

    David I like your strategy and it sounds similar if not identical to some of what you can find in the Radioactive Trading Blueprint. A couple of questions for you. When you say you get our around $.50 cents, are you talking about the whole collar or just the call you sold against it? Also, how long do you usually end up holding on to those trades?

    One of the reasons I lean away from collars and covered calls is the amount of buying power they eat up. I think they’re good, conservative strategies for people with bigger accounts, but I’d be curious to hear your thoughts on how to implement your particular strategy with a small account.

Leave a Reply