Andy​ ​Tanner:
Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash
Flow
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
Andy:
Hello.​ ​Andy​ ​Tanner​ ​here.​ ​Welcome​ ​to​ ​this​ ​awesome​ ​session.​ ​It's​ ​going​ ​to​ ​be​ ​fun​ ​on
options.​ ​We're​ ​calling​ ​this​ ​old​ ​man​ ​options,​ ​some​ ​secret​ ​to​ ​get​ ​in​ ​some​ ​cash​ ​flow.​ ​It's
going​ ​to​ ​be​ ​a​ ​lot​ ​of​ ​fun.​ ​I​ ​congratulate​ ​you​ ​for​ ​being​ ​here.​ ​I​ ​also​ ​thank​ ​Russell​ ​and​ ​the
other​ ​members​ ​of​ ​the​ ​faculty​ ​for​ ​inviting​ ​me​ ​and​ ​including​ ​me.​ ​Very​ ​honored​ ​for​ ​that.​ ​I
consider​ ​myself​ ​a​ ​instructor/student.​ ​I​ ​enjoy​ ​learning​ ​just​ ​like​ ​you.​ ​Congratulations​ ​for
tuning​ ​in​ ​and​ ​showing​ ​up.​ ​There's​ ​a​ ​lot​ ​of​ ​people​ ​that​ ​end​ ​their​ ​education​ ​when​ ​they
graduate​ ​from​ ​high​ ​school​ ​or​ ​college.​ ​Some​ ​of​ ​them​ ​even​ ​complain​ ​about​ ​not​ ​having
enough​ ​money​ ​or​ ​wanting​ ​to​ ​do​ ​better.
The​ ​fact​ ​that​ ​you're​ ​here,​ ​it​ ​is​ ​meaningful.​ ​I​ ​make​ ​a​ ​habit​ ​every​ ​presentation​ ​I​ ​give​ ​to
acknowledge​ ​that​ ​fact​ ​because​ ​I​ ​care​ ​about​ ​it.​ ​I​ ​relate​ ​with​ ​people​ ​who​ ​want​ ​to​ ​learn
more​ ​because​ ​I'm​ ​a​ ​student​ ​just​ ​like​ ​you.​ ​I​ ​love​ ​learning​ ​more.​ ​It's​ ​just​ ​a​ ​wonderful
journey.​ ​Congratulations​ ​for​ ​coming.​ ​I​ ​really​ ​mean​ ​that.​ ​I​ ​hope​ ​you​ ​can​ ​feel​ ​that.​ ​I'm
going​ ​to​ ​talk​ ​about​ ​options​ ​today.​ ​That​ ​means​ ​risk.​ ​Everyone​ ​I​ ​know,​ ​including​ ​me,​ ​this
trade​ ​option​ ​just​ ​had​ ​losses​ ​in​ ​the​ ​market​ ​because​ ​not​ ​every​ ​trade​ ​works​ ​out.​ ​It's​ ​very
important​ ​to​ ​understand​ ​that​ ​what​ ​I'm​ ​speaking​ ​about​ ​does​ ​have​ ​a​ ​degree​ ​of​ ​risk.​ ​I
wouldn't​ ​put​ ​it​ ​as​ ​the​ ​riskiest​ ​strategy.​ ​I​ ​wouldn't​ ​put​ ​it​ ​as​ ​the​ ​most​ ​conservative,​ ​but​ ​it
does​ ​have​ ​risk​ ​involved.​ ​I​ ​thought​ ​it​ ​would​ ​be​ ​very​ ​important​ ​just​ ​to​ ​protect​ ​myself​ ​and
my​ ​company​ ​to​ ​let​ ​you​ ​know,​ ​"Hey,​ ​what​ ​we're​ ​going​ ​to​ ​do​ ​in​ ​here​ ​is​ ​for​ ​grown-ups."
There​ ​is​ ​some​ ​risk​ ​of​ ​loss​ ​when​ ​we​ ​invest​ ​in​ ​securities.
Then,​ ​the​ ​other​ ​thing​ ​that's​ ​essential​ ​that​ ​I​ ​communicate​ ​really​ ​well​ ​is​ ​that​ ​I'm​ ​not​ ​a
person​ ​that​ ​recommends​ ​when​ ​strategy​ ​over​ ​the​ ​other​ ​or​ ​makes​ ​recommendations​ ​on
specific​ ​picks.​ ​This​ ​is​ ​for​ ​education.​ ​The​ ​reason​ ​I​ ​hit​ ​this​ ​really​ ​hard,​ ​in​ ​the​ ​beginning,​ ​is
there's​ ​a​ ​chance​ ​we'll​ ​see​ ​where​ ​it​ ​goes,​ ​but​ ​there's​ ​a​ ​chance​ ​I​ ​might​ ​bring​ ​up​ ​a​ ​paper
account​ ​or​ ​simulate​ ​account,​ ​but​ ​look​ ​at​ ​real​ ​securities​ ​in​ ​that​ ​account.​ ​Let​ ​me
communicate​ ​for​ ​now​ ​that​ ​this​ ​is​ ​for​ ​example.​ ​It's​ ​not​ ​a​ ​recommendation​ ​that​ ​you​ ​try​ ​to
copy​ ​anything.​ ​It's​ ​just​ ​for​ ​illustration​ ​only.​ ​That's​ ​much​ ​appreciated​ ​when​ ​people​ ​are
grown-ups.​ ​I​ ​understand​ ​investing​ ​has​ ​risk​ ​for​ ​sure.
What​ ​are​ ​you​ ​going​ ​to​ ​get​ ​out​ ​of​ ​this​ ​program?​ ​Well,​ ​I​ ​have​ ​three​ ​ideas​ ​here.​ ​First,​ ​I'm
only​ ​going​ ​to​ ​focus​ ​on​ ​one​ ​strategy​ ​today​ ​with​ ​options.​ ​We'll​ ​give​ ​an​ ​overview​ ​of​ ​what
they​ ​are.​ ​I​ ​love​ ​showing​ ​beginners​ ​who​ ​haven't​ ​trade​ ​a​ ​lot​ ​of​ ​options​ ​how​ ​these​ ​works.
If​ ​you're​ ​a​ ​seasoned​ ​pro,​ ​this​ ​will​ ​be​ ​a​ ​wonderful​ ​review​ ​for​ ​you.​ ​I​ ​hope​ ​you​ ​can​ ​gain
some​ ​insight,​ ​but​ ​the​ ​strategy​ ​I've​ ​chosen​ ​to​ ​highlight​ ​in​ ​this​ ​program​ ​is​ ​a​ ​strategy​ ​often
used​ ​by​ ​Warren​ ​Buffett​ ​very​ ​frequently​ ​actually.​ ​You'll​ ​enjoy​ ​that​ ​so​ ​give​ ​an​ ​example​ ​of
how​ ​he's​ ​done​ ​it​ ​one​ ​or​ ​two​ ​or​ ​three.​ ​Then,​ ​we'll​ ​talk​ ​about​ ​how​ ​ordinary​ ​folks​ ​really
have​ ​access​ ​to​ ​doing​ ​the​ ​exact​ ​same​ ​strategy​ ​really,​ ​I​ ​mean​ ​exactly​ ​the​ ​same.​ ​It'll​ ​be​ ​fun.
Now,​ ​if​ ​you​ ​missed​ ​the​ ​keynote,​ ​I'll​ ​take​ ​a​ ​moment​ ​to​ ​introduce​ ​myself.​ ​They​ ​were​ ​very
nice​ ​to​ ​let​ ​me​ ​launch​ ​the​ ​event.​ ​I​ ​did​ ​a​ ​little​ ​video​ ​on​ ​my​ ​four-pillar​ ​system​ ​of​ ​investing.
If​ ​you​ ​missed​ ​that,​ ​I'll​ ​give​ ​you.​ ​I'll​ ​be​ ​very​ ​brief.​ ​My​ ​name​ ​is​ ​Andy​ ​Tanner.​ ​Over​ ​the​ ​past
20​ ​plus​ ​years,​ ​I've​ ​taught​ ​thousands​ ​of​ ​people​ ​how​ ​to​ ​better​ ​learn,​ ​how​ ​to​ ​invest​ ​in
options​ ​at​ ​financial​ ​education.​ ​The​ ​biggest​ ​thing​ ​I've​ ​gained​ ​from​ ​that​ ​is​ ​the​ ​importance
of​ ​simplicity.​ ​I'm​ ​a​ ​very​ ​simple​ ​guy.​ ​I​ ​don't​ ​have​ ​a​ ​lot​ ​of​ ​talents.​ ​People​ ​that​ ​know​ ​me,
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
they’ll​ ​say​ ​I​ ​need​ ​a​ ​lot​ ​of​ ​talents,​ ​but​ ​there's​ ​one​ ​thing​ ​that​ ​they're​ ​kind​ ​to​ ​say​ ​is​ ​that​ ​I​ ​do
have​ ​a​ ​knack​ ​for​ ​making​ ​complex​ ​things​ ​simple​ ​for​ ​whatever​ ​reason.​ ​I​ ​guess​ ​I​ ​have​ ​a
simple​ ​mind.​ ​I​ ​really​ ​have​ ​a​ ​love​ ​for​ ​this​ ​simple​ ​and​ ​simplicity.​ ​If​ ​you've​ ​delved​ ​in​ ​options
before​ ​they​ ​seem​ ​complex,​ ​well,​ ​welcome​ ​because​ ​we're​ ​going​ ​to​ ​make​ ​them​ ​simple​ ​for
you.​ ​You'll​ ​understand​ ​them.​ ​That's​ ​the​ ​thing​ ​I​ ​know​ ​how​ ​to​ ​do.​ ​That's​ ​good.
Two​ ​books,​ ​Stock​ ​Market​ ​Cash​ ​Flow​ ​of​ ​the​ ​Rich​ ​Dad​ ​series​ ​and​ ​401(K)s​ ​about​ ​our
retirement.​ ​Very​ ​passion​ ​about​ ​those​ ​topics.​ ​My​ ​story​ ​is​ ​very​ ​simple.​ ​I​ ​went​ ​to​ ​school.​ ​I
didn't​ ​get​ ​very​ ​good​ ​grades.​ ​I​ ​went​ ​the​ ​school​ ​to​ ​play​ ​basketball​ ​mostly.​ ​The​ ​decision​ ​I
have​ ​made​ ​is​ ​the​ ​point​ ​of​ ​decision​ ​I​ ​came​ ​to​ ​is​ ​worker​ ​stay​ ​as​ ​a​ ​student.​ ​I've​ ​decided​ ​to
stay​ ​as​ ​a​ ​student​ ​my​ ​whole​ ​life.​ ​I​ ​show​ ​up​ ​at​ ​classes​ ​like​ ​this​ ​all​ ​the​ ​time​ ​and​ ​the
decision​ ​to​ ​become​ ​a​ ​lifelong​ ​student​ ​has​ ​been​ ​one​ ​of​ ​the​ ​great​ ​blessings​ ​in​ ​my​ ​life.
Now,​ ​it​ ​hasn't​ ​just​ ​been​ ​roses.​ ​I've​ ​lost​ ​money​ ​trading​ ​before​ ​as​ ​most​ ​guys​ ​have​ ​if
they're​ ​honest,​ ​will​ ​tell​ ​you.​ ​I've​ ​had​ ​businesses​ ​that​ ​have​ ​succeeded,​ ​but​ ​I've​ ​had
business​ ​failures​ ​too.
My​ ​experience​ ​comes​ ​from​ ​both​ ​negative​ ​and​ ​positive​ ​things,​ ​but​ ​that​ ​decision​ ​to
become​ ​a​ ​student​ ​vesting​ ​is​ ​when​ ​I​ ​would​ ​make​ ​over​ ​again​ ​because​ ​the​ ​good​ ​has​ ​far
outweighed​ ​the​ ​bad​ ​and​ ​the​ ​relationships​ ​I've​ ​had​ ​and​ ​the​ ​chance​ ​to​ ​teach​ ​and​ ​learn.
It's​ ​just​ ​been​ ​great.​ ​That's​ ​just​ ​about​ ​me.​ ​I​ ​love​ ​to​ ​learn.​ ​I'm​ ​a​ ​student​ ​like​ ​you.
Sometimes,​ ​I​ ​get​ ​to​ ​teach​ ​once​ ​in​ ​a​ ​while.​ ​That's​ ​a​ ​lot​ ​of​ ​fun.​ ​Keep​ ​the​ ​big​ ​picture​ ​if​ ​you
want​ ​to​ ​get​ ​the​ ​most​ ​out​ ​of​ ​this​ ​class.​ ​I​ ​will​ ​not​ ​make​ ​this​ ​comprehensive.​ ​There's
always​ ​details,​ ​details​ ​here,​ ​details​ ​there.​ ​The​ ​details​ ​are​ ​important.​ ​If​ ​you​ ​want​ ​to​ ​learn
the​ ​details,​ ​well,​ ​great.​ ​You​ ​can​ ​continue​ ​to​ ​pursue,​ ​but​ ​what​ ​we'll​ ​do​ ​is​ ​keep​ ​the​ ​eye​ ​on
the​ ​big​ ​picture​ ​and​ ​also​ ​on​ ​the​ ​progress,​ ​this​ ​is​ ​my​ ​education​ ​continuum.
I​ ​specialize​ ​with​ ​people​ ​that​ ​that​ ​are​ ​in​ ​this​ ​area​ ​right​ ​here​ ​where​ ​maybe​ ​they​ ​have​ ​a
401(K).​ ​They​ ​don't​ ​know​ ​much​ ​about​ ​investing​ ​or​ ​stocks​ ​or​ ​options.​ ​I​ ​help​ ​make​ ​them
aware.​ ​Usually,​ ​in​ ​a​ ​90-minute​ ​presentation​ ​proficiency​ ​is​ ​silly​ ​to​ ​look​ ​at​ ​or​ ​an​ ​hour
presentation​ ​or​ ​45​ ​minutes,​ ​but​ ​we​ ​can​ ​be​ ​more​ ​aware​ ​of​ ​things.​ ​What​ ​I​ ​do​ ​is​ ​I​ ​move
people​ ​along​ ​this​ ​over​ ​time.​ ​Keep​ ​your​ ​eye​ ​on​ ​the​ ​big​ ​picture​ ​and​ ​know​ ​that​ ​while​ ​we're
looking​ ​at​ ​Warren​ ​Buffett's​ ​strategy,​ ​you're​ ​probably​ ​not​ ​going​ ​to​ ​beat​ ​him​ ​in​ ​investing
contest​ ​after​ ​one-hour​ ​presentation.​ ​There's​ ​going​ ​to​ ​be​ ​more​ ​to​ ​learn​ ​for​ ​sure.
But​ ​with​ ​that,​ ​in​ ​the​ ​keynote​ ​address​ ​I​ ​made​ ​earlier​ ​in​ ​the​ ​summit,​ ​I​ ​talked​ ​about​ ​how
we​ ​never​ ​bash​ ​an​ ​asset​ ​class.​ ​Richard​ ​Grant​ ​Branson​ ​did​ ​great​ ​in​ ​business.​ ​Donald
Trump,​ ​whether​ ​you​ ​like​ ​him​ ​or​ ​hate​ ​him,​ ​I​ ​think​ ​he​ ​says​ ​some​ ​interesting​ ​things​ ​myself,
but​ ​I​ ​do​ ​know​ ​he​ ​knows​ ​how​ ​to​ ​invest.​ ​Warren​ ​Buffett​ ​is​ ​one​ ​of​ ​the​ ​great​ ​exemplars​ ​of
investing​ ​success.​ ​[inaudible​ ​00:06:57],​ ​they've​ ​all​ ​done​ ​it​ ​in​ ​their​ ​different​ ​asset​ ​classes
and​ ​their​ ​different​ ​specialties.
In​ ​the​ ​summit,​ ​we​ ​talked​ ​a​ ​lot​ ​about​ ​paper.​ ​We're​ ​going​ ​to​ ​concentrate​ ​on​ ​this​ ​called
the​ ​derivative​ ​market.​ ​That's​ ​the​ ​promise​ ​I​ ​made​ ​you​ ​in​ ​the​ ​keynote.​ ​We​ ​have​ ​web
bonds​ ​which​ ​are​ ​loans.​ ​We​ ​have​ ​stocks​ ​which​ ​are​ ​pieces​ ​of​ ​a​ ​company.​ ​You​ ​get​ ​a​ ​chunk
of​ ​the​ ​company's​ ​share​ ​of​ ​it,​ ​but​ ​in​ ​the​ ​derivative​ ​markets,​ ​we​ ​deal​ ​with​ ​contracts​ ​or
another​ ​way​ ​that​ ​to​ ​say​ ​that​ ​is​ ​an​ ​agreement.​ ​That's​ ​all​ ​those​ ​are.​ ​Derivative​ ​sounds
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
really,​ ​oh,​ ​derivative​ ​markets,​ ​weapons​ ​financial,​ ​mass​ ​destruction.​ ​They​ ​can​ ​be
dangerous,​ ​but​ ​there's​ ​just​ ​agreements.​ ​It's​ ​just​ ​a​ ​handshake​ ​that's​ ​written​ ​down.​ ​That's
all​ ​it​ ​is.
When​ ​you​ ​really​ ​boil​ ​this​ ​down​ ​like​ ​one​ ​guy​ ​wanted​ ​to​ ​do​ ​one​ ​thing,​ ​another​ ​guy​ ​wants
to​ ​do​ ​another​ ​thing,​ ​they​ ​shook​ ​hands.​ ​Instead,​ ​you're​ ​shaking​ ​hands.​ ​They​ ​decide​ ​to
put​ ​on​ ​a​ ​piece​ ​of​ ​paper.​ ​Call​ ​the​ ​contract.​ ​When​ ​an​ ​agreement​ ​is​ ​written​ ​down,​ ​it
becomes​ ​an​ ​agreement​ ​of​ ​the​ ​contract.​ ​That's​ ​all​ ​the​ ​derivative​ ​is.​ ​It's,​ ​to​ ​a​ ​couple​ ​of
guys,​ ​shaking​ ​hands​ ​or​ ​a​ ​couple​ ​of​ ​businesses​ ​shaking​ ​hands​ ​that​ ​are​ ​going​ ​to​ ​agree​ ​to
something.​ ​That's​ ​really​ ​what​ ​often​ ​the​ ​derivative​ ​market​ ​consists​ ​of,​ ​is​ ​some​ ​an
agreement​ ​or​ ​promise.​ ​That's​ ​the​ ​case​ ​at​ ​least​ ​for​ ​our​ ​purposes​ ​most​ ​of​ ​the​ ​time.
Let's​ ​look​ ​at​ ​a​ ​couple​ ​of​ ​different​ ​agreements.​ ​A​ ​person​ ​with​ ​an​ ​insurance​ ​contract.​ ​This
guy​ ​has​ ​a​ ​house.​ ​He's​ ​a​ ​homeowner.​ ​We'll​ ​just​ ​hop​ ​right​ ​in.​ ​I'll​ ​tell​ ​you​ ​as​ ​I​ ​go​ ​through
this,​ ​you'll​ ​feel​ ​more​ ​and​ ​more​ ​at​ ​home​ ​with​ ​it.​ ​You'll​ ​feel​ ​excitement​ ​to​ ​participate​ ​in
some​ ​contracts​ ​that​ ​could​ ​help​ ​you.​ ​You'll​ ​have​ ​an​ ​epiphany​ ​to​ ​say,​ ​"Wow,​ ​this​ ​could​ ​be
a​ ​business​ ​for​ ​me.​ ​"We​ ​have​ ​a​ ​homeowner.​ ​We​ ​have​ ​an​ ​insurance​ ​company​ ​so​ ​maybe
an​ ​agent​ ​or​ ​we​ ​can​ ​just​ ​call​ ​it​ ​insurance.​ ​This​ ​guy​ ​scared​ ​his​ ​house​ ​might​ ​catch​ ​on​ ​fire.
She​ ​would​ ​put​ ​it​ ​on​ ​fire.​ ​Look,​ ​flame's​ ​coming​ ​out​ ​of​ ​here.​ ​They're​ ​supposed​ ​to​ ​be​ ​in​ ​the
chimney.​ ​Look,​ ​they're​ ​coming​ ​out​ ​all​ ​over.
They​ ​make​ ​an​ ​agreement.​ ​This​ ​guy​ ​says,​ ​"Look,​ ​I'll​ ​make​ ​you​ ​a​ ​promise.​ ​I​ ​will​ ​make​ ​you​ ​a
promise​ ​that​ ​if​ ​your​ ​house​ ​is​ ​to​ ​burn​ ​down​ ​anytime​ ​in​ ​the​ ​next​ ​year​ ​or​ ​maybe​ ​it's​ ​a
yearly​ ​contract​ ​or​ ​whatever,​ ​that​ ​I'll​ ​pay​ ​for​ ​you."​ ​What​ ​does​ ​this​ ​guy's​ ​balance​ ​sheet
look​ ​like,​ ​this​ ​insurance?​ ​Well,​ ​they​ ​got​ ​a​ ​bunch​ ​of​ ​money​ ​in​ ​here​ ​in​ ​their​ ​asset​ ​column,
liabilities,​ ​income,​ ​expense.​ ​I'll​ ​show​ ​you​ ​what​ ​this​ ​looks​ ​like.​ ​He​ ​says,​ ​"Look,​ ​I​ ​have​ ​a​ ​ton
of​ ​money​ ​here​ ​in​ ​my​ ​bank​ ​account.​ ​If​ ​you'll​ ​give​ ​me​ ​a​ ​little​ ​bit​ ​more,​ ​I​ ​will​ ​promise​ ​to
take​ ​care​ ​of​ ​your​ ​house.​ ​I​ ​have​ ​enough​ ​money​ ​here​ ​to​ ​make​ ​you​ ​whole."
This​ ​guy​ ​will​ ​send​ ​insurance​ ​man​ ​here​ ​a​ ​couple​ ​of​ ​dollars.​ ​He'll​ ​send​ ​him​ ​a​ ​few​ ​bucks​ ​for
insurance.​ ​This​ ​is​ ​called​ ​the​ ​premium,​ ​insurance​ ​premium.​ ​You've​ ​heard​ ​of​ ​that​ ​before
probably.​ ​If​ ​you​ ​have​ ​car​ ​insurance,​ ​you​ ​pay​ ​your​ ​premium.​ ​You​ ​have​ ​self-insurance.​ ​You
pay​ ​your​ ​premiums​ ​each​ ​month.​ ​In​ ​that​ ​premium,​ ​it​ ​looks​ ​like​ ​this.​ ​It​ ​comes​ ​in​ ​here​ ​like
this​ ​from​ ​the​ ​sky.​ ​They​ ​have​ ​no​ ​manufacturing​ ​costs.​ ​They​ ​have​ ​no​ ​raw​ ​material​ ​costs.
They​ ​don't​ ​have​ ​any​ ​shipping.​ ​They​ ​don't​ ​have​ ​any​ ​distribution.​ ​Basically,​ ​they​ ​just​ ​said,
"Look,​ ​we've​ ​got​ ​money​ ​to​ ​fix​ ​houses​ ​if​ ​they​ ​burn​ ​down.​ ​If​ ​you'll​ ​pay​ ​me​ ​a​ ​premium
right​ ​here,​ ​then​ ​we'll​ ​make​ ​you​ ​a​ ​promise."
Look​ ​at​ ​this.​ ​Promises​ ​can​ ​generate​ ​income.​ ​That's​ ​something.​ ​If​ ​you're​ ​a​ ​smart​ ​person,
you​ ​might​ ​say,​ ​"Gee,​ ​that​ ​might​ ​be​ ​one​ ​of​ ​the​ ​coolest​ ​ways​ ​to​ ​generate​ ​income​ ​ever."​ ​A
lot​ ​of​ ​people​ ​have​ ​always​ ​dreamed​ ​of​ ​owning​ ​a​ ​business.​ ​They've​ ​always​ ​dreamed​ ​of
having​ ​a​ ​business,​ ​but​ ​they​ ​say,​ ​"What​ ​product​ ​could​ ​I​ ​have?​ ​I​ ​don't​ ​know​ ​how​ ​to​ ​make
XYZ.​ ​I​ ​don't​ ​know​ ​what​ ​product​ ​to​ ​come​ ​up​ ​with.​ ​I​ ​haven't​ ​come​ ​up​ ​with​ ​the​ ​pet​ ​rock
yet.​ ​What​ ​product​ ​could​ ​I​ ​have?"​ ​The​ ​idea​ ​that​ ​you​ ​could​ ​just​ ​simply​ ​have​ ​a​ ​product​ ​that
is​ ​manufactured​ ​via​ ​a​ ​promise​ ​is​ ​an​ ​amazing​ ​idea,​ ​isn't​ ​it?
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
I​ ​will​ ​tell​ ​you​ ​this.​ ​If​ ​you​ ​Vegas,​ ​the​ ​casinos​ ​make​ ​the​ ​money.​ ​That's​ ​the​ ​clue.​ ​Well,​ ​if​ ​you
go​ ​to​ ​Wall​ ​Street,​ ​you​ ​have​ ​banks​ ​and​ ​insurance​ ​companies,​ ​and​ ​insurance​ ​companies
are​ ​some​ ​of​ ​the​ ​largest​ ​companies​ ​in​ ​the​ ​world.​ ​Why?​ ​Well,​ ​they​ ​don't​ ​have​ ​to​ ​dig
anything​ ​out​ ​of​ ​the​ ​ground,​ ​do​ ​they?​ ​They​ ​don't​ ​have​ ​a​ ​big​ ​factory​ ​where​ ​they​ ​assemble
something.​ ​They​ ​don't​ ​have​ ​anything​ ​to​ ​package​ ​your​ ​ship.​ ​They​ ​basically​ ​just​ ​have
agreements.​ ​That's​ ​all​ ​it​ ​is,​ ​is​ ​agreements.​ ​Of​ ​course,​ ​they​ ​do​ ​pretty​ ​well.
Let's​ ​take​ ​a​ ​look​ ​at​ ​some​ ​insurance​ ​numbers​ ​just​ ​for​ ​fun.​ ​I​ ​think​ ​I​ ​have​ ​something​ ​here.
It​ ​talks​ ​about​ ​the​ ​1.1​ ​trillion.​ ​That's​ ​probably​ ​too​ ​tiny​ ​to​ ​see.​ ​1.1​ ​trillion​ ​in​ ​2014​ ​in
premiums.​ ​In​ ​other​ ​words,​ ​when​ ​you​ ​look​ ​at​ ​this​ ​idea​ ​of​ ​making​ ​money​ ​by​ ​making
promises,​ ​it's​ ​a​ ​pretty​ ​big​ ​deal.​ ​These​ ​guys​ ​here​ ​income​ ​wise,​ ​when​ ​these​ ​guys​ ​pay​ ​the
premium,​ ​it's​ ​1.1​ ​trillion​ ​for​ ​a​ ​year.​ ​That's​ ​pretty​ ​good​ ​money.​ ​You​ ​only​ ​need​ ​a​ ​small
portion​ ​of​ ​that​ ​to​ ​keep​ ​you​ ​happy.​ ​It's​ ​a​ ​very,​ ​very​ ​interesting​ ​business.
Well,​ ​let's​ ​just​ ​draw​ ​their​ ​business​ ​in​ ​a​ ​simple​ ​way.​ ​Let's​ ​draw​ ​a​ ​great​ ​big​ ​piece​ ​like​ ​this.
We'll​ ​call​ ​that​ ​the​ ​premium​ ​they​ ​collect.​ ​Premium.​ ​Then,​ ​you've​ ​got​ ​maybe​ ​some​ ​claims.
Maybe,​ ​it​ ​looks​ ​like​ ​this.​ ​I​ ​don't​ ​know​ ​what​ ​it​ ​looks​ ​like.​ ​You​ ​have​ ​people​ ​that​ ​make​ ​a
claim​ ​in​ ​expenses.​ ​Claims.​ ​They​ ​say,​ ​"Hey,​ ​we​ ​had​ ​hurricane​ ​Irma​ ​and​ ​Hugo.​ ​"They​ ​laid
ways​ ​so​ ​people​ ​call​ ​up​ ​and​ ​say,​ ​"Hey​ ​I​ ​didn’t​ ​have​ ​a​ ​fire,​ ​but​ ​I​ ​had​ ​floods.​ ​You've​ ​got​ ​to
pay​ ​me​ ​my​ ​premium."​ ​They​ ​do​ ​that.​ ​They​ ​pay​ ​that​ ​out.​ ​The​ ​deal's​ ​a​ ​deal.​ ​Handshake​ ​is​ ​a
handshake.​ ​They​ ​pay​ ​that​ ​out.
Then,​ ​all​ ​the​ ​other​ ​money​ ​that​ ​didn't​ ​get​ ​paid​ ​out​ ​in​ ​claims,​ ​you​ ​might​ ​look​ ​at​ ​that​ ​as
profit.​ ​That's​ ​probably​ ​oversimplified,​ ​but​ ​that's​ ​a​ ​heck​ ​of​ ​a​ ​business​ ​where​ ​you​ ​make​ ​a
bunch​ ​of​ ​promises​ ​to​ ​people​ ​and​ ​all​ ​these​ ​promises​ ​go​ ​out​ ​to​ ​people,​ ​all​ ​kinds​ ​of​ ​them.
Here's​ ​the​ ​other​ ​people​ ​you​ ​made​ ​promises​ ​to.​ ​Maybe​ ​a​ ​certain​ ​percentage​ ​of​ ​them
have​ ​a​ ​fire.​ ​They​ ​have​ ​a​ ​problem.​ ​Fire​ ​over​ ​here​ ​and​ ​fire​ ​over​ ​here.​ ​But​ ​as​ ​long​ ​as​ ​the
promises​ ​that​ ​don't​ ​have​ ​a​ ​claim​ ​to​ ​them​ ​outnumber​ ​and​ ​outweigh​ ​the​ ​ones​ ​that​ ​do
have​ ​a​ ​claim,​ ​you've​ ​got​ ​a​ ​nice​ ​little​ ​profitable​ ​business.​ ​Warren​ ​Buffett​ ​owns​ ​Geico
which​ ​makes​ ​a​ ​lot​ ​of​ ​sense.
Well,​ ​people​ ​do​ ​this​ ​all​ ​the​ ​time​ ​in​ ​real​ ​estate.​ ​You​ ​have​ ​a​ ​house​ ​here​ ​that​ ​a​ ​money​ ​is
your​ ​asset,​ ​liability​ ​over​ ​here,​ ​income,​ ​expense.​ ​We​ ​say,​ ​"I​ ​promise."​ ​What's​ ​the
promise?​ ​I​ ​promise​ ​that​ ​you​ ​can​ ​stay.​ ​I​ ​have​ ​rental​ ​property,​ ​stay​ ​in​ ​my​ ​house.​ ​For
example,​ ​we​ ​might​ ​have​ ​a​ ​rental​ ​property.​ ​I'll​ ​drive​ ​my​ ​kids​ ​by.​ ​We'll​ ​just​ ​say,​ ​"Yeah.
This​ ​is​ ​not​ ​a​ ​house​ ​we​ ​live​ ​in."​ ​Other​ ​people​ ​live​ ​in​ ​this,​ ​but​ ​what​ ​they​ ​do​ ​is​ ​they'll​ ​pay​ ​us
a​ ​premium,​ ​but​ ​this​ ​time,​ ​it's​ ​called​ ​rent.​ ​It's​ ​just​ ​a​ ​different​ ​name.​ ​Both​ ​of​ ​these
contracts​ ​whether​ ​it​ ​be​ ​insurance​ ​or​ ​rent​ ​are​ ​made​ ​up​ ​of​ ​time.
That​ ​will​ ​introduce​ ​some​ ​jargon​ ​later​ ​on​ ​in​ ​your​ ​investing​ ​trip​ ​called​ ​time​ ​decay,​ ​but
basically,​ ​that's​ ​what​ ​we​ ​sell​ ​is​ ​time.​ ​Most​ ​insurance​ ​contracts,​ ​maybe​ ​six​ ​months​ ​long
or​ ​a​ ​month-to-month​ ​in​ ​rent.​ ​You're​ ​selling​ ​people​ ​time.​ ​The​ ​asset​ ​remains.​ ​you're​ ​just
making​ ​money​ ​off​ ​the​ ​past​ ​as​ ​your​ ​time.​ ​I​ ​guess​ ​time​ ​really​ ​is​ ​money​ ​when​ ​they​ ​say​ ​time
is​ ​money.​ ​If​ ​you​ ​are​ ​a​ ​real​ ​estate​ ​investor​ ​and​ ​you​ ​have​ ​renters,​ ​what​ ​are​ ​you​ ​really
selling?​ ​You're​ ​just​ ​selling​ ​an​ ​agreement.​ ​You're​ ​selling​ ​a​ ​rental​ ​contract.​ ​They​ ​purchase
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
it​ ​through​ ​that​ ​contract.​ ​The​ ​money​ ​gets​ ​sent​ ​to​ ​their​ ​home.​ ​He​ ​used​ ​to​ ​go​ ​stay​ ​in​ ​this
guy's​ ​house​ ​for​ ​a​ ​while.​ ​That's​ ​a​ ​little​ ​bit​ ​about​ ​contracts.
Well,​ ​a​ ​lot​ ​of​ ​folks​ ​want​ ​to​ ​control​ ​a​ ​price​ ​at​ ​which​ ​they​ ​buy.​ ​Here's​ ​a​ ​new​ ​agreement.
We​ ​talked​ ​about​ ​insurance​ ​agreements​ ​to​ ​protect​ ​yourself.​ ​We​ ​talked​ ​about​ ​rental
agreements​ ​so​ ​you​ ​can​ ​have​ ​a​ ​place​ ​to​ ​live​ ​or​ ​provide​ ​some​ ​other​ ​place​ ​to​ ​live.​ ​Let's​ ​say
here​ ​we​ ​got​ ​Delta.​ ​Let's​ ​just​ ​make​ ​this​ ​up,​ ​Delta​ ​Airlines​ ​or​ ​whatever​ ​Airlines.​ ​It​ ​doesn't
matter.​ ​Maybe​ ​you​ ​got​ ​ExxonMobil​ ​over​ ​here​ ​for​ ​oil.​ ​Delta​ ​says,​ ​"Gee,​ ​we're​ ​concerned
that​ ​the​ ​price​ ​of​ ​oil​ ​would​ ​go​ ​up.​ ​We're​ ​thinking​ ​maybe​ ​the​ ​price​ ​is​ ​like​ ​$60​ ​a​ ​barrel."
We​ ​don't​ ​know​ ​what​ ​it​ ​is.​ ​We're​ ​concerned​ ​that​ ​if​ ​the​ ​price​ ​goes​ ​up​ ​to,​ ​say,​ ​$90​ ​a​ ​barrel
that​ ​our​ ​fuel​ ​costs​ ​will​ ​be​ ​really​ ​bad​ ​and​ ​people​ ​won't​ ​want​ ​to​ ​fly​ ​and​ ​all​ ​this​ ​stuff.
They're​ ​concerned​ ​about​ ​that.
What​ ​Delta​ ​wants​ ​is​ ​they​ ​want​ ​a​ ​choice.​ ​They​ ​say,​ ​"Look,​ ​I​ ​would​ ​like​ ​the​ ​choice​ ​to​ ​be
able​ ​to​ ​buy​ ​some​ ​barrels​ ​of​ ​oil​ ​from​ ​you​ ​at​ ​today's​ ​price​ ​at​ ​$60​ ​a​ ​barrel."​ ​I​ ​like​ ​to​ ​do​ ​that
over​ ​the​ ​next​ ​year,​ ​let's​ ​just​ ​say.​ ​We'll​ ​put​ ​a​ ​time​ ​on​ ​that​ ​over​ ​a​ ​year.​ ​Exxon​ ​Mobil​ ​says,
"Well,​ ​that​ ​sounds​ ​good."​ ​We​ ​see​ ​why​ ​you​ ​want​ ​to​ ​do​ ​that.​ ​Tell​ ​you​ ​what.​ ​We'll​ ​sell​ ​you
some​ ​oil​ ​just​ ​for​ ​fun.​ ​We'll​ ​make​ ​a​ ​promise​ ​to​ ​sell.​ ​This​ ​is​ ​oversimplified,​ ​of​ ​course.​ ​It's
just​ ​an​ ​example.​ ​I​ ​could​ ​use​ ​to​ ​anything.​ ​To​ ​sell​ ​oil​ ​at​ ​$60​ ​a​ ​barrel​ ​for​ ​one​ ​year.​ ​I'll​ ​do
that,​ ​but​ ​they're​ ​not​ ​going​ ​to​ ​do​ ​that​ ​of​ ​the​ ​goodness​ ​of​ ​their​ ​heart.​ ​They​ ​can​ ​say,​ ​"Well,
give​ ​us​ ​some​ ​love​ ​for​ ​this​ ​Delta."
Delta's​ ​going​ ​to​ ​pay​ ​them​ ​something​ ​called​ ​a​ ​premium​ ​for​ ​that.​ ​They'll​ ​pay​ ​them​ ​a​ ​small
amount​ ​of​ ​money​ ​to​ ​lock​ ​in​ ​that​ ​price.​ ​Exxon's​ ​pretty​ ​happy​ ​with​ ​this​ ​because​ ​they're
going​ ​to​ ​sell​ ​oil​ ​anyway.​ ​They're​ ​making​ ​money​ ​at​ ​$60​ ​a​ ​barrel​ ​right​ ​now.​ ​Yeah.​ ​Sure.
They'd​ ​like​ ​to​ ​make​ ​90,​ ​but​ ​how​ ​does​ ​Exxon​ ​know​ ​that​ ​the​ ​price​ ​doesn't​ ​fall​ ​back​ ​down
to​ ​40​ ​or​ ​50?​ ​For​ ​Exxon,​ ​this​ ​is​ ​money​ ​that​ ​comes​ ​in.​ ​This​ ​is​ ​cash​ ​flow.​ ​This​ ​is​ ​a​ ​nice
money​ ​just​ ​for​ ​doing​ ​nothing​ ​more​ ​than​ ​promising​ ​to​ ​do​ ​what​ ​they've​ ​been​ ​doing
anyway.​ ​They're​ ​just​ ​locking​ ​your​ ​price.​ ​What​ ​they're​ ​really​ ​doing​ ​is​ ​giving​ ​up​ ​some
upside​ ​potential.​ ​They're​ ​giving​ ​that​ ​up​ ​to​ ​be​ ​able​ ​to​ ​sell​ ​it​ ​a​ ​price​ ​they​ ​can​ ​make​ ​money
out​ ​anyway​ ​and​ ​to​ ​get​ ​a​ ​little​ ​extra​ ​for​ ​that.​ ​ExxonMobil​ ​likes​ ​that.
Now,​ ​the​ ​reason​ ​Delta​ ​likes​ ​that​ ​is,​ ​now,​ ​they​ ​can​ ​look​ ​forward​ ​in​ ​their​ ​business.​ ​They
can​ ​create​ ​a​ ​budget.​ ​Their​ ​chief​ ​financial​ ​officer​ ​can​ ​go​ ​in​ ​and​ ​say,​ ​"Look,​ ​we've​ ​spent​ ​a
little​ ​money,​ ​but​ ​what​ ​it​ ​did,​ ​it​ ​brought​ ​stabilization​ ​to​ ​our​ ​prices​ ​at​ ​which​ ​we​ ​can​ ​buy
oil​ ​now."​ ​We​ ​can​ ​go​ ​out​ ​and​ ​make​ ​forecasts.​ ​We​ ​can​ ​go​ ​out​ ​and​ ​run​ ​our​ ​business.​ ​We
can​ ​say,​ ​"Look,​ ​for​ ​the​ ​next​ ​year​ ​even​ ​if​ ​oil​ ​goes​ ​nuts,​ ​we're​ ​going​ ​to​ ​be​ ​fine."​ ​Really,​ ​it's
like​ ​insurance,​ ​isn't​ ​it?​ ​Delta's​ ​saying,​ ​"Look,​ ​I'll​ ​pay​ ​you​ ​a​ ​little​ ​premium​ ​to​ ​make​ ​sure
my​ ​oil​ ​reserves​ ​don't​ ​burn​ ​down,"​ ​because​ ​of​ ​high​ ​prices.
It's​ ​very​ ​much​ ​insurance.​ ​They​ ​want​ ​to​ ​control.​ ​Risk.​ ​This​ ​is​ ​an​ ​important​ ​thing,​ ​risk,​ ​has
a​ ​relationship​ ​to​ ​control.​ ​It​ ​really​ ​does.​ ​If​ ​you​ ​have​ ​lots​ ​and​ ​lots​ ​of​ ​control​ ​over
something,​ ​the​ ​risk​ ​goes​ ​down.​ ​Think​ ​about​ ​that.​ ​The​ ​more​ ​control​ ​you​ ​have​ ​over
something,​ ​the​ ​less​ ​risk​ ​there​ ​is,​ ​but​ ​I'll​ ​tell​ ​you.​ ​If​ ​you​ ​lose​ ​control​ ​of​ ​something,​ ​risk
goes​ ​up,​ ​doesn't​ ​it?​ ​Round​ ​and​ ​round,​ ​she​ ​goes.​ ​Where​ ​she​ ​stops,​ ​you​ ​can't​ ​control.
Nobody​ ​knows​ ​the​ ​risk​ ​that's​ ​gambling.​ ​That's​ ​higher.
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
By​ ​purchasing​ ​this​ ​contract​ ​here,​ ​this​ ​airline's​ ​over​ ​here​ ​has​ ​gotten​ ​the​ ​greater​ ​amount
of​ ​increase​ ​their​ ​control​ ​at​ ​which​ ​they​ ​can​ ​buy​ ​oil​ ​or​ ​jet​ ​fuel​ ​or​ ​what​ ​are​ ​you​ ​going​ ​to
talk​ ​about.​ ​They've​ ​locked​ ​it​ ​in.​ ​Now,​ ​they​ ​have​ ​control​ ​over​ ​their​ ​buying​ ​price.​ ​These
guys​ ​have​ ​made​ ​them​ ​a​ ​promise​ ​to​ ​sell​ ​at​ ​this​ ​price.​ ​It's​ ​interesting.​ ​Now,​ ​if​ ​oil​ ​goes
down​ ​to​ ​40,​ ​well,​ ​Delta​ ​can​ ​say,​ ​"I​ ​choose​ ​to​ ​buy​ ​it​ ​40."​ ​I​ ​have​ ​the​ ​choice​ ​to​ ​buy​ ​at​ ​60​ ​or
not​ ​buy​ ​at​ ​60.
Exxon​ ​says,​ ​"Well,​ ​gee,​ ​that​ ​sucks.​ ​They're​ ​going​ ​to​ ​buy​ ​40,​ ​but​ ​what​ ​did​ ​they​ ​get​ ​up
front?​ ​They​ ​got​ ​a​ ​premium​ ​up​ ​front."​ ​They​ ​got​ ​cash​ ​flow​ ​too.​ ​Often,​ ​these​ ​were​ ​called
future​ ​contracts​ ​or​ ​option​ ​contracts.​ ​The​ ​word​ ​option​ ​comes​ ​from​ ​choice.​ ​Futures​ ​are
promised​ ​with​ ​the​ ​promise​ ​and​ ​an​ ​option​ ​where​ ​one​ ​guy​ ​has​ ​a​ ​choice.​ ​That's​ ​where
these​ ​came​ ​from.​ ​This​ ​is​ ​the​ ​choice​ ​to​ ​buy.​ ​That's​ ​pretty​ ​good.​ ​Let's​ ​review​ ​taking
inventory​ ​of​ ​where​ ​we​ ​are​ ​right​ ​now.
An​ ​insurance​ ​contract​ ​is​ ​where​ ​a​ ​guy​ ​makes​ ​a​ ​promise​ ​to​ ​make​ ​you​ ​whole​ ​if​ ​your​ ​house
burns​ ​down.​ ​Why​ ​does​ ​he​ ​do​ ​that,​ ​because​ ​someone​ ​sends​ ​him​ ​money?​ ​Someone
sends​ ​him​ ​a​ ​premium.​ ​We​ ​got​ ​that​ ​down.​ ​That​ ​was​ ​pretty​ ​easy.​ ​A​ ​rental​ ​contract.​ ​This
guy​ ​says,​ ​"I​ ​give​ ​you​ ​a​ ​promise​ ​that​ ​you​ ​can​ ​stay​ ​in​ ​my​ ​house."​ ​This​ ​guy​ ​says,​ ​"Okay.​ ​I'll
give​ ​you​ ​some​ ​rent​ ​for​ ​that​ ​time​ ​for​ ​there."
In​ ​this​ ​third​ ​example,​ ​this​ ​guy​ ​says,​ ​"All​ ​right.​ ​I'll​ ​make​ ​you​ ​a​ ​promise​ ​that​ ​I​ ​will​ ​sell​ ​oil​ ​to
you​ ​at​ ​$60​ ​a​ ​barrel."​ ​In​ ​order​ ​for​ ​that​ ​promise,​ ​he​ ​pays​ ​him​ ​a​ ​premium.​ ​Let's​ ​put​ ​some
dollars​ ​in​ ​there.​ ​A​ ​premium​ ​to​ ​get​ ​that.​ ​That​ ​should​ ​be​ ​pretty​ ​simple.​ ​Pretty​ ​simple.​ ​If
you​ ​need​ ​to​ ​get​ ​access​ ​to​ ​the​ ​summit,​ ​you​ ​want​ ​to​ ​watch​ ​this​ ​again.​ ​The​ ​more​ ​you
watch​ ​it,​ ​the​ ​more​ ​it​ ​will​ ​click​ ​with​ ​your​ ​premium.
Basically,​ ​the​ ​big​ ​picture​ ​message.​ ​When​ ​I​ ​said​ ​you​ ​get​ ​most​ ​out​ ​of​ ​this,​ ​if​ ​you
understood​ ​the​ ​big​ ​picture,​ ​is​ ​look,​ ​here's​ ​the​ ​big​ ​picture.​ ​You​ ​make​ ​a​ ​promise​ ​y​ ​you​ ​get
paid.​ ​Promises​ ​insurance​ ​contracts.​ ​Someone​ ​got​ ​paid.​ ​Rental​ ​contracts​ ​and​ ​we​ ​got
paid.​ ​Option​ ​contracts​ ​and​ ​we​ ​got​ ​paid.​ ​Now,​ ​another​ ​contract.​ ​People​ ​will​ ​also​ ​want​ ​to
get​ ​control​ ​overselling.​ ​Remember,​ ​risk​ ​is​ ​related​ ​to​ ​the​ ​amount​ ​of​ ​control​ ​you​ ​have
over​ ​something.​ ​It's​ ​funny.​ ​People​ ​say,​ ​"Oh,​ ​options​ ​are​ ​risky​ ​and​ ​stuff."​ ​The​ ​funny​ ​thing
is​ ​people​ ​don't​ ​realize​ ​that​ ​a​ ​lot​ ​of​ ​options​ ​are​ ​purchased​ ​not​ ​because​ ​they're​ ​risky,​ ​but
to​ ​control​ ​the​ ​risk.
Here's​ ​an​ ​example.​ ​We've​ ​got​ ​farmer​ ​Joe​ ​over​ ​here.​ ​Farmer​ ​Joe.​ ​He​ ​makes​ ​wheat​ ​or​ ​he
makes​ ​wheat.​ ​He​ ​grows​ ​wheat.​ ​He​ ​makes​ ​it.​ ​He's​ ​an​ ​alchemist.​ ​Now,​ ​excuse​ ​me,​ ​he
grows​ ​wheat.​ ​I​ ​don't​ ​know​ ​what​ ​the​ ​price​ ​of​ ​wheat​ ​is.​ ​I'm​ ​not​ ​a​ ​commodities​ ​guy,​ ​but
let's​ ​just​ ​say​ ​it's​ ​$6​ ​a​ ​bushel.​ ​It's​ ​$6​ ​a​ ​bushel.​ ​He's​ ​got​ ​to​ ​sell​ ​it​ ​for​ ​$6​ ​a​ ​bushel.​ ​He
absolutely​ ​has​ ​to​ ​sell​ ​for​ ​$6​ ​bushel​ ​because​ ​if​ ​he​ ​doesn't,​ ​he​ ​goes​ ​out​ ​of​ ​business.​ ​Well,
that's​ ​a​ ​lot​ ​of​ ​risk​ ​because​ ​he​ ​can't​ ​control​ ​the​ ​price​ ​of​ ​wheat.​ ​He's​ ​going​ ​to​ ​go​ ​and​ ​get
his​ ​farm​ ​ready​ ​and​ ​spend​ ​all​ ​that​ ​money​ ​raised​ ​that​ ​wheat​ ​not​ ​knowing​ ​whether​ ​there's
drought​ ​or​ ​whether​ ​there's​ ​not​ ​or​ ​whether​ ​the​ ​...​ ​It​ ​goes,​ ​"Look,​ ​to​ ​make​ ​this​ ​thing
worth​ ​my​ ​while,​ ​I​ ​got​ ​to​ ​get​ ​six​ ​bucks​ ​a​ ​bushel."
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
He​ ​goes​ ​to​ ​ACME​ ​wheat​ ​crackers​ ​here​ ​or​ ​whoever.​ ​He​ ​goes​ ​to​ ​Nabisco.​ ​He​ ​says,​ ​"Look,
I'll​ ​sell​ ​you​ ​some​ ​wheat.​ ​Are​ ​you​ ​interested​ ​in​ ​buying​ ​wheat?"​ ​The​ ​guy​ ​says,​ ​"I​ ​buy​ ​the
wheat​ ​all​ ​the​ ​time."​ ​He​ ​says,​ ​"Will​ ​you​ ​give​ ​me​ ​a​ ​promise,​ ​a​ ​promise​ ​to​ ​buy​ ​the​ ​wheat
from​ ​me.​ ​Look.​ ​You're​ ​going​ ​to​ ​buy​ ​it​ ​anyway.​ ​Is​ ​$6​ ​a​ ​bushel​ ​a​ ​fair​ ​price?​ ​Could​ ​we​ ​just
agree​ ​to​ ​that​ ​right​ ​now,​ ​a​ ​bushel?​ ​I'll​ ​pay​ ​you​ ​for​ ​that​ ​promise.​ ​I'll​ ​give​ ​you​ ​a​ ​premium
for​ ​that.​ ​I'll​ ​give​ ​you​ ​some​ ​money​ ​right​ ​now.​ ​I'm​ ​a​ ​farmer.​ ​I'm​ ​a​ ​little​ ​bit​ ​saved​ ​up​ ​here.
I'll​ ​give​ ​you​ ​some​ ​of​ ​my​ ​money​ ​right​ ​now​ ​if​ ​you​ ​just​ ​give​ ​me​ ​that​ ​promise​ ​to​ ​buy​ ​the
wheat​ ​from​ ​me.​ ​Please,​ ​buy​ ​the​ ​wheat​ ​from​ ​me."
He​ ​says,​ ​"I​ ​won't​ ​because​ ​I​ ​really​ ​would​ ​like​ ​to​ ​have​ ​the​ ​choice."​ ​This​ ​will​ ​cost​ ​him​ ​a
higher​ ​premium.​ ​I'd​ ​really​ ​like​ ​a​ ​choice​ ​to​ ​be​ ​able​ ​to​ ​sell​ ​this​ ​to​ ​you​ ​sell.​ ​Sell​ ​wheat​ ​at​ ​$6
a​ ​bushel​ ​to​ ​you.​ ​They​ ​might​ ​come​ ​to​ ​that​ ​agreement.​ ​Nabisco​ ​might​ ​say,​ ​"Gee,​ ​if​ ​you
actually​ ​pay​ ​me​ ​a​ ​little​ ​money​ ​for​ ​what​ ​I​ ​was​ ​going​ ​to​ ​have​ ​to​ ​spend​ ​anyway​ ​at​ ​the​ ​six
bucks,​ ​we​ ​can​ ​make​ ​our​ ​crackers​ ​profit​ ​with​ ​six​ ​bucks.​ ​We​ ​have​ ​no​ ​problem​ ​paying​ ​six.​ ​If
you'll​ ​give​ ​me​ ​a​ ​little​ ​love​ ​upfront,​ ​help​ ​our​ ​business,​ ​give​ ​us​ ​a​ ​little​ ​more​ ​cash​ ​flow,​ ​I'll
take​ ​that​ ​any​ ​day.
This​ ​guy​ ​now​ ​says,​ ​"Yeah."​ ​Now,​ ​if​ ​it​ ​goes​ ​from​ ​six​ ​down​ ​to​ ​four,​ ​now​ ​he​ ​can​ ​still​ ​sell.​ ​He
controls​ ​the​ ​selling​ ​price.​ ​He​ ​can​ ​still​ ​sell​ ​at​ ​six.​ ​This​ ​gets​ ​complicated.​ ​As​ ​you​ ​guys​ ​know,
I​ ​hate​ ​complexity.​ ​The​ ​way​ ​to​ ​get​ ​over​ ​that​ ​is​ ​just​ ​through​ ​repetition​ ​and​ ​remembering.
Look,​ ​here's​ ​wheat​ ​guy.​ ​What's​ ​he​ ​doing?​ ​He​ ​says,​ ​"Look,​ ​I​ ​promise​ ​you.​ ​I'm​ ​going​ ​to​ ​buy
wheat​ ​anyway.​ ​We've​ ​been​ ​paying​ ​six​ ​bucks​ ​anyway.​ ​I​ ​promised​ ​to​ ​buy​ ​the​ ​wheat​ ​from
you,​ ​Mr.​ ​Farmer​ ​Jones.​ ​I'm​ ​going​ ​to​ ​buy​ ​it​ ​from​ ​you.​ ​I'm​ ​going​ ​to​ ​buy​ ​from​ ​you,​ ​Farmer
Jones.​ ​I'll​ ​buy​ ​it​ ​at​ ​$6​ ​a​ ​bushel."
This​ ​guy​ ​now​ ​has​ ​the​ ​choice.​ ​He​ ​says,​ ​"Great.​ ​I​ ​can​ ​sell​ ​it​ ​or​ ​not.​ ​I​ ​have​ ​the​ ​choice."
What's​ ​another​ ​word​ ​for​ ​choice?​ ​That​ ​starts​ ​with​ ​an​ ​O.​ ​Option.​ ​That's​ ​why​ ​they​ ​call
them​ ​option​ ​contracts.​ ​I​ ​have​ ​the​ ​choice​ ​to​ ​what?​ ​He's​ ​going​ ​to​ ​buy​ ​it.​ ​I​ ​can​ ​sell​ ​it​ ​to​ ​you
if​ ​I​ ​want​ ​to​ ​or​ ​not​ ​at​ ​$6​ ​a​ ​bushel.​ ​Now,​ ​if​ ​it​ ​goes​ ​from​ ​six​ ​down​ ​to​ ​four,​ ​this​ ​guy​ ​made​ ​a
promise​ ​to​ ​buy​ ​a​ ​six.​ ​He​ ​probably​ ​doesn't​ ​want​ ​to.​ ​He's​ ​like,​ ​"Gal,​ ​you​ ​know​ ​what?​ ​I'd
rather​ ​buy​ ​it​ ​for​ ​four​ ​out​ ​there​ ​in​ ​the​ ​market,"​ ​but​ ​the​ ​guy​ ​says,​ ​"Look,​ ​I​ ​sent​ ​you​ ​this
premium.​ ​I​ ​sent​ ​you​ ​this​ ​money.​ ​You​ ​agreed​ ​to​ ​buy​ ​it​ ​from​ ​me.​ ​We​ ​agreed​ ​at​ ​a​ ​$6​ ​price.
I​ ​expect​ ​you​ ​to​ ​honor​ ​that​ ​commitment."
The​ ​guy​ ​shrugged​ ​his​ ​shoulders,​ ​says,​ ​"Yeah.​ ​I​ ​guess​ ​you're​ ​right.​ ​We've​ ​made​ ​money​ ​at
six​ ​before.​ ​You​ ​give​ ​me​ ​some​ ​love​ ​up​ ​front.​ ​I​ ​made​ ​the​ ​commitment.​ ​I'll​ ​keep​ ​it."​ ​This​ ​is
the​ ​essence​ ​of​ ​options.​ ​We​ ​have​ ​two​ ​kinds​ ​of​ ​options.​ ​Puts​ ​and​ ​calls.​ ​Now,​ ​some​ ​people
want​ ​to​ ​do​ ​this​ ​with​ ​a​ ​stock.​ ​Let's​ ​look​ ​at​ ​both.​ ​There's​ ​two​ ​types​ ​of​ ​options​ ​contracts.
There's​ ​puts.​ ​There's​ ​calls.​ ​That's​ ​it.​ ​Puts​ ​and​ ​calls.​ ​Let's​ ​start​ ​with​ ​the​ ​calls.​ ​Someone
might​ ​say​ ​I​ ​want​ ​the​ ​choice​ ​to​ ​buy​ ​something.​ ​Let's​ ​put​ ​it​ ​over​ ​here.​ ​This​ ​guy​ ​has​ ​I​ ​want
the​ ​choice​ ​to​ ​buy.​ ​I​ ​want​ ​you​ ​to​ ​make​ ​me​ ​a​ ​promise.​ ​Maybe​ ​this​ ​guy​ ​owns​ ​the​ ​stock​ ​to
sell.
There's​ ​a​ ​match​ ​made​ ​in​ ​heaven​ ​right​ ​there.​ ​Maybe​ ​the​ ​stock's​ ​at​ ​a​ ​$100.​ ​He​ ​says,​ ​"I
want​ ​to​ ​be​ ​able​ ​to​ ​buy​ ​it​ ​at​ ​100.​ ​I'll​ ​give​ ​you​ ​maybe​ ​$5​ ​right​ ​now​ ​for​ ​that​ ​choice​ ​for​ ​two
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
months,"​ ​something​ ​like​ ​that.​ ​Over​ ​the​ ​next​ ​two​ ​months,​ ​I​ ​can​ ​buy​ ​it​ ​at​ ​100.​ ​This​ ​guy
might​ ​have​ ​bought​ ​it​ ​down​ ​here​ ​at​ ​50​ ​anyway.​ ​He​ ​might​ ​be​ ​looking​ ​to​ ​sell​ ​it​ ​anyway.​ ​If
the​ ​stock​ ​goes​ ​up​ ​to​ ​say​ ​120,​ ​this​ ​guy's​ ​going​ ​to​ ​be​ ​pretty​ ​happy​ ​over​ ​here.​ ​He's​ ​going​ ​to
be​ ​really​ ​happy.​ ​Why?​ ​That's​ ​a​ ​really​ ​bad​ ​smile.​ ​Maybe​ ​he​ ​can​ ​use​ ​his​ ​money​ ​and​ ​go​ ​get
some​ ​teeth​ ​put​ ​in​ ​there,​ ​but​ ​120,​ ​well,​ ​he​ ​gets​ ​to​ ​buy​ ​it​ ​at​ ​100.
This​ ​guy​ ​says,​ ​"Gee,​ ​I'd​ ​much​ ​rather​ ​would​ ​have​ ​sold​ ​it​ ​at​ ​120,​ ​but​ ​he​ ​did​ ​give​ ​me​ ​$5​ ​to
promise​ ​to​ ​do​ ​that."​ ​That's​ ​called​ ​a​ ​call​ ​contract.​ ​We​ ​have​ ​puts​ ​and​ ​calls.​ ​A​ ​put​ ​is​ ​just
the​ ​opposite.​ ​A​ ​put​ ​contract​ ​is​ ​where​ ​this​ ​guy​ ​says,​ ​"Look,​ ​I​ ​like​ ​the​ ​choice​ ​to​ ​sell​ ​it​ ​to
you.​ ​I​ ​like​ ​the​ ​choice​ ​to​ ​sell."​ ​This​ ​guy​ ​says,​ ​"All​ ​right,​ ​I'll​ ​make​ ​a​ ​promise​ ​to​ ​buy."​ ​If​ ​it's
confusing,​ ​don't​ ​worry​ ​about​ ​it.​ ​That's​ ​a​ ​put​ ​contract.​ ​Just​ ​understand​ ​this.​ ​Here's​ ​the
big​ ​picture.​ ​The​ ​guy​ ​that​ ​makes​ ​the​ ​promise​ ​to​ ​buy​ ​something​ ​gets​ ​the​ ​money.
The​ ​guy​ ​that​ ​makes​ ​the​ ​promise,​ ​the​ ​money​ ​always​ ​flows​ ​that​ ​way​ ​every​ ​single​ ​time.
That's​ ​a​ ​basic​ ​understanding​ ​of​ ​option​ ​contracts.​ ​It's​ ​not​ ​comprehensive.​ ​There's​ ​a​ ​lot​ ​of
things​ ​to​ ​learn​ ​like​ ​expiration​ ​dates​ ​and​ ​strike​ ​prices​ ​and​ ​all​ ​kinds​ ​of​ ​jargon​ ​that​ ​we
could​ ​do​ ​another​ ​day,​ ​but​ ​essentially,​ ​a​ ​person​ ​that​ ​is​ ​promising​ ​to​ ​buy​ ​something​ ​and
get​ ​paid​ ​by​ ​people​ ​that​ ​might​ ​want​ ​the​ ​choice​ ​to​ ​sell​ ​it.​ ​That's​ ​a​ ​big​ ​deal.​ ​Let's​ ​take​ ​a
look​ ​at​ ​how​ ​this​ ​might​ ​work​ ​and​ ​why​ ​this​ ​might​ ​be​ ​interesting​ ​to​ ​someone​ ​like​ ​Warren
Buffett.
There's​ ​an​ ​article​ ​here.​ ​The​ ​first​ ​thing​ ​you​ ​got​ ​to​ ​realize​ ​is,​ ​this​ ​is​ ​recent,​ ​that​ ​Buffett
loses​ ​a​ ​bidding​ ​war.​ ​That's​ ​not​ ​true.​ ​They​ ​actually​ ​interviewed​ ​Warren​ ​Buffett​ ​and​ ​said,
"Oh,​ ​you​ ​weren't​ ​able​ ​to​ ​pick​ ​up​ ​these​ ​taxes.​ ​Utility​ ​wants​ ​it."​ ​The​ ​reason​ ​he​ ​says,​ ​"I
didn't​ ​lose​ ​the​ ​bidding​ ​war,​ ​he​ ​says,​ ​"Look,​ ​I​ ​made​ ​him​ ​an​ ​offer.​ ​They​ ​declined​ ​it.​ ​I​ ​didn't
lose​ ​anything.​ ​I​ ​have​ ​no​ ​losses​ ​here.​ ​I​ ​didn't​ ​lose​ ​any​ ​money."​ ​I​ ​said,​ ​"Look,​ ​I​ ​am​ ​a
fundamental​ ​analyst."​ ​When​ ​I​ ​look​ ​at​ ​stock​ ​fundamental,​ ​when​ ​I​ ​look​ ​at​ ​stock​ ​I​ ​decide
the​ ​price.​ ​See​ ​this?​ ​I​ ​don't​ ​know​ ​how​ ​to​ ​spell​ ​decide.​ ​Decide,​ ​decision.​ ​I​ ​decide​ ​the​ ​price.
I​ ​decide​ ​the​ ​price.​ ​I​ ​don't​ ​let​ ​anyone​ ​tell​ ​me​ ​any​ ​different.
That's​ ​really​ ​how​ ​Buffett​ ​goes​ ​about​ ​it.​ ​He​ ​says,​ ​"Look,​ ​I​ ​don't​ ​care​ ​what​ ​the​ ​competitors
say​ ​that​ ​that​ ​thing's​ ​worth.​ ​I​ ​don't​ ​even​ ​care​ ​what​ ​the​ ​utility​ ​company​ ​self-thinks​ ​they're
worth.​ ​Look,​ ​I​ ​made​ ​an​ ​offer.​ ​I​ ​did​ ​a​ ​fundamental​ ​analysis.​ ​I​ ​said​ ​this​ ​is​ ​what.​ ​It's​ ​worth
to​ ​me.​ ​Take​ ​it​ ​or​ ​leave​ ​it."​ ​He​ ​really​ ​wasn't​ ​in​ ​a​ ​bidding​ ​war​ ​necessarily.​ ​He​ ​didn't​ ​lose.
He​ ​said,​ ​"Look,​ ​I​ ​didn't​ ​lose​ ​anything.​ ​I​ ​decided​ ​what​ ​I'd​ ​pay.​ ​I​ ​didn't​ ​want​ ​to​ ​pay​ ​as
much​ ​as​ ​the​ ​other​ ​guy."​ ​If​ ​the​ ​other​ ​guy​ ​wants​ ​to​ ​get​ ​caught​ ​up​ ​in​ ​that,​ ​he​ ​has​ ​a
different​ ​valuation​ ​than​ ​me,​ ​more​ ​power​ ​to​ ​him,​ ​but​ ​I'm​ ​not​ ​going​ ​to​ ​overpay.​ ​I'm​ ​a
value​ ​investor.​ ​I'm​ ​not​ ​going​ ​to​ ​overpay.
I​ ​think​ ​that's​ ​the​ ​mentality​ ​that​ ​is​ ​in​ ​the​ ​Benjamin​ ​Graham​ ​book,​ ​the​ ​intelligent​ ​investor.
That's​ ​the​ ​mentality​ ​that​ ​they​ ​have.​ ​How​ ​has​ ​Buffett​ ​used​ ​this​ ​to​ ​his​ ​advantage,​ ​this
mentality​ ​and​ ​also​ ​the​ ​options​ ​market​ ​to​ ​do​ ​some​ ​fun​ ​things?​ ​Well,​ ​here's​ ​an​ ​article
that's​ ​interesting​ ​from​ ​the​ ​Nasdaq.​ ​This​ ​is​ ​from​ ​Nasdaq.com.​ ​It​ ​says​ ​here's​ ​a​ ​secret​ ​trick
Buffett​ ​uses​ ​to​ ​multiply​ ​his​ ​income.​ ​It​ ​has​ ​three​ ​or​ ​four​ ​examples​ ​of​ ​this​ ​right​ ​here.​ ​The
one​ ​I'm​ ​going​ ​to​ ​talk​ ​about​ ​here​ ​is​ ​Coca-Cola​ ​because​ ​I​ ​think​ ​it's​ ​one​ ​of​ ​the​ ​great
illustrations​ ​of​ ​this​ ​strategy.​ ​This​ ​article​ ​doesn't​ ​give​ ​a​ ​comprehensive​ ​version​ ​of​ ​this
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Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
story,​ ​but​ ​I​ ​know​ ​the​ ​story​ ​very​ ​well.​ ​I​ ​will​ ​give​ ​a​ ​little​ ​bit​ ​more​ ​detail​ ​than​ ​the​ ​article
does,​ ​but​ ​we'll​ ​work​ ​off​ ​the​ ​article​ ​for​ ​just​ ​a​ ​minute.​ ​Let's​ ​pull​ ​this​ ​over​ ​here​ ​and​ ​put​ ​this
up​ ​here​ ​and​ ​have​ ​my​ ​whiteboard​ ​already.​ ​That's​ ​going​ ​to​ ​be​ ​fantastic.
Buffett​ ​really​ ​loves​ ​Coke.​ ​He​ ​loves​ ​to​ ​drink​ ​it.​ ​He​ ​loves​ ​to​ ​buy​ ​it.​ ​In​ ​the​ ​mid-1980s,​ ​he
always​ ​like​ ​to​ ​pick​ ​up​ ​stuff.​ ​He​ ​loves​ ​great​ ​bands​ ​and​ ​great​ ​companies.​ ​He​ ​felt​ ​it​ ​was
undervalued.​ ​That's​ ​fundamental​ ​analysis​ ​that​ ​I​ ​talked​ ​about​ ​as​ ​the​ ​first​ ​pillar​ ​if​ ​you​ ​saw
the​ ​keynote​ ​I​ ​did.​ ​He​ ​said,​ ​"Look,​ ​when​ ​I​ ​look​ ​at​ ​that,​ ​I​ ​think​ ​it's​ ​undervalued."​ ​He​ ​really
like​ ​this.​ ​He​ ​started​ ​buying​ ​it.​ ​He​ ​started​ ​buying​ ​it.​ ​Well,​ ​five​ ​years​ ​later,​ ​the​ ​shares
doubled​ ​in​ ​value.​ ​The​ ​question​ ​is​ ​are​ ​they​ ​still​ ​a​ ​good​ ​value.​ ​Are​ ​they​ ​still​ ​a​ ​good​ ​value?​ ​I
picked​ ​them​ ​up​ ​really​ ​cheap​ ​probably​ ​in​ ​the​ ​teens.​ ​Now,​ ​they're​ ​in​ ​the​ ​30s.​ ​Do​ ​I​ ​want​ ​to
buy​ ​more,​ ​but​ ​I​ ​don't​ ​want​ ​to​ ​overpay.
That's​ ​why​ ​I'm​ ​laughing​ ​at​ ​these​ ​idiots​ ​that​ ​write​ ​in​ ​the​ ​paper.​ ​Buffett​ ​loses​ ​bidding​ ​war.
Buffett​ ​never​ ​loses​ ​a​ ​bidding​ ​war.​ ​He's​ ​worth​ ​a​ ​$100​ ​billion​ ​or​ ​whatever.​ ​I​ ​think​ ​he
[inaudible​ ​00:31:43]​ ​like​ ​60​ ​and​ ​giving​ ​40​ ​away​ ​or​ ​something​ ​like​ ​that.​ ​He​ ​didn’t​ ​lose.​ ​He
just​ ​simply​ ​wasn't​ ​willing​ ​to​ ​pay​ ​that​ ​much.​ ​He​ ​draws​ ​a​ ​line​ ​in​ ​the​ ​sand.​ ​He​ ​says,​ ​"I​ ​will
not​ ​overpay.​ ​I​ ​am​ ​a​ ​value​ ​investor.​ ​I'm​ ​not​ ​going​ ​to​ ​speculate​ ​on​ ​more​ ​growth​ ​or
whatever.​ ​I'm​ ​just​ ​going​ ​to​ ​say​ ​what's​ ​the​ ​company​ ​worth."
This​ ​is​ ​what​ ​he​ ​did.​ ​Here's​ ​Coca-Cola​ ​trading​ ​at​ ​$39.​ ​You​ ​know​ ​what?​ ​Let's​ ​put​ ​that​ ​up​ ​a
little​ ​higher​ ​here​ ​so​ ​have​ ​room.​ ​He​ ​says,​ ​"Look,​ ​I​ ​do​ ​my​ ​fundamental​ ​analysis.​ ​I​ ​don't
think​ ​it's​ ​worth​ ​35​ ​or​ ​39."​ ​He​ ​says,​ ​"My​ ​magic​ ​price​ ​when​ ​I​ ​do​ ​my​ ​fundamental​ ​analysis,
the​ ​shares​ ​have​ ​doubled,​ ​the​ ​price​ ​has​ ​gone​ ​up,​ ​but​ ​they've​ ​increased​ ​sales.​ ​They've
increased​ ​revenues.​ ​Their​ ​brand​ ​has​ ​gotten​ ​more​ ​solid​ ​in​ ​13​ ​years."​ ​He​ ​says,​ ​"I​ ​pay​ ​35
for​ ​it.​ ​That's​ ​what​ ​I'd​ ​pay.​ ​That's​ ​my​ ​line​ ​in​ ​the​ ​sand.​ ​I'm​ ​not​ ​going​ ​to​ ​pay​ ​anymore."
Maybe​ ​there's​ ​some​ ​people​ ​that​ ​are​ ​scared​ ​that​ ​it​ ​would​ ​drop.​ ​Maybe​ ​there's​ ​a​ ​hedge
fund​ ​that​ ​owns​ ​a​ ​bunch​ ​of​ ​39.​ ​They're​ ​scared​ ​to​ ​go​ ​to​ ​20​ ​or​ ​30​ ​or​ ​10.​ ​Let's​ ​put​ ​Warren
Buffett​ ​over​ ​here.​ ​Let's​ ​say​ ​Warren​ ​Buffett's​ ​over​ ​here.​ ​He​ ​says,​ ​"I'm​ ​willing​ ​to​ ​buy​ ​at​ ​35.
In​ ​fact,​ ​if​ ​it​ ​was​ ​35​ ​today,​ ​I'd​ ​buy​ ​it​ ​anyway.​ ​It's​ ​not​ ​35.​ ​It's​ ​39,​ ​but​ ​if​ ​it​ ​wasn't​ ​35,​ ​I​ ​would
buy​ ​it​ ​this​ ​very​ ​moment.​ ​This​ ​very​ ​second,​ ​I​ ​would​ ​do​ ​it."
Keep​ ​that​ ​in​ ​mind.​ ​He's​ ​willing​ ​to​ ​risk​ ​$35​ ​on​ ​the​ ​stock.​ ​He's​ ​not​ ​willing​ ​to​ ​risk​ ​39.​ ​It's
just​ ​too​ ​high.​ ​He​ ​says,​ ​"Look,​ ​I​ ​will​ ​make​ ​you​ ​a​ ​promise."​ ​This​ ​is​ ​where​ ​Buffett​ ​not​ ​caring
about​ ​prices​ ​going​ ​down​ ​is​ ​a​ ​really​ ​big​ ​deal​ ​because,​ ​look,​ ​if​ ​this​ ​price​ ​worth​ ​20​ ​or​ ​10​ ​or
five,​ ​it​ ​wouldn't​ ​matter​ ​Buffett.​ ​Look,​ ​he's​ ​willing​ ​to​ ​pay​ ​35​ ​and​ ​be​ ​happy​ ​with​ ​it.​ ​That's​ ​a
really​ ​important​ ​mentality​ ​to​ ​have.​ ​When​ ​you​ ​go​ ​out​ ​and​ ​shop​ ​for​ ​something,​ ​value​ ​is​ ​in
the​ ​eye​ ​of​ ​the​ ​beholder.​ ​What's​ ​a​ ​new​ ​pair​ ​of​ ​jeans​ ​worth​ ​to​ ​you?​ ​Maybe​ ​it's​ ​$200.
Maybe​ ​you​ ​think​ ​that's​ ​a​ ​deal.​ ​Maybe​ ​someone​ ​else​ ​doesn't​ ​think​ ​it's​ ​a​ ​deal.
I​ ​have​ ​an​ ​NCAA​ ​men's​ ​championship​ ​watch​ ​from​ ​1993​ ​as​ ​a​ ​matter​ ​of​ ​fact​ ​when​ ​we
played​ ​in​ ​that​ ​tournament.​ ​I​ ​could​ ​sell​ ​on​ ​eBay​ ​for​ ​a​ ​couple​ ​hundred​ ​bucks​ ​or
something,​ ​but​ ​I​ ​wouldn't​ ​give​ ​it​ ​up​ ​for​ ​a​ ​$​ ​million​ ​because​ ​the​ ​team​ ​I​ ​played​ ​on​ ​and​ ​the
relationships,​ ​it​ ​just​ ​means​ ​too​ ​much​ ​to​ ​me.​ ​It's​ ​the​ ​value​ ​in​ ​the​ ​beholder.​ ​Buffett​ ​says,
"Look,​ ​I​ ​really​ ​don't​ ​care​ ​what​ ​anyone​ ​else​ ​thinks​ ​it's​ ​worth.​ ​If​ ​the​ ​market​ ​thinks​ ​it's​ ​39,​ ​I
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
disagree.​ ​I'd​ ​pay​ ​35.​ ​If​ ​the​ ​market​ ​thinks​ ​it's​ ​20,​ ​I'd​ ​disagree.​ ​I'd​ ​still​ ​pay​ ​35.​ ​He​ ​says,​ ​"I
promise​ ​to​ ​buy​ ​this​ ​at​ ​$35.​ ​I'll​ ​buy​ ​it."
Someone​ ​else,​ ​maybe​ ​it's​ ​a​ ​fund​ ​or​ ​a​ ​bank​ ​or​ ​an​ ​institution.​ ​It​ ​has​ ​a​ ​whole​ ​bunch​ ​of​ ​this.
Let's​ ​put​ ​them​ ​in​ ​red.​ ​This​ ​is​ ​Buffett​ ​over​ ​here​ ​in​ ​green.​ ​We​ ​better​ ​label​ ​them​ ​so​ ​we
don't​ ​get​ ​them​ ​confused.​ ​This​ ​is​ ​Buffett.​ ​I​ ​don’t​ ​know​ ​if​ ​Buffett's​ ​with​ ​two​ ​Ts.​ ​I​ ​think​ ​it​ ​is.
Maybe,​ ​this​ ​is​ ​an​ ​institution.​ ​When​ ​they​ ​say,​ ​"Look,​ ​I​ ​would​ ​like​ ​the​ ​choice."​ ​This​ ​guy​ ​has
a​ ​promise.​ ​He​ ​wants​ ​the​ ​choice.​ ​He​ ​wants​ ​the​ ​choice​ ​to​ ​be​ ​able​ ​to​ ​get​ ​rid​ ​of​ ​this​ ​in​ ​case
it​ ​goes​ ​down.​ ​He's​ ​a​ ​trend​ ​investor.​ ​He​ ​sees​ ​this​ ​thing​ ​trickling​ ​down.​ ​He​ ​said,​ ​"Hey,​ ​I
want​ ​to​ ​guarantee​ ​that​ ​then​ ​I​ ​can​ ​get​ ​out​ ​at​ ​35​ ​in​ ​case​ ​it​ ​goes​ ​down."​ ​Why?​ ​He​ ​has​ ​a
different​ ​analysis​ ​of​ ​Coke​ ​than​ ​Buffett​ ​does.​ ​It​ ​happens​ ​all​ ​the​ ​time.​ ​He​ ​says,​ ​"Look,​ ​I
have​ ​the​ ​choice​ ​to​ ​sell​ ​at​ ​35.​ ​It​ ​goes​ ​down​ ​there."
Let's​ ​look​ ​at​ ​the​ ​stock​ ​chart​ ​here.​ ​Let's​ ​look​ ​at​ ​what​ ​could​ ​happen.​ ​The​ ​stock​ ​could​ ​go
up.​ ​The​ ​stock​ ​could​ ​stay​ ​the​ ​same.​ ​The​ ​stock​ ​could​ ​go​ ​down​ ​below​ ​35​ ​or​ ​below.​ ​Those
are​ ​the​ ​three​ ​things​ ​that​ ​could​ ​happen.​ ​If​ ​the​ ​stock​ ​stays​ ​above​ ​35,​ ​if​ ​it​ ​just​ ​stays
anywhere​ ​above​ ​up​ ​here,​ ​this​ ​guy's​ ​not​ ​going​ ​to​ ​want​ ​to​ ​sell​ ​at​ ​35​ ​if​ ​it's​ ​worth​ ​39.​ ​This
option​ ​would​ ​expire​ ​worthless.​ ​I'll​ ​catch​ ​up​ ​with​ ​you​ ​in​ ​a​ ​bit.​ ​What​ ​happens​ ​right​ ​here​ ​is
this​ ​guy's​ ​going​ ​to​ ​pay​ ​Buffett​ ​a​ ​premium.​ ​That's​ ​our​ ​big​ ​picture.
Remember,​ ​the​ ​guy​ ​that​ ​makes​ ​the​ ​promise​ ​receives​ ​the​ ​money.​ ​He​ ​says,​ ​"How​ ​many
shares​ ​would​ ​you​ ​like​ ​to​ ​do​ ​this​ ​with​ ​Warren​ ​Buffett?"​ ​Warren​ ​Buffett​ ​says,​ ​"I​ ​would​ ​like
to​ ​do​ ​this​ ​with​ ​five​ ​million​ ​shares."​ ​We'll​ ​just​ ​put​ ​five​ ​million​ ​shares​ ​right​ ​here.​ ​I'd​ ​like​ ​to
pick​ ​up​ ​five​ ​million​ ​shares​ ​of​ ​Coke​ ​at​ ​35​ ​right​ ​here.​ ​This​ ​guy​ ​says,​ ​"All​ ​right,​ ​I'll​ ​give​ ​you
$1.50​ ​a​ ​share​ ​on​ ​that​ ​deal.​ ​I'll​ ​give​ ​you​ ​a​ ​$1.50​ ​for​ ​the​ ​time."
Think​ ​about​ ​that.​ ​That​ ​$7.5​ ​million​ ​is​ ​going​ ​in​ ​Warren​ ​Buffett's​ ​pocket​ ​for​ ​doing​ ​what​ ​he
was​ ​going​ ​to​ ​do​ ​anyway​ ​if​ ​it​ ​hit​ ​35.​ ​Figure​ ​that.​ ​Now,​ ​this​ ​is​ ​why​ ​the​ ​article​ ​said,​ ​"This​ ​is
how​ ​he​ ​adds​ ​extra​ ​income​ ​to​ ​what​ ​he​ ​does.​ ​He's​ ​going​ ​to​ ​receive​ ​$7.5​ ​million​ ​to​ ​do
what​ ​he​ ​was​ ​going​ ​to​ ​do​ ​anyway​ ​to​ ​take​ ​the​ ​same​ ​risk​ ​he​ ​was​ ​going​ ​to​ ​take​ ​anyway."
This​ ​happens​ ​every​ ​single​ ​day​ ​the​ ​markets​ ​open​ ​on​ ​a​ ​scale​ ​that​ ​most​ ​people​ ​have​ ​no
clue​ ​about.​ ​There's​ ​people​ ​in​ ​401(K)s​ ​that​ ​think​ ​they're​ ​investing​ ​like​ ​Warren​ ​Buffett.​ ​It
kills​ ​me.​ ​They​ ​say,​ ​"Oh,​ ​yeah.​ ​I​ ​just​ ​buy​ ​and​ ​hold​ ​forever."​ ​What​ ​Warren​ ​Buffett​ ​does
couldn't​ ​be​ ​further​ ​from​ ​a​ ​401(K)​ ​because​ ​if​ ​it​ ​was​ ​the​ ​same​ ​thing,​ ​everyone​ ​at​ ​401(K)
would​ ​have​ ​$40​ ​billion​ ​to​ ​$100​ ​billion​ ​to​ ​...
Look,​ ​Warren​ ​Buffett,​ ​number​ ​one,​ ​does​ ​not​ ​diversify.​ ​He's​ ​a​ ​focused​ ​investor.​ ​Warren
Buffett​ ​does​ ​not​ ​buy​ ​companies​ ​without​ ​doing​ ​a​ ​fundamental​ ​analysis​ ​on​ ​them.​ ​People
that​ ​put​ ​money​ ​in​ ​401(K)s​ ​generally​ ​have​ ​no​ ​clue​ ​what​ ​they​ ​own.​ ​They​ ​have​ ​no​ ​idea.
Some,​ ​money​ ​managers.​ ​Some​ ​does​ ​it.​ ​They​ ​diversify.​ ​They​ ​buy​ ​all​ ​kinds​ ​of​ ​stuff​ ​hoping
winners​ ​outnumber​ ​losers.​ ​Warren​ ​Buffett​ ​is​ ​a​ ​focused​ ​investor.​ ​He​ ​finds​ ​great
companies​ ​and​ ​wants​ ​to​ ​buy.​ ​Then,​ ​he​ ​buys​ ​them,​ ​but​ ​often​ ​one​ ​of​ ​the​ ​great​ ​ways​ ​he'll
use​ ​to​ ​buy​ ​them​ ​is​ ​he​ ​will​ ​say,​ ​"Hey,​ ​I​ ​promise​ ​to​ ​buy​ ​it​ ​by​ ​making​ ​that​ ​promise.​ ​I'll​ ​pick
up​ ​an​ ​extra​ ​dollar​ ​50."
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Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
Now,​ ​a​ ​couple​ ​of​ ​things​ ​can​ ​happen​ ​right​ ​here.​ ​A​ ​couple​ ​of​ ​things​ ​can​ ​happen​ ​The​ ​stock
could​ ​go​ ​up.​ ​The​ ​stock​ ​go​ ​down,​ ​goes​ ​sideways.​ ​Let's​ ​say​ ​it​ ​goes​ ​up.​ ​If​ ​the​ ​stock​ ​goes​ ​up
to​ ​40​ ​or​ ​50,​ ​Warren​ ​Buffett​ ​doesn't​ ​want​ ​it.​ ​It's​ ​not​ ​losing​ ​the​ ​bidding​ ​war.​ ​He​ ​just
wasn't​ ​willing​ ​to​ ​pay​ ​that​ ​much.​ ​Let's​ ​say​ ​it​ ​goes​ ​up​ ​here​ ​to​ ​42.​ ​Well,​ ​what​ ​will​ ​Warren
Buffett​ ​get?​ ​He​ ​gets​ ​7.5​ ​million​ ​for​ ​watching​ ​the​ ​stock​ ​go​ ​up​ ​even​ ​though​ ​he​ ​never
owned​ ​it.
Let​ ​me​ ​say​ ​it​ ​again.​ ​He​ ​collects​ ​7.5​ ​million​ ​simply​ ​by​ ​promising​ ​to​ ​buy​ ​it​ ​low.​ ​Well,​ ​it
didn't​ ​go​ ​low.​ ​He​ ​keeps​ ​the​ ​7.5​ ​million.​ ​That​ ​would​ ​make​ ​anyone​ ​happy.​ ​Let​ ​me​ ​say​ ​it
again.​ ​He​ ​gets​ ​paid​ ​$7.5​ ​million​ ​for​ ​stock​ ​that​ ​he​ ​never​ ​laid​ ​a​ ​finger​ ​on.​ ​He​ ​never​ ​even
owned​ ​it.​ ​He​ ​just​ ​happened​ ​to​ ​promise​ ​to​ ​buy​ ​it​ ​maybe.​ ​It​ ​went​ ​up.​ ​He's​ ​not​ ​going​ ​to
have​ ​to​ ​do​ ​anything.​ ​You​ ​don't​ ​have​ ​to​ ​buy​ ​anything.​ ​Of​ ​course,​ ​this​ ​guy's​ ​not​ ​going​ ​to
sell​ ​at​ ​45​ ​if​ ​it​ ​went​ ​up​ ​to​ ​40​ ​or​ ​50.
Let's​ ​say​ ​it​ ​stays​ ​the​ ​same,​ ​39.​ ​Well,​ ​he's​ ​not​ ​going​ ​to​ ​use​ ​this​ ​choice​ ​to​ ​sell​ ​at​ ​35.​ ​What
happens?​ ​Warren​ ​Buffett​ ​keeps​ ​the​ ​7.5​ ​million.​ ​Well,​ ​that's​ ​going​ ​to​ ​make​ ​him​ ​happy
again.​ ​Put​ ​another​ ​[inaudible​ ​00:39:15]​ ​on​ ​him​ ​there.​ ​Let's​ ​say​ ​it​ ​goes​ ​down​ ​below​ ​35,
you​ ​know,​ ​34​ ​or​ ​33.​ ​Well,​ ​he​ ​still​ ​keeps​ ​the​ ​7.5​ ​million,​ ​plus​ ​he'll​ ​buy​ ​the​ ​shares​ ​as
promised​ ​at​ ​35.​ ​Why,​ ​because​ ​he​ ​was​ ​going​ ​to​ ​do​ ​that​ ​anyway.​ ​The​ ​reason​ ​you​ ​buy​ ​at
35​ ​is​ ​Buffett​ ​say,​ ​"Look.​ ​It's​ ​worth​ ​35."​ ​Now,​ ​if​ ​the​ ​market​ ​calls​ ​at​ ​34​ ​or​ ​33,​ ​I​ ​believe
eventually​ ​they'll​ ​figure​ ​it​ ​out​ ​and​ ​figure​ ​out​ ​that​ ​it's​ ​worth​ ​more.
He​ ​really​ ​doesn't​ ​care​ ​about​ ​dips​ ​after​ ​he​ ​buys​ ​because​ ​he's​ ​buying​ ​the​ ​value.​ ​He's
saying,​ ​"Look.​ ​It's​ ​worth​ ​35​ ​bucks.​ ​I​ ​don't​ ​care​ ​what​ ​the​ ​market​ ​says​ ​its​ ​worth​ ​with
supply​ ​and​ ​demand.​ ​I​ ​know​ ​what​ ​this​ ​company​ ​is​ ​worth.​ ​I​ ​know​ ​what​ ​I'm​ ​willing​ ​to​ ​pay
for​ ​it.​ ​If​ ​the​ ​market​ ​closed​ ​for​ ​10​ ​years,​ ​I​ ​wouldn't​ ​care​ ​because​ ​that's​ ​what​ ​it's​ ​worth.
I'm​ ​just​ ​really​ ​good​ ​at​ ​valuing​ ​companies."​ ​If​ ​he​ ​bought​ ​it​ ​at​ ​35​ ​a​ ​week​ ​ago​ ​and​ ​it​ ​went
down,​ ​he​ ​wouldn't​ ​care.​ ​The​ ​fact​ ​it's​ ​gone​ ​down​ ​to​ ​34,​ ​33,​ ​he'll​ ​still​ ​pay​ ​35​ ​for​ ​it.​ ​He
would​ ​have​ ​done​ ​it​ ​last​ ​week,​ ​but​ ​what​ ​else​ ​does​ ​he​ ​get?​ ​He​ ​gets​ ​$7.5​ ​million​ ​plus,​ ​he
gets​ ​5​ ​million​ ​shares​ ​of​ ​the​ ​stock​ ​that​ ​he​ ​wanted​ ​anyway​ ​which​ ​would​ ​probably​ ​make
him​ ​really​ ​happy​ ​because​ ​it​ ​went​ ​down.​ ​He​ ​actually​ ​got​ ​the​ ​asset​ ​that​ ​he​ ​wanted.
In​ ​this​ ​case,​ ​it​ ​went​ ​up.​ ​The​ ​Coke​ ​continued​ ​higher​ ​in​ ​this​ ​case.​ ​He​ ​just​ ​did​ ​this​ ​scenario.
He​ ​just​ ​kept​ ​the​ ​7.5​ ​million,​ ​but​ ​what​ ​people​ ​don't​ ​realize​ ​is​ ​Warren​ ​Buffett​ ​collects
money​ ​on​ ​stocks​ ​that​ ​he​ ​doesn't​ ​even​ ​own.​ ​He​ ​collects​ ​money​ ​by​ ​making​ ​promises​ ​on
stocks​ ​he'd​ ​buy​ ​if​ ​they​ ​got​ ​cheap.​ ​He​ ​has​ ​made​ ​billions​ ​of​ ​dollars​ ​this​ ​way,​ ​not​ ​millions,
billions​ ​of​ ​dollars​ ​this​ ​way.
Let's​ ​just​ ​take​ ​a​ ​look​ ​at​ ​another​ ​one​ ​for​ ​fun.​ ​There's​ ​all​ ​kinds​ ​of​ ​them​ ​up​ ​here.​ ​Here's
one​ ​on​ ​BNSF.​ ​This​ ​is​ ​a​ ​train.​ ​This​ ​is​ ​a​ ​company​ ​that​ ​says​ ​trains.​ ​I​ ​think​ ​it's​ ​a​ ​railroad​ ​or
something​ ​like​ ​that.​ ​Here's​ ​the​ ​same​ ​thing.​ ​He​ ​says,​ ​"Look,​ ​he's​ ​buying​ ​BNSF."​ ​He​ ​says,
"I'm​ ​going​ ​to​ ​do​ ​this​ ​low-cost​ ​strategy."​ ​He​ ​sold​ ​750,000​ ​puts​ ​on​ ​BNSF.​ ​Then,​ ​two​ ​days
later,​ ​he​ ​sold​ ​another​ ​1.9​ ​million.​ ​That's​ ​about​ ​2​ ​million​ ​puts​ ​right​ ​here.​ ​Basically,​ ​he
said,​ ​"Look,​ ​I​ ​promise.​ ​I​ ​promise​ ​to​ ​buy."​ ​This​ ​is​ ​a​ ​lot​ ​of​ ​shares,​ ​man,​ ​to​ ​buy.​ ​This​ ​is​ ​more
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than​ ​2​ ​million​ ​shares​ ​if​ ​you​ ​like​ ​200​ ​million​ ​shares​ ​because​ ​there's​ ​a​ ​lot​ ​of​ ​shares​ ​in​ ​the
contract.
But​ ​it​ ​says,​ ​"I​ ​promise​ ​to​ ​buy​ ​a​ ​bunch​ ​of​ ​BNSF​ ​stock​ ​here.​ ​Promise​ ​to​ ​do​ ​it​ ​if​ ​it​ ​goes
down​ ​at​ ​a​ ​certain​ ​price."​ ​The​ ​premium​ ​they​ ​gave​ ​him​ ​for​ ​that​ ​promise​ ​was​ ​$13​ ​million
without​ ​buying​ ​a​ ​single​ ​share​ ​to​ ​tie​ ​up​ ​his​ ​capital.​ ​He's​ ​also​ ​expired​ ​worthless.​ ​One​ ​of
the​ ​way​ ​Buffett​ ​buys​ ​companies​ ​is​ ​they'll​ ​be​ ​here.​ ​They'll​ ​dip​ ​down​ ​in​ ​his​ ​value​ ​zone.
Let's​ ​say​ ​that​ ​here's​ ​the​ ​value​ ​zone​ ​where​ ​Buffett​ ​looks​ ​at​ ​a​ ​company​ ​and​ ​maybe​ ​their
price​ ​is​ ​up​ ​here.​ ​Here's​ ​their​ ​stock​ ​chart​ ​looking​ ​like​ ​this.
Well,​ ​what​ ​he'll​ ​do​ ​is​ ​he​ ​says,​ ​"Look,​ ​if​ ​this​ ​stock​ ​ever​ ​got​ ​to​ ​this​ ​price,​ ​it​ ​would​ ​be​ ​within
my​ ​value​ ​zone.​ ​It​ ​would​ ​be​ ​undervalued."​ ​In​ ​other​ ​words,​ ​if​ ​I​ ​can​ ​ever​ ​pick​ ​up​ ​the
company​ ​this​ ​price,​ ​I'd​ ​do​ ​it​ ​because​ ​there's​ ​way​ ​value​ ​with​ ​that​ ​price.​ ​He'll​ ​simply​ ​make
promises​ ​say,​ ​"Look,​ ​if​ ​the​ ​stock​ ​dips​ ​into​ ​my​ ​value​ ​zone,​ ​I'm​ ​willing​ ​to​ ​buy​ ​it.​ ​I'm​ ​willing
to​ ​buy​ ​it​ ​because​ ​he​ ​eventually​ ​believes​ ​it'll​ ​be​ ​up​ ​here​ ​anyway."​ ​It's​ ​undervalued.
He'll​ ​simply​ ​make​ ​these​ ​promises.​ ​He'll​ ​get​ ​paid​ ​millions​ ​and​ ​even​ ​billions​ ​of​ ​dollars​ ​to
do​ ​what​ ​he​ ​would​ ​have​ ​done​ ​anyway.​ ​Look,​ ​if​ ​Coca-Cola​ ​...​ ​Buffett​ ​owns​ ​it​ ​right​ ​now,
but​ ​if​ ​Coca-Cola​ ​went​ ​down​ ​20%​ ​in​ ​price,​ ​man,​ ​they're​ ​way​ ​valuable​ ​in​ ​his​ ​eyes.​ ​He'd
pick​ ​up​ ​as​ ​much​ ​as​ ​he​ ​could.​ ​Same​ ​thing.​ ​He​ ​did​ ​this​ ​on​ ​puts.​ ​He​ ​does​ ​this​ ​on​ ​the​ ​S&P
index​ ​on​ ​the​ ​broad​ ​index​ ​right​ ​here.​ ​In​ ​the​ ​short​ ​run,​ ​Buffett​ ​and​ ​Berkshire​ ​generally
staggered​ ​my​ ​income​ ​from​ ​these​ ​types​ ​of​ ​trades​ ​for​ ​$4.2​ ​billion.​ ​He​ ​does​ ​this​ ​a​ ​lot.​ ​He'll
do​ ​them​ ​for​ ​long​ ​periods​ ​of​ ​time​ ​like​ ​five​ ​years​ ​or​ ​more​ ​because​ ​Buffett​ ​loves​ ​to​ ​buy
value.
I've​ ​done​ ​the​ ​same​ ​thing.​ ​Hopefully,​ ​you're​ ​enjoying​ ​this​ ​right​ ​here.​ ​Let's​ ​just​ ​do​ ​the
trade​ ​one​ ​more​ ​time.​ ​Here's​ ​Buffett.​ ​Buffett​ ​will​ ​simply​ ​see​ ​something​ ​a​ ​price.​ ​He​ ​say,
"Look.​ ​I​ ​promise.​ ​I​ ​promise​ ​to​ ​buy​ ​at​ ​X​ ​price,​ ​at​ ​XYZ​ ​price.​ ​I​ ​promise​ ​to​ ​buy​ ​at​ ​that​ ​price."
This​ ​person​ ​over​ ​here​ ​says,​ ​"I​ ​would​ ​like​ ​the​ ​choice​ ​to​ ​sell​ ​at​ ​this​ ​price."
Buffett,​ ​they​ ​pay​ ​him​ ​a​ ​premium​ ​money​ ​right​ ​there.​ ​What​ ​does​ ​this​ ​balance​ ​sheet​ ​look?
Well,​ ​it​ ​looks​ ​like​ ​this.​ ​He​ ​says,​ ​"I've​ ​got​ ​a​ ​bunch​ ​of​ ​money​ ​in​ ​my​ ​asset​ ​column​ ​right
here."​ ​I​ ​have​ ​money​ ​to​ ​buy​ ​your​ ​stock​ ​from​ ​you.​ ​If​ ​you​ ​will​ ​give​ ​me​ ​an​ ​income,​ ​if​ ​you'll
give​ ​me​ ​this​ ​premium,​ ​then​ ​I'll​ ​make​ ​that​ ​promise​ ​to​ ​you.​ ​He​ ​brings​ ​in​ ​income​ ​all​ ​the
time​ ​by​ ​promising​ ​to​ ​buy​ ​new​ ​things​ ​to​ ​turn​ ​cash​ ​into​ ​stock.
Why?​ ​People​ ​say,​ ​"Why​ ​would​ ​people​ ​pay​ ​him​ ​to​ ​do​ ​that?"​ ​Well,​ ​maybe​ ​the​ ​stock​ ​is​ ​at
$100.​ ​This​ ​guy​ ​is​ ​fearful.​ ​He's​ ​fearful​ ​because​ ​he's​ ​a​ ​trader.​ ​He's​ ​trader.​ ​He​ ​says,​ ​"My
gosh,​ ​what​ ​if​ ​it​ ​goes​ ​down​ ​to​ ​80?​ ​What​ ​if​ ​it​ ​goes​ ​down​ ​to​ ​70?"​ ​I​ ​would​ ​like​ ​to​ ​be​ ​able​ ​to
sell,​ ​let's​ ​say​ ​90?​ ​Buffett​ ​says,​ ​"I'm​ ​not​ ​panicking​ ​at​ ​90.​ ​If​ ​I​ ​can​ ​pick​ ​it​ ​up​ ​at​ ​90,​ ​I​ ​know​ ​it'll
be​ ​back​ ​up​ ​here​ ​later.​ ​I'll​ ​take​ ​your​ ​premium."​ ​He​ ​makes​ ​the​ ​money​ ​where​ ​that​ ​goes​ ​up,
down,​ ​or​ ​sideways.​ ​That​ ​money​ ​goes​ ​all​ ​the​ ​time.​ ​It​ ​works.​ ​Let's​ ​look​ ​at​ ​an​ ​example.
I'll​ ​give​ ​myself​ ​a​ ​little​ ​plug​ ​if​ ​it's​ ​okay.​ ​Hopefully,​ ​no​ ​one​ ​cares​ ​about​ ​that.​ ​Often,​ ​people
like​ ​our​ ​style.​ ​They​ ​like​ ​how​ ​we​ ​teach​ ​on​ ​the​ ​whiteboard.​ ​What​ ​I​ ​do​ ​once​ ​a​ ​week​ ​is​ ​I
have​ ​a​ ​mentor​ ​club.​ ​I​ ​have​ ​some​ ​fun​ ​programs​ ​at​ ​my​ ​company,​ ​Cashflow​ ​Academy.​ ​This
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is​ ​what​ ​we​ ​do.​ ​We​ ​just​ ​teach​ ​people​ ​different​ ​strategies​ ​like​ ​this​ ​one.​ ​This​ ​my​ ​four​ ​pillars
program​ ​that​ ​teaches​ ​a​ ​lot​ ​of​ ​what​ ​I​ ​went​ ​over​ ​in​ ​the​ ​keynote​ ​in​ ​the​ ​wealth​ ​summit.
Then,​ ​this​ ​is​ ​my​ ​mentor​ ​Club.​ ​What​ ​my​ ​mentor​ ​Club​ ​is​ ​it's​ ​a​ ​group​ ​of​ ​us​ ​where​ ​I​ ​bring​ ​in
mentors​ ​and​ ​people​ ​to​ ​teach​ ​me.
We​ ​actually​ ​do​ ​this​ ​stuff​ ​every​ ​week.​ ​People​ ​get​ ​to​ ​watch.​ ​For​ ​example,​ ​we​ ​always​ ​use
the​ ​simulate​ ​account​ ​for​ ​people.​ ​We​ ​ask​ ​that​ ​you​ ​get​ ​a​ ​simulated​ ​account​ ​and​ ​that​ ​you
don't​ ​practice​ ​in​ ​a​ ​real​ ​one.​ ​That​ ​just​ ​is​ ​good​ ​risk​ ​management.​ ​Let's​ ​say​ ​you​ ​think​ ​the
Federal​ ​Reserve​ ​is​ ​going​ ​to​ ​print​ ​money.​ ​Maybe​ ​you​ ​look​ ​at​ ​the​ ​price​ ​of​ ​silver​ ​going
down​ ​here.​ ​Let's​ ​just​ ​look​ ​at​ ​silver​ ​and​ ​maybe​ ​you​ ​say​ ​this.​ ​You​ ​say,​ ​"Gee,​ ​Janet​ ​Yellen
says​ ​that​ ​she's​ ​tightening​ ​monetary​ ​policy."​ ​Let's​ ​look​ ​at​ ​a​ ​bigger​ ​chart​ ​of​ ​silver.​ ​I'd
rather​ ​look​ ​at​ ​the​ ​big​ ​picture​ ​here.​ ​She's​ ​tightening​ ​monetary​ ​policy.​ ​I​ ​think​ ​silver​ ​might
dip.
Well,​ ​I'll​ ​just​ ​show​ ​you​ ​what​ ​I​ ​think​ ​about​ ​this.​ ​In​ ​fact,​ ​let's​ ​go​ ​out​ ​to​ ​...​ ​It's​ ​got​ ​even
longer.​ ​.Let's​ ​go​ ​out​ ​to​ ​10​ ​years​ ​or​ ​20​ ​years​ ​or​ ​something.​ ​Let's​ ​go​ ​out​ ​to,​ ​I​ ​don't​ ​know,
like​ ​20​ ​years,​ ​maybe​ ​monthly.​ ​Let's​ ​just​ ​look​ ​at​ ​the​ ​big​ ​picture​ ​of​ ​a​ ​silver​ ​here.​ ​Silver
used​ ​to​ ​be​ ​riding​ ​high.​ ​It's​ ​down​ ​here​ ​pretty​ ​low.​ ​Let's​ ​just​ ​look​ ​at​ ​an​ ​example​ ​and
please​ ​understand​ ​my​ ​disclaimer.​ ​I'm​ ​not​ ​recommending​ ​you​ ​do​ ​this​ ​because​ ​you​ ​need
to​ ​know​ ​how​ ​to​ ​get​ ​out​ ​of​ ​these.​ ​There's​ ​risk​ ​involved​ ​in​ ​all​ ​this,​ ​but​ ​this​ ​is​ ​just​ ​for
educational​ ​purposes.
Let's​ ​say​ ​I​ ​look​ ​at​ ​the​ ​Fed.​ ​Let's​ ​say​ ​I​ ​look​ ​at​ ​the​ ​fiscal​ ​policy​ ​of​ ​the​ ​government
Congress.​ ​I​ ​look​ ​at​ ​monetary​ ​here.​ ​I​ ​see​ ​a​ ​couple​ ​things​ ​here.​ ​On​ ​the​ ​Congress​ ​balance
sheet,​ ​I​ ​see​ ​$20​ ​trillion​ ​in​ ​debt.​ ​I​ ​see​ ​100​ ​trillion​ ​in​ ​unfunded​ ​liabilities​ ​like​ ​health​ ​care
that​ ​they​ ​promised​ ​seniors.​ ​I​ ​see​ ​a​ ​big​ ​bubble​ ​of​ ​79​ ​million​ ​baby​ ​boomers​ ​coming​ ​into
2018​ ​here​ ​pretty​ ​quick.​ ​We're​ ​going​ ​to​ ​have​ ​to​ ​pay​ ​all​ ​this​ ​which​ ​is​ ​going​ ​to​ ​cost​ ​...
We've​ ​gotten​ ​$800​ ​billion​ ​deficit​ ​already.​ ​We​ ​got​ ​3.2​ ​in​ ​taxes.​ ​We​ ​bring​ ​in.​ ​We​ ​got​ ​4.0
trillion​ ​in​ ​spending​ ​going​ ​out.​ ​That​ ​number's​ ​going​ ​to​ ​get​ ​higher.​ ​How​ ​do​ ​I​ ​know​ ​that?
Well,​ ​the​ ​baby​ ​boomer's​ ​going​ ​to​ ​retire.​ ​I​ ​can​ ​see​ ​it​ ​here​ ​on​ ​the​ ​fundamentals.​ ​Some
people​ ​saw​ ​the​ ​movie,​ ​the​ ​Big​ ​Short.​ ​They​ ​say,​ ​"Boy,​ ​that's​ ​a​ ​time​ ​bomb.​ ​Look​ ​at​ ​all
these​ ​mortgage-backed​ ​securities​ ​that​ ​they're​ ​going​ ​to​ ​adjust.​ ​They're​ ​not​ ​going​ ​to​ ​be
able​ ​to​ ​pay​ ​for​ ​these.​ ​This​ ​is​ ​a​ ​time​ ​bomb."​ ​People​ ​walk​ ​out​ ​of​ ​the​ ​movie​ ​Big​ ​Short​ ​say,
"Boy,​ ​I​ ​wish​ ​I​ ​could​ ​see​ ​a​ ​time​ ​bomb​ ​like​ ​that."​ ​Well,​ ​there​ ​you​ ​go.​ ​There's​ ​your​ ​time
bomb.​ ​You're​ ​not​ ​going​ ​to​ ​draw​ ​your​ ​way​ ​out​ ​of​ ​this​ ​problem.​ ​You're​ ​not​ ​going​ ​to​ ​get​ ​a
GDP​ ​that​ ​fixes​ ​this.
Then,​ ​I​ ​look​ ​at​ ​the​ ​Fed's​ ​balance​ ​sheet.​ ​On​ ​the​ ​Fed's​ ​balance​ ​sheet,​ ​they​ ​bought​ ​up​ ​all​ ​of
these​ ​bonds​ ​and​ ​all​ ​of​ ​these​ ​mortgage-backed​ ​securities.​ ​It's​ ​bloated.​ ​They​ ​have​ ​got
about​ ​$4.5​ ​trillion​ ​of​ ​stuff​ ​they​ ​bought​ ​on​ ​their​ ​balance​ ​sheet.​ ​The​ ​problem​ ​is​ ​to​ ​do​ ​that,
they've​ ​put​ ​all​ ​of​ ​this​ ​money​ ​into​ ​the​ ​world,​ ​all​ ​these​ ​US​ ​dollars​ ​in​ ​the​ ​world.​ ​Janet​ ​says,
"We​ ​want​ ​to​ ​sell​ ​these​ ​and​ ​suck​ ​this​ ​money​ ​back​ ​in."​ ​It's​ ​not​ ​in​ ​the​ ​world​ ​anymore.
We​ ​want​ ​to​ ​put​ ​this​ ​money​ ​on​ ​our​ ​balance​ ​sheet​ ​where​ ​no​ ​one​ ​can​ ​have​ ​it.​ ​That's​ ​called
controlling​ ​the​ ​money​ ​supply.​ ​They​ ​want​ ​to​ ​suck​ ​this.​ ​Starting​ ​in​ ​October,​ ​they're​ ​going
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to​ ​pull​ ​$10​ ​billion​ ​out​ ​of​ ​the​ ​economy,​ ​out​ ​of​ ​the​ ​banks​ ​by​ ​selling​ ​them​ ​these​ ​bonds​ ​or
maybe​ ​some​ ​of​ ​these​ ​more​ ​toxic​ ​assets​ ​they​ ​bought​ ​or​ ​whatever​ ​they're​ ​going​ ​to​ ​do
with​ ​it.
What​ ​that​ ​means​ ​is​ ​that​ ​should​ ​show​ ​a​ ​bump​ ​in​ ​the​ ​dollar.​ ​The​ ​dollar​ ​should​ ​go​ ​up​ ​in
value.​ ​Precious​ ​metals​ ​should​ ​go​ ​down.​ ​That's​ ​how​ ​it​ ​should​ ​work​ ​if​ ​I'm​ ​right.​ ​I​ ​could​ ​be
dead​ ​wrong.​ ​I​ ​don't​ ​know,​ ​but​ ​the​ ​dollar​ ​should​ ​go​ ​up​ ​in​ ​value​ ​and​ ​the​ ​precious​ ​metal
should​ ​go​ ​down.​ ​The​ ​problem​ ​is​ ​though​ ​is​ ​I​ ​think​ ​the​ ​Fed​ ​is​ ​going​ ​to​ ​try​ ​to​ ​do​ ​this.​ ​I​ ​think
it's​ ​going​ ​to​ ​be​ ​a​ ​short-term​ ​investment.​ ​I​ ​don't​ ​think​ ​they​ ​can​ ​get​ ​rid​ ​of​ ​all​ ​4.5​ ​trillion​ ​of
these​ ​assets.​ ​They​ ​started​ ​with​ ​900​ ​billion​ ​10​ ​years​ ​ago.
It's​ ​gone​ ​from​ ​900​ ​billion​ ​to​ ​4.5​ ​trillion.​ ​I​ ​think​ ​they're​ ​going​ ​to​ ​have​ ​to​ ​deal​ ​with​ ​this.​ ​I
think​ ​the​ ​Treasury​ ​is​ ​still​ ​going​ ​to​ ​issue​ ​bonds.​ ​I​ ​think​ ​that​ ​the​ ​Fed​ ​is​ ​going​ ​to​ ​have​ ​to
eventually​ ​reverse​ ​this​ ​process​ ​and​ ​begin​ ​to​ ​print​ ​more​ ​money​ ​and​ ​buy​ ​more​ ​of​ ​those
bonds​ ​on​ ​their​ ​asset​ ​sheet.​ ​I​ ​think​ ​that's​ ​the​ ​way​ ​it's​ ​going​ ​to​ ​go.​ ​Why?​ ​I​ ​see​ ​that
coming.​ ​I​ ​see​ ​this​ ​coming.
I'm​ ​no​ ​Warren​ ​Buffett​ ​by​ ​any​ ​stretch​ ​of​ ​the​ ​imagination,​ ​but​ ​I​ ​might​ ​say​ ​to​ ​myself,​ ​and
this​ ​is​ ​just​ ​for​ ​teaching,​ ​this​ ​is​ ​hypothetical,​ ​I​ ​might​ ​say​ ​to​ ​myself,​ ​"You​ ​know​ ​what?
When​ ​the​ ​Fed​ ​starts​ ​printing​ ​money,​ ​people​ ​value​ ​precious​ ​metals."​ ​If​ ​this​ ​thing​ ​dives
down​ ​a​ ​little​ ​bit,​ ​I​ ​wouldn't​ ​mind​ ​picking​ ​up​ ​silver​ ​at​ ​15​ ​bucks​ ​or​ ​at​ ​$16​ ​because​ ​I​ ​think
silver​ ​long-term​ ​may​ ​go​ ​up​ ​over​ ​the​ ​long​ ​term.​ ​Heck,​ ​it​ ​might​ ​even​ ​only​ ​go​ ​up​ ​to​ ​here.​ ​It
might​ ​only​ ​go​ ​up​ ​to​ ​20​ ​like​ ​it​ ​did​ ​last​ ​year.
If​ ​I​ ​can​ ​pick​ ​up​ ​silver​ ​at​ ​16,​ ​I​ ​might​ ​say​ ​I'd​ ​buy​ ​silver​ ​anyway​ ​right​ ​now​ ​because​ ​I​ ​think​ ​it
might​ ​drip​ ​a​ ​little​ ​bit.​ ​I​ ​got​ ​a​ ​little​ ​support​ ​right​ ​here,​ ​but​ ​it​ ​might​ ​drip​ ​down​ ​a​ ​little​ ​bit,
but,​ ​ultimately,​ ​I​ ​might​ ​be​ ​happy​ ​to​ ​buy​ ​silver​ ​based​ ​on​ ​what​ ​I​ ​see​ ​fundamentally.
Maybe​ ​I​ ​look​ ​at​ ​my​ ​analysis​ ​here.​ ​I​ ​say,​ ​"Well,​ ​how​ ​much​ ​are​ ​options​ ​on​ ​silver?"​ ​Let's​ ​go
out​ ​to​ ​just​ ​even​ ​a​ ​couple​ ​of​ ​weeks.​ ​Well,​ ​let's​ ​go​ ​out​ ​a​ ​month.​ ​What​ ​is​ ​it?​ ​The​ ​27.​ ​That's
close,​ ​about​ ​a​ ​month,​ ​a​ ​little​ ​less​ ​than​ ​a​ ​month.
I​ ​look​ ​at​ ​this​ ​at​ ​16.​ ​I​ ​say,​ ​"All​ ​right.​ ​Well,​ ​what​ ​can​ ​I​ ​get​ ​at​ ​$16?"​ ​It's​ ​15.83​ ​now.​ ​It's​ ​16
bucks.​ ​Let's​ ​get​ ​a​ ​calculator​ ​out.​ ​I'll​ ​show​ ​you​ ​how​ ​this​ ​would​ ​work.​ ​If​ ​I​ ​wanted​ ​to​ ​sell​ ​a
put​ ​right​ ​here.​ ​I​ ​can​ ​click​ ​on​ ​this​ ​and​ ​puts​ ​in​ ​a​ ​ticket​ ​that​ ​says​ ​sell​ ​10​ ​of​ ​these.​ ​Then,​ ​I
click​ ​again​ ​and​ ​say​ ​confirm​ ​and​ ​send.​ ​That's​ ​how​ ​quick​ ​I​ ​can​ ​do​ ​it.​ ​Right​ ​here,​ ​they​ ​would
send​ ​me​ ​$360​ ​if​ ​I​ ​was​ ​willing​ ​to​ ​buy​ ​a​ ​thousand​ ​shares​ ​of​ ​this​ ​at​ ​16​ ​bucks,​ ​okay,​ ​$16​ ​put.
Let's​ ​draw​ ​that​ ​so​ ​it's​ ​a​ ​little​ ​easier.​ ​By​ ​the​ ​way,​ ​this​ ​is​ ​what​ ​we​ ​do​ ​in​ ​our​ ​mentor​ ​club
every​ ​week.​ ​We​ ​get​ ​in​ ​here.​ ​We​ ​look​ ​at​ ​real​ ​stocks.​ ​We​ ​say,​ ​"How​ ​can​ ​we​ ​execute​ ​these
strategies​ ​in​ ​real​ ​time?"​ ​Let's​ ​just​ ​have​ ​fun​ ​with​ ​this​ ​and​ ​move​ ​this​ ​over​ ​here.​ ​I'll​ ​keep
that​ ​right​ ​here​ ​with​ ​my​ ​options​ ​chain​ ​open.​ ​I'll​ ​say,​ ​"Okay."​ ​Here's​ ​me​ ​and​ ​here​ ​are​ ​you
or​ ​whoever​ ​there.​ ​Here's​ ​Joe​ ​investor​ ​in​ ​the​ ​market​ ​that​ ​owns​ ​some​ ​of​ ​this​ ​ETF.​ ​This​ ​is
not​ ​real​ ​silver.​ ​By​ ​the​ ​way,​ ​this​ ​silver​ ​is​ ​I​ ​want​ ​to​ ​make​ ​a​ ​delineation​ ​here.
I​ ​have​ ​precious​ ​metals​ ​that​ ​I​ ​hold​ ​for​ ​insurance.​ ​I​ ​do​ ​this​ ​for​ ​cash​ ​flow.​ ​I​ ​really​ ​do
encourage​ ​people​ ​learn​ ​the​ ​difference​ ​between​ ​an​ ​ETF​ ​because​ ​that's​ ​fake​ ​silver.​ ​I'm
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buying​ ​fake​ ​silver.​ ​I​ ​often​ ​use​ ​it​ ​this​ ​way​ ​though​ ​to​ ​convert​ ​it​ ​into​ ​silver​ ​because​ ​I​ ​usually
don't​ ​get​ ​paid​ ​for​ ​buying​ ​real​ ​silver.​ ​If​ ​I​ ​can​ ​get​ ​paid​ ​to​ ​buy​ ​fake​ ​silver​ ​and​ ​convert​ ​that
into​ ​silver​ ​anytime​ ​I​ ​want,​ ​well,​ ​that​ ​can​ ​be​ ​a​ ​nice​ ​benefit,​ ​but​ ​I​ ​really​ ​encourage​ ​people
understanding​ ​there's​ ​between​ ​holding​ ​a​ ​real​ ​precious​ ​metal​ ​and​ ​a​ ​derivative​ ​which​ ​an
ETF​ ​is​ ​a​ ​derivative​ ​with​ ​the​ ​precious​ ​metal.
Here's​ ​me.​ ​I​ ​say,​ ​"Look,​ ​I​ ​wanted​ ​to​ ​buy​ ​this​ ​at​ ​16​ ​today.​ ​I​ ​would​ ​write​ ​a​ ​check​ ​today​ ​by
the​ ​$16,​ ​this​ ​ETF."​ ​I​ ​said,​ ​"Look,​ ​I​ ​promise.​ ​I​ ​give​ ​you​ ​my​ ​word.​ ​I​ ​got​ ​money​ ​in​ ​my
account.​ ​I​ ​can​ ​do​ ​this.​ ​I​ ​promise​ ​to​ ​buy​ ​some​ ​SLV​ ​at​ ​$16​ ​anytime​ ​between​ ​now​ ​and​ ​what
I​ ​say,​ ​October​ ​20th,"​ ​which​ ​is​ ​less​ ​than​ ​a​ ​month​ ​away.​ ​We'll​ ​call​ ​it​ ​three​ ​weeks​ ​away​ ​or
whatever​ ​it​ ​is.​ ​We'll​ ​call​ ​it​ ​three​ ​weeks​ ​away,​ ​three​ ​four​ ​weeks​ ​away.​ ​On​ ​October​ ​20th.
Then,​ ​this​ ​expires.
This​ ​guy​ ​has​ ​to​ ​send​ ​me.​ ​I'll​ ​shave​ ​the​ ​spread​ ​on​ ​this​ ​and​ ​get​ ​37​ ​out​ ​of​ ​it.​ ​Let's​ ​say​ ​37
cents​ ​for​ ​this.​ ​Well,​ ​think​ ​about​ ​that​ ​for​ ​a​ ​minute.​ ​Think​ ​about​ ​that​ ​return.​ ​Well,​ ​before
we​ ​think​ ​about​ ​the​ ​return,​ ​let's​ ​look​ ​at​ ​what​ ​this​ ​guy​ ​says.​ ​He​ ​says​ ​he​ ​now​ ​has​ ​the
choice.​ ​I​ ​promise​ ​a​ ​choice.​ ​[inaudible​ ​00:54:44]​ ​choice.​ ​I​ ​promise​ ​to​ ​buy​ ​this​ ​SLV.​ ​He​ ​has
the​ ​choice​ ​to​ ​sell​ ​it​ ​to​ ​him​ ​if​ ​he​ ​wants.​ ​Sell​ ​SLV​ ​at​ ​$16​ ​any​ ​time​ ​between​ ​now,​ ​today​ ​and
November​ ​20th,​ ​October​ ​20th​ ​if​ ​I​ ​ask​ ​him​ ​to.
There​ ​you​ ​have​ ​it.​ ​Now,​ ​silver​ ​is​ ​a​ ​$16.​ ​That's​ ​a​ ​$15​ ​and​ ​84​ ​cents​ ​right​ ​now.​ ​Let's​ ​say​ ​it
could​ ​go​ ​up,​ ​it​ ​could​ ​go​ ​down,​ ​it​ ​could​ ​go​ ​sideways.​ ​If​ ​it​ ​was​ ​going​ ​to​ ​go​ ​down,​ ​I​ ​was
going​ ​to​ ​buy​ ​it​ ​anyway​ ​because​ ​I​ ​think​ ​it's​ ​going​ ​to​ ​be​ ​up​ ​long-term​ ​with​ ​the​ ​printing​ ​and
the​ ​money​ ​and​ ​the​ ​whole​ ​bit.​ ​This​ ​is​ ​going​ ​to​ ​add​ ​my​ ​long-term​ ​holdings.​ ​If​ ​it​ ​goes​ ​up,
nothing​ ​will​ ​happen.​ ​It'll​ ​expire​ ​on​ ​October​ ​20th.​ ​I'll​ ​keep​ ​the​ ​37​ ​cents.​ ​If​ ​it​ ​stays​ ​the
same,​ ​I'll​ ​keep​ ​the​ ​37​ ​cents.​ ​If​ ​it​ ​stays​ ​the​ ​same​ ​at​ ​15.84.​ ​If​ ​it​ ​goes​ ​down,​ ​let's​ ​say,​ ​it​ ​goes
down​ ​to​ ​14​ ​bucks,​ ​yeah,​ ​I​ ​have​ ​to​ ​pay​ ​16​ ​for​ ​it,​ ​but​ ​I​ ​just​ ​wanted​ ​to​ ​do​ ​that​ ​today
anyway​ ​because,​ ​why,​ ​I​ ​think​ ​it'll​ ​probably​ ​go​ ​down.​ ​I​ ​think​ ​it'll​ ​go​ ​up​ ​again.
It's​ ​the​ ​same​ ​thing​ ​as​ ​Buffett​ ​He's​ ​like,​ ​look,​ ​I​ ​think​ ​silvers​ ​were​ ​$16.​ ​That's​ ​what​ ​I'm
going​ ​to​ ​pay​ ​for​ ​it.​ ​I​ ​think​ ​it's​ ​undervalued​ ​at​ ​16.​ ​Even​ ​the​ ​market​ ​takes​ ​it​ ​lower.​ ​I​ ​don't
care.​ ​If​ ​it​ ​goes​ ​down,​ ​I​ ​will​ ​buy.​ ​I'll​ ​keep​ ​my​ ​37​ ​cents.​ ​I'll​ ​buy​ ​at​ ​16​ ​which​ ​is​ ​what​ ​I​ ​wanted
to​ ​do​ ​anyway​ ​because​ ​I​ ​see​ ​value​ ​in​ ​it.​ ​That's​ ​fine,​ ​but​ ​let's​ ​just​ ​run​ ​a​ ​calculator​ ​and​ ​look
at​ ​what​ ​this​ ​looks​ ​like​ ​annualized.​ ​Let's​ ​take​ ​a​ ​picture​ ​of​ ​this.​ ​Let's​ ​see​ ​if​ ​I​ ​can​ ​do​ ​this.
This​ ​might​ ​be​ ​cool.​ ​Hang​ ​on.​ ​Let's​ ​just​ ​take​ ​a​ ​picture​ ​of​ ​this​ ​like​ ​that.
Then,​ ​I​ ​can​ ​get​ ​rid​ ​of​ ​it,​ ​and​ ​I​ ​can​ ​make​ ​it​ ​smaller.​ ​Let's​ ​see​ ​here.​ ​Open​ ​the​ ​clipboard
right​ ​up.​ ​There​ ​we​ ​are,​ ​guys.​ ​Bam.​ ​Let's​ ​make​ ​this​ ​smaller.​ ​Can​ ​I​ ​do​ ​that?​ ​Yes,​ ​I​ ​can.
That's​ ​the​ ​deal​ ​right​ ​there.​ ​That's​ ​what​ ​the​ ​trade​ ​looks​ ​like.​ ​Now,​ ​I'll​ ​show​ ​you​ ​what​ ​my
balance​ ​sheet​ ​looks​ ​like.​ ​I​ ​have​ ​some​ ​cash​ ​in​ ​here.​ ​Let's​ ​say​ ​I​ ​got​ ​16,000​ ​bucks​ ​in​ ​here.​ ​I
want​ ​to​ ​turn​ ​it​ ​to​ ​silver.​ ​I​ ​was​ ​going​ ​to​ ​do​ ​it​ ​anyway.​ ​That's​ ​fine.
This​ ​is​ ​what​ ​I​ ​look​ ​like​ ​now.​ ​Let's​ ​say​ ​I​ ​got​ ​16,000​ ​in​ ​there.​ ​Okay.​ ​Fine.​ ​We​ ​have​ ​more
than​ ​16,​ ​but​ ​let's​ ​just​ ​say​ ​that's​ ​what​ ​we​ ​have​ ​for​ ​this​ ​trade.​ ​I​ ​can​ ​have​ ​one​ ​or​ ​two​ ​things
happen​ ​next​ ​month.​ ​Either,​ ​I​ ​still​ ​have​ ​$16,000​ ​in​ ​cash​ ​or​ ​I​ ​have​ ​$16,000​ ​in​ ​silver​ ​or​ ​I
have​ ​16,000​ ​shares​ ​of​ ​silver​ ​because​ ​I'm​ ​doing​ ​10​ ​contracts.​ ​There's​ ​a​ ​contract.​ ​Actually,
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
it's​ ​only​ ​a​ ​1000​ ​shares.​ ​Excuse​ ​me.​ ​A​ ​thousand​ ​shares​ ​of​ ​silver.​ ​That's​ ​16​ ​bucks​ ​a​ ​piece.
That​ ​would​ ​give​ ​me​ ​1000​ ​shares​ ​at​ ​16,000.
I​ ​agree​ ​to​ ​buy​ ​it​ ​at​ ​16.​ ​A​ ​1000​ ​shares​ ​times​ ​$16,000.​ ​I​ ​need​ ​to​ ​ask​ ​myself.​ ​Look,​ ​I​ ​really
don't​ ​care​ ​what​ ​the​ ​price​ ​of​ ​silver​ ​is,​ ​but​ ​I​ ​like​ ​to​ ​have​ ​1000​ ​pieces​ ​of​ ​silver.​ ​What​ ​I​ ​like
to​ ​acquire​ ​1000​ ​pieces​ ​of​ ​silver​ ​or​ ​ETF​ ​that​ ​I​ ​might​ ​sell​ ​and​ ​then​ ​convert​ ​to​ ​silver​ ​or
whatever.​ ​What​ ​I​ ​like​ ​to​ ​have​ ​that​ ​with​ ​the​ ​monetary​ ​policy.​ ​I​ ​think​ ​it's​ ​tightening​ ​out.​ ​I
think​ ​in​ ​the​ ​long​ ​term,​ ​I​ ​think​ ​it'll​ ​flip.​ ​It's​ ​like​ ​Buffett​ ​says​ ​when​ ​other​ ​people​ ​are​ ​fearful,
you​ ​get​ ​greedy.​ ​When​ ​people​ ​are​ ​greedy,​ ​you're​ ​fearful.​ ​If​ ​I​ ​see​ ​the​ ​dollar​ ​starting​ ​to​ ​rise
a​ ​little​ ​bit​ ​and​ ​silver​ ​starting​ ​to​ ​fall,​ ​boy,​ ​do​ ​I​ ​think​ ​that's​ ​a​ ​permanent​ ​wave?
Think​ ​about​ ​this,​ ​ladies​ ​and​ ​gentlemen.​ ​Do​ ​you​ ​really​ ​think​ ​the​ ​long-term​ ​prospects​ ​for
the​ ​dollar​ ​is​ ​for​ ​it​ ​to​ ​strengthen?​ ​Has​ ​it​ ​strengthened​ ​in​ ​the​ ​last​ ​10​ ​years,​ ​20​ ​years,​ ​30
years,​ ​40​ ​years,​ ​50​ ​years?​ ​Since​ ​Richard​ ​Nixon​ ​took​ ​the​ ​dollar​ ​off​ ​the​ ​gold​ ​standard,​ ​has
the​ ​dollar​ ​gotten​ ​weaker​ ​or​ ​stronger​ ​over​ ​time?​ ​If​ ​the​ ​dollar​ ​begins​ ​to​ ​strengthen
approximately​ ​and​ ​precious​ ​metals​ ​begin​ ​to​ ​dip,​ ​is​ ​that​ ​the​ ​long-term​ ​trade?​ ​Is​ ​the
long-term​ ​trade​ ​for​ ​precious​ ​metals​ ​to​ ​dwindle​ ​and​ ​for​ ​the​ ​dollar​ ​to​ ​get​ ​stronger?
That's​ ​where​ ​you​ ​got​ ​to​ ​decide​ ​on​ ​your​ ​fundamental​ ​analysis​ ​where​ ​you​ ​are.​ ​For​ ​me,​ ​I
might​ ​just​ ​want​ ​another​ ​1000​ ​pieces​ ​of​ ​silver​ ​in​ ​that​ ​environment.​ ​I​ ​might​ ​just​ ​think,
"You​ ​know​ ​what?​ ​I​ ​think​ ​I'd​ ​be​ ​a​ ​good​ ​value​ ​right​ ​there."​ ​They'll​ ​pay​ ​me​ ​to​ ​pick​ ​that​ ​up
36.​ ​That​ ​was​ ​$360​ ​to​ ​do​ ​this.​ ​Either​ ​way,​ ​I​ ​get​ ​the​ ​360​ ​either​ ​way.
Let's​ ​take​ ​a​ ​look​ ​at​ ​that​ ​right​ ​here​ ​just​ ​for​ ​fun.​ ​Let's​ ​get​ ​the​ ​calculator​ ​out​ ​here.​ ​$360
divided​ ​by​ ​$16,000​ ​okay​ ​so​ ​that​ ​looks​ ​correct​ ​is​ ​about​ ​2%​ ​in​ ​a​ ​month​ ​and​ ​in​ ​less​ ​than
four​ ​weeks.​ ​It's​ ​actually​ ​less​ ​than​ ​a​ ​month.​ ​If​ ​I​ ​annualize​ ​that,​ ​that's​ ​not​ ​a​ ​bad​ ​return​ ​for
a​ ​year.​ ​Does​ ​your​ ​$16,000​ ​in​ ​a​ ​bank​ ​account​ ​get​ ​27%​ ​percent​ ​a​ ​year?​ ​Probably​ ​not.
What's​ ​my​ ​risk?
My​ ​risk​ ​is​ ​that​ ​I​ ​buy​ ​silver,​ ​that​ ​I​ ​buy​ ​1000​ ​chairs​ ​of​ ​SLV​ ​and​ ​that​ ​it​ ​goes​ ​down.​ ​Well,​ ​I
don't​ ​think​ ​silver​ ​will​ ​ever​ ​be​ ​zero.​ ​I​ ​don't​ ​think​ ​it's​ ​going​ ​to​ ​go​ ​bankrupt.​ ​I​ ​think​ ​we're
always​ ​going​ ​to​ ​have​ ​a​ ​price​ ​on​ ​oil​ ​and​ ​gold​ ​and​ ​silver​ ​at​ ​least​ ​in​ ​my​ ​lifetime.​ ​I​ ​think​ ​the
chances​ ​of​ ​silver​ ​being​ ​free​ ​in​ ​my​ ​lifetime​ ​are​ ​low.​ ​Now,​ ​a​ ​company​ ​might​ ​go​ ​bankrupt.
If​ ​this​ ​is​ ​[inaudible​ ​01:00:23],​ ​you​ ​might​ ​want​ ​to​ ​think​ ​twice​ ​because​ ​it​ ​can​ ​go​ ​to​ ​zero,
but​ ​silver,​ ​even​ ​the​ ​ETF​ ​...I​ ​don't​ ​know.​ ​There's​ ​always​ ​risks,​ ​but​ ​that's​ ​my​ ​main​ ​risk​ ​is
that​ ​this​ ​would​ ​go​ ​down.
Well,​ ​that's​ ​a​ ​risk​ ​that​ ​I​ ​was​ ​willing​ ​to​ ​take​ ​anyway​ ​if​ ​I'm​ ​buying​ ​silver.​ ​Why​ ​not​ ​get​ ​paid
27%​ ​annualized​ ​to​ ​buy​ ​what​ ​you​ ​are​ ​going​ ​to​ ​buy​ ​anyway?​ ​I​ ​think​ ​that's​ ​why​ ​they​ ​have
the​ ​title​ ​this​ ​article,​ ​The​ ​Secret​ ​Trick​ ​Buffett​ ​Uses​ ​To​ ​Multiply​ ​His​ ​Income​ ​because​ ​I'm
going​ ​to​ ​get​ ​paid​ ​up​ ​down​ ​or​ ​sideways.​ ​I​ ​get​ ​that​ ​27%.​ ​The​ ​only​ ​thing​ ​that​ ​can​ ​happen​ ​is
either,​ ​A,​ ​if​ ​it​ ​goes​ ​up​ ​or​ ​sideways,​ ​I​ ​keep​ ​my​ ​16,000​ ​and​ ​I'm​ ​making​ ​27%​ ​annualized​ ​on
it​ ​or​ ​I​ ​wind​ ​up​ ​with​ ​silver.​ ​The​ ​silver​ ​goes​ ​down​ ​for​ ​a​ ​while.​ ​Hopefully,​ ​it​ ​goes​ ​back​ ​up,
but​ ​I​ ​don't​ ​lose​ ​the​ ​1000​ ​shares​ ​no​ ​matter​ ​what.​ ​I​ ​still​ ​have​ ​the​ ​asset.
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit
Andy​ ​Tanner:​ ​Ultimate​ ​Options,​ ​Your​ ​Secret​ ​To​ ​Cash​ ​Flow
Anyway,​ ​there's​ ​lots​ ​of​ ​examples,​ ​lots​ ​of​ ​fun​ ​stuff​ ​we​ ​can​ ​do.​ ​We're​ ​a​ ​little​ ​short​ ​on
time,​ ​but​ ​I​ ​hope​ ​you​ ​enjoyed​ ​this​ ​little​ ​bit​ ​on​ ​using​ ​options.​ ​It's​ ​a​ ​fun.​ ​It's​ ​a​ ​really​ ​fun
presentation​ ​to​ ​give.​ ​I​ ​hope​ ​you​ ​enjoyed​ ​it.​ ​Awesome​ ​stuff.​ ​Give​ ​my​ ​website​ ​one​ ​last
little​ ​plugs.​ ​It​ ​looks​ ​like​ ​I'm​ ​out​ ​of​ ​time,​ ​but​ ​I​ ​have​ ​two​ ​primary​ ​classes​ ​I​ ​teach.​ ​I​ ​have
some​ ​that​ ​I​ ​only​ ​invite​ ​certain​ ​students​ ​into,​ ​but​ ​the​ ​ones​ ​I​ ​will​ ​give​ ​to​ ​the​ ​general​ ​public
is​ ​for​ ​my​ ​four​ ​pillars​ ​of​ ​investing​ ​with​ ​fundamentals,​ ​tentacles,​ ​options,​ ​and​ ​cash​ ​flow
and​ ​risk.
Then,​ ​my​ ​mentor​ ​club​ ​is​ ​when​ ​we​ ​just​ ​practice​ ​it​ ​once​ ​a​ ​week.​ ​I​ ​invite​ ​you​ ​to​ ​observe
those​ ​sessions.​ ​They're​ ​about​ ​an​ ​hour​ ​a​ ​week​ ​when​ ​we​ ​get​ ​in​ ​here​ ​and​ ​look​ ​at​ ​fun​ ​stuff
like​ ​this.​ ​Amazing​ ​that​ ​a​ ​guy​ ​can​ ​just​ ​click​ ​that​ ​button​ ​like​ ​that​ ​confirm​ ​and​ ​send​ ​and​ ​put
360​ ​bucks​ ​in​ ​his​ ​account.​ ​My​ ​risk​ ​is​ ​that​ ​I​ ​buy​ ​silver​ ​at​ ​$16​ ​next​ ​month​ ​which​ ​is
something​ ​I​ ​may​ ​or​ ​may​ ​not​ ​want​ ​to​ ​do​ ​anyway.​ ​Fun​ ​stuff,​ ​great​ ​strategy​ ​on​ ​selling​ ​puts
for​ ​income.​ ​I'm​ ​Andy​ ​Tanner.​ ​I'm​ ​out.​ ​Have​ ​a​ ​great​ ​summit,​ ​everybody.
©​ ​2017​ ​Aggressive​ ​Growth​ ​Trading​ ​Summit