Editor's note: As we noted yesterday, our friend and colleague Dr. David "Doc" Eifrig is excited to share the project he and his team have been working on for the past year...

But unlike his other advisories, Advanced Options is doing something completely different.

As his senior analyst Matt Weinschenk explains in today's Masters Series – the conclusion of an exclusive two-part interview – this strategy isn't for your rent money, but the results from their year of "paper trading" were astronomical...

619% a Year?!

An interview with Matt Weinschenk, senior analyst, Retirement Trader

Sam Latter: As you mentioned yesterday, over the past year, you've been testing "bull spread" and "calendar spread" trades in your new trading service, Advanced Options.

How do you select the stocks to trade? Are you picking stable, blue-chip companies like Johnson & Johnson (JNJ) and Pepsi (PEP)? Or are you choosing more volatile companies, like junior gold miners?

Matt Weinschenk: Advanced Options was born one day when our team thought, "Why don't we take all these great stock recommendations that come from Porter, Steve, and our newsletters, and try to make them more profitable with an options trade?"

The way we've been testing the system so far is by using the latest recommendations from each analyst's flagship newsletter: Stansberry's Investment Advisory, True Wealth, and Retirement Millionaire. Then, we turn that into an options trade.

If Porter recommends Disney (DIS) one month, we'll look to build an options trade around that. This way, we can sort of "outsource" the fundamental research to some of Stansberry Research's best analysts, and then use options to "boost" the returns from them in our issues, which we'll publish twice per month.

Sam: How do you know how likely a trade is to return a profit or end up losing money?

Matt: I'm glad you asked. You can look at a measure in options called "delta." This is a good way to determine the likelihood that a stock will hit a certain level.

For instance, if you wanted to see how likely it is that iPhone maker Apple (AAPL) is going to hit $200 by a certain time, you can look up an options chain on your brokerage account and find the $200 option. The delta will be something like 30%. This means the options market says Apple has a 30% chance of hitting that price level. You might think you need some kind of advanced system to find that number, but it's right there for anybody to look up.

Say we're making a bull spread trade... Again, we're betting a stock will rise. If it works, we're going to make 200%. By looking at the delta, we have maybe a 60% chance of that happening. Now, you can really judge whether or not this trade is worth placing.

Sam: To make these trades, what level of options approval will I need? If I'm able to make the trades in Retirement Trader, am I all set with making the trades in Advanced Options?

Matt: You'll actually need approval for one level higher than what we do in Retirement Trader. The good thing is, our trades are types of "covered spreads" or "qualified spreads," meaning what you put into the trade at the start is the most you can lose. You'll never face a margin call or anything like that.

But these aren't the highest level of trades, either, because they don't involve naked options with unlimited risk. "Level One" is the lowest level of approval, and "Level Four" is the highest. Depending on how your broker categorizes them, you'll need to be approved for either "Level Two" or "Level Three" options trading.

Sam: Going back to the initial "paper trading" you guys did before launching this service, what did the results look like?

Matt: As I mentioned before, we actually paper traded these strategies for a full year. This wasn't a back test, where we came up with an idea and then went backward and tested it historically. We actually spent a year trading as the research came out. We read our flagship newsletters, and when a new recommendation came out, we tracked our favorite options trade on that stock and decided when to get out.

Over the course of the year, we made money on 21 out of 31 trades, good for a win rate of 68%, with an average return of 23%. But the important thing to remember is that many of these trades last around a month or so. If you can make 20% every month, it really adds up over time. In fact, our annualized rate of return was 619%, while the S&P 500 was up about 8%.

For example, we made a trade on Disney. Shares rose about 8% over the next three months, but our Advanced Options trade made 167% over the same period.

That's not me cherry-picking one position, either... We also booked a 90% gain in about four and a half months on semiconductor stocks, while the fund itself fell 1%... made 181% in about seven weeks on steel stocks, while they rose just 3%... booked gains of 123% in less than two weeks in online-dating company Match Group (MTCH), while the stock rose 6%... and made 201% in less than seven weeks on heating and cooling company Ingersoll Rand (IR), while shares rose 8%.

After a year of testing, we were thrilled with the results, so we're finally ready to share it with Stansberry Research readers.

Sam: We've talked about both strategies and how you'll need a higher level of options approval to make these trades. It sounds like it's very profitable but will take some work on the readers' end.

What kind of investor is Advanced Options geared toward? Is it for the person who checks his brokerage account a couple of times a month, or is it more for day traders?

Matt: It's for anyone who is willing to learn something new and take a little risk.

You don't have to have a huge trading account to make these trades. You can open these spreads for a couple hundred bucks each.

Make no mistake, though... It's going to be volatile. We're going to experience some losses. So we recommend keeping your position sizes small. It's a little challenging learning a new way to trade, but anyone can do it. And as we've seen in the past year, it can be a great way to speculate profitably.

Sam: What kind of percentage of my portfolio should I be dedicating to these kinds of trades?

Matt: We definitely don't want anybody putting their whole retirement account into this. The trades we're making in Advanced Options are a way to go and chase some bigger gains and have some fun with it.

Once you've set aside an amount you are comfortable using to trade options, you could put maybe 5% or 10% of that into each of the trades we're recommending. We've put together a big primer called "The Guide to Advanced Options" that walks readers through this and shows you how to determine position sizes based on your goals.

Our goal in Advanced Options is for readers to have a little fun, book some big winners, and keep the position sizes small so your portfolio never blows up.

Sam: In addition to the primer, what other educational materials has your team put together for readers who are just getting started and want to learn more?

Matt: For Advanced Options, we produced more educational material than anything else Stansberry Research has ever put together for the launch of one service. We have the comprehensive primer, as well as several special reports, and even a 27-part video course.

We cover everything from the basics – like what an option is – all the way to the advanced stuff... like how to trade spreads, how and why they work, and why the odds are in our favor.

Ultimately, we want to empower our readers to be able to make their own trades... not just limit themselves to the ones we recommend.

Sam: The video series that you put together does all the hand-holding a reader needs. It even shows how to place these trades, right?

Matt: Yes. We show screenshots of brokerage accounts so you can see how to pick the trades, how to enter them, and everything else you need to know.

Sam: I think we've covered a good range of topics in this conversation. Is there anything else you want to make sure the readers hear about?

Matt: If you're interested in finance, the markets, and trading, take the time to look at options. See if they work for you. It's an exciting way to make money. It's challenging to learn these things at first, and it involves a little math, but as we've seen, the strategies we're using in Advanced Options are a powerful way to make a lot of money.

Sam: Great. Thank you so much for taking the time to talk with us. I can't wait to follow along and see how the new service turns out.

Matt: Of course. Thanks, Sam.

Editor's note: Doc is one of the best traders we know. His 95% win rate in Retirement Trader is among the best track records in the history of our industry. So when he shared his idea for a brand-new trading advisory with us, we dropped everything we were doing. He just put together a brand-new video presentation detailing this incredibly powerful strategy. Watch it here.