Keith Kaplan of TradeSmith recently released a presentation about his Infinite Income Loop system, which he claims can help you “generate instant cash” with a few clicks of a mouse.
According to Kaplan, he’s developed an algorithm that focuses on three stocks each month with the least risk that could help you “see up to $2,880 in a single month.”
Is it legit?
The trading method Keith Kaplan’s system is based on is selling put options, which is a legitimate method for generating income. And I don’t believe the Infinite Income Loop service itself is a scam.
However, I’m not a huge fan of the marketing pitch because it makes the whole thing seem like a “push-button” way to make easy money with very little risk. And the reality is, there are significant potential risks involved with this strategy.
In this post, I’ll walk you through what the Infinite Income Loop strategy is and how the system works to help you decide if it’s worth getting involved with or not.
What Is Infinite Income Loop?
My biggest concern with Infinite Income Loop isn’t the strategy or system; it’s the sales pitch. Because I don’t believe it sets the average person up with realistic expectations.
In an almost hour-long video, Keith Kaplan spent most of the time talking about how quick and easy the system makes it to generate “instant” cash, but he doesn’t spend much time explaining the mechanics behind the strategy and the potential risks involved.
So, what’s it (actually) about?
Infinite Income Loop is a system TradeSmith’s Keith Kaplan has developed to help subscribers learn how to sell options for income. And based on the example trades shown in the presentation, the system centers around selling naked put options.
In short, this is a type of options trade where you collect an upfront premium for selling a put option contract. And once you collect the premium, you’re hoping the price of the underlying stock doesn’t reach or go below the strike price before the contract expires.
In other words, as the seller of a put option, you don’t want the stock price to tank.
Because if the underlying share price hits the strike price, the buyer of the put option can exercise the contract, which means you have to buy at least 100 shares of the underlying stock at the strike price. And this can present a significant downside risk.
Why? Because unless you plan on holding those shares, you’ll need to sell them, and by the time you do that, the share price could be much lower than what you paid. Theoretically, the share price could go to $0, meaning you could lose a lot of money.
For example… let’s say you sell a put option contract tied to Company ABC with a share price of $25. And let’s also say that the contract’s price is $4 per share and the strike price is $15.
Now, if you sell a put option contract at $4, you can collect an immediate premium of $400 because each option represents 100 shares ($4 x 100 equals $400). Cool.
But that’s not the end of the trade, so you could still end up losing that $400 in “instant income” and potentially even more money depending on what happens next.
One outcome is that the underlying share price stays above the strike price ($15) at the time the contract expires (let’s say two months later). And in that case, you’re $400 in the green.
But on the other hand, if the stock reaches $15 or less, the contract can be exercised, meaning you now have to buy 100 shares of Company ABC for $15 a pop, or $1,500.
And if that happens, you’re now down $1,100.
However, you also own 100 shares of Company ABC, so assuming the share price stays at around $15, you could still exit the trade profitably by selling those shares.
But the risk is that the share price could continue falling (potentially to zero), in which case your total loss could be $1,100 ($1,500 minus $400).
There is also a different outcome again. Instead of waiting for the contract to expire, you could offload it to minimize your losses before its expiry. And based on the backtest data on the TradeSmith website, that seems to be what Kaplan has done at times.
Either way, my point is that selling put options is a perfectly legitimate method of generating income, but it’s also possible to lose a lot of money if the trade works against you.
I recommend checking out the article I linked to earlier before doing anything else because there’s a lot more to this subject. What I’ve explained is the basic overview, but there are nuances and different approaches to this strategy.
Nevertheless, in the next section, I’ll give you an overview of how the Infinite Income Loop system works to give you a better idea of what to expect.
How Does the Infinite Income Loop System Work?
According to Keith Kaplan, the system uses an algorithm he developed to predict “the maximum directional move of any stock.”
“Instead of just predicting whether a stock is going to go up or down in price…
This algorithm predicts the maximum directional move of any stock.
And that is very important.
Because if I know the maximum directional move of a stock, I can use it to predict the exact probability of profit on any income trade – before I hit enter.”
When it comes to selling a put or call option, gauging the maximum potential price movement is more important than predicting an exact stock price because your goal is to make sure the stock doesn’t hit the strike price.
Of course, nobody can predict anything when it comes to the stock or options market, but that’s what the Infinite Income Loop algorithm is supposedly attempting to do – predict the maximum directional move so that the option contract is profitable.
And according to Kaplan, it analyzes just three stocks:
“It’s simple. Instead of analyzing and interpreting 10,000 different trades — and letting you, the trader, pick which ones you want to make…
I found a way to apply my Infinite Income algorithm to a set of just 3 stocks at a time.”
Why three stocks?
Because according to Keith Kaplan, he focuses on the three stocks out of 10,000 trades that have the potential to pay the most cash and have the least potential risk.
There’s no guarantee (at all) that the system will help you make money. But Keith Kaplan says that it’s designed to give you a “probability of profit” (POP) and “ROI score” on each trade so that you know the odds before executing a trade.
“And remember, every new trade comes with a POP and ROI score, so you always know your odds and estimated profit BEFORE you ever click ‘Trade.'”
Kaplan says he has programmed the system “to only pick trades with a probability of profit 80% or higher” because trades with a “POP score” of above 80% won 9/10 times in a backtest of the system.
“Well here’s why they don’t need to be. In a backtest of this strategy, trades with a POP score above 80% were winners more than 9 times out of 10.
That’s why I programmed today’s system to only pick trades with a probability of profit 80% or higher.”
I checked out the backtest data on the disclosures and details page of the TradeSmith website, and, assuming the data is credible, Kaplan’s system seems to have worked pretty well. As you’d expect, some trades lost, but many appear to have won.
That said, even if the backtest is legit, it is based on theoretical trades between February 2020 to August 2021, so there is no telling how it will perform going forward.
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What Do You Get If You Join?
The cost of joining Infinite Income Loop is $79 per year, and the main thing you get is access to three trade ideas each month that Keith Kaplan says have a “POP” of 80% or higher.
According to Keith Kaplan, all you need to do is check your email and “copy” the trade instructions you receive in your brokerage account.
“For anyone who decides to join me today, all you have to do is check your email – and then you can just copy the trade instructions in your brokerage account.”
Aside from that, subscribers receive weekly updates on the positions Keith Kaplan has recommended, which include guidance on upcoming trade exits.
“Every week you’ll get an email with detailed updates on all three of your trades. You can relax as you quickly absorb what to expect in the week ahead, including up-to-date profitability reports, upcoming trade exits, and guidance for closing out a trade with maximum income.”
Lastly, you get training videos that Kaplan says are designed to help you learn how to trade and cover topics such as risk management and finding your own trades.
“The videos are a fun way to watch over my shoulder as I run you through the steps of today’s strategy. We’ll start with basics like how to start, and the different types of options.
Then we’ll progress into risk management, trading checklists, and other techniques that develop you into a trader who can spot profitable setups on your own.”
So, the basic idea is that Kaplan shares his top options selling trade ideas with subscribers each month, and you can decide which trades you want to place within your trading account.
You do get access to training which is cool, but if you choose to follow the trade ideas, you are essentially trusting that Keith Kaplan and his algorithm will pick winning trades.
Who Is Keith Kaplan?
Keith Kaplan is the CEO of TradeSmith, the company behind Infinite Income Loop.
Kaplan doesn’t seem to describe himself as a trading expert, nor does he have a background in finance like many “gurus” in the space.
Instead, he says he’s a computer engineer who developed a trading system to help him pinpoint trades with a high chance of success.
Based on my research of another system Kaplan runs called CoPilot by TradeSmith, he claims to have built enterprise software for large tech firms and built software to help automate trading systems for expert investors who shared their knowledge with him.
So, his specialty seems to be building automated trading systems.
What about TradeSmith?
TradeSmith is a company that provides risk management and portfolio analysis tools for self-directed investors. And some of their most popular products include TradeStops, Ideas by TradeSmith, and TradeSmith Decoder.
This is the first time I’ve come across the “Infinite Income Loop” system, but it appears to be one of TradeSmith’s latest services.
Bottom Line: Is Infinite Income Loop Legit?
In the end, I chose not to join Infinite Income Loop, so I can’t say how worthwhile the system is firsthand, but I don’t believe it’s a “scam.”
I say this because TradeSmith is a real Florida-based company in the trading space and its products appear to be genuine based on the reviews I’ve seen.
There are some complaints about TradeSmith online, but for the most part, these seem to relate to the company’s refund policy. From what I can see, the company usually offers a “refund credit” instead of a cash refund if you decide it’s not for you.
Still, there are a couple of things I want to mention.
First, there is no guarantee you will make money following the Infinite Income Loop trade ideas. Nobody can predict the future, so it is always possible the trades could end up losing you money. That doesn’t make the service a scam, but I think it’s worth pointing out.
And second, I found the marketing a bit overhyped. I mean, it’s not like TradeSmith is claiming you’ll get rich overnight or anything. But I don’t feel that the average person who joins would have a very good understanding of the potential risks and drawbacks since most of the presentation centered around how quick and easy it can be to profit.
So, while it may not be a scam, I think it’s important to keep in mind that there are significant risks involved with selling put options, or any method of trading for that matter.
Anyway, that’s it from me. I hope this helps you make a more informed choice and if you want to share your experience with this service, please comment below.