This Strange Device Holds a 64-Year Income Secret

By Michael Salvatore, Editor, TradeSmith Daily

In This Digest:

This strange device isn’t as dangerous as it looks
Why this MIT professor feared the Mafia would take him out
How TradeSmith constantly pushes the odds in your favor
Our latest breakthrough helps supplement your regular income
This 80-year-old trader is raking it in with Constant Cash Flow

I’ll bet you can’t guess what this sketchy-looking device is…

It was built in 1961, kept secret for five years, and archived four decades later.

It’s about the size of a deck of cards. Gritty and yellowed with time, a plastic pane covers a mess of primitive electronics and metal knobs.

If you held it in your hands, you wouldn’t know what to do with it. You might even be afraid to touch it.

Source: MIT Museum

Is it a rudimentary sensor from an old car?

A part from a long-obsolete telephone?

A trigger for a bomb?

It’s none of these things.

It’s far more important.

And for reasons I’ll show you today, this curious box laid the groundwork for TradeSmith’s most popular – and powerful – trading strategies.

Since we launched it in 2021, it’s delivered an 98.8% win rate over more than 900 trade recommendations.

Each of them an opportunity to draw quick income from the market with minimal risk.

**A brand-new way to make money unlike anything you imagined was even possible…**

This is NOT a stock chart… It doesn’t predict future stocks’ prices… Instead, this blue line does something you may never have even imagined was possible when it comes to investing… The result? 112%… 172%… even 519% gains in a single afternoon. At TradeSmith’s historic T-Day Summit, Keith Kaplan revealed how this game-changing innovation works for the first time ever. Watch the demonstration that changed everything here…

What you’re looking at is the first wearable computer…

When most people think about wearable computers, their mind first goes to the Apple (AAPL) Watch – the most ubiquitous wearable device of our time.

You might even think of Meta Platform’s (META) smart glasses… or Google’s (GOOGL) clunkier attempt from 2013.

But the history of wearable computing goes back much further.

This wearable computer wasn’t designed to track your heart rate or take pictures for social media. It was designed to make money – and a lot of it.

The inventor expected it would make him a 200% gain at a Las Vegas roulette table.

That’s no mean feat. Roulette is notorious for being highly random. You’re betting on odds as low as 2.6% or as high as 50% that a ball the size of a marble will fall into one of 38 slots on a wheel while spinning at three to five revolutions per second.

Some gamblers, like Richard Jarecki, exploited the tilts of beat-up old wheels to gain an edge.

But MIT mathematicians Ed Thorp and Claude Shannon wanted to find a better, smarter way to up the odds of winning.

Thorp and Shannon weren’t trying to make a fortune…

It was more exercise in ingenuity than a way to make money.

Thorp was obsessed with how math could beat chance. He wanted to see if what seemed like pure luck could yield to calculation.

And Shannon – who went on to lay the groundwork for digital communication, modern computing, and even the earliest version of AI – loved puzzles and machines. In fact, he’s the namesake of Anthropic’s AI chatbot, Claude.

The wearable computer Shannon built for their experiment was a covert way for a roulette bettor to receive signals.

An observer watched the wheel and – after much practice – quickly calculated the likely trajectory of the ball based on the speed it entered the wheel, the speed of the wheel’s rotation, and its rate of deceleration.

Then, he’d send the wearer of the computer a coded message through a switch operated inside their shoe.

The bettor received the message in an earpiece and placed a last-call bet on the wheel. After a few rounds of throwaways, the bettor made a big bet on a range of numbers… and won huge.

The experiment worked well in Shannon’s basement. It gave them an expected edge of about +44% over the house, at least in theory. Compare that to normal roulette, where the house edge is about 5%.

Though, like many groundbreaking ideas, the first attempt to use the device was a failure. As Thorp put it…

The wires to the speaker broke often, leading to tedious repairs and the need to rewire ourselves. This stopped us from serious betting on this trip. Except for the wire problem, the computer was a success.

And dodgy wires weren’t the only hazard the pair faced. Due to Thorp’s previous “experiments” in counting cards at blackjack, his and Shannon’s better halves had some reservations about testing the device in casinos…

Claude and Betty and my wife Vivian were nervous whereas I wasn’t, perhaps because my blackjack trip familiarized me with the scene. In retrospect they were right, judging from the Mafia-riddled “gaming” industry of the time.

Thorp got out of the gambling game before the Mafia took him out. Although he later claimed that someone tried to poison one of his cocktails on one of his casino outings. He even believed that someone messed with the brakes in his car, which nearly caused him to crash on a trip back from Vegas to his home in New Mexico.

But that wasn’t the end of his attempts to beat the odds… not by a long shot.

After a stint teaching at MIT, Thorp decided to take his statistical edge to Wall Street. He went on to manage the pioneering “quant” hedge fund Princeton Newport Partners. Thorp’s fund only had three down months in 20 years – and each was less than a 1% loss.

It’s one of the greatest track records of all time.

And Thorp’s strategy wasn’t about making big, bold directional bets. Instead, it was all about repeated wins on small discrepancies in market pricing. Just the same as he did to win at roulette with the world’s first wearable computer.

Thorp was all about increasing his odds of success…

And we follow that same philosophy at TradeSmith.

Subscribers to our suite of options tools, Options360, are familiar with the Probability of Profit (PoP) algorithm.

Most people think options trading is all about betting on whether a stock will go up or down. But at TradeSmith, we love to use options a different way:

Selling options for steady income instead of buying them.

Think of it like running an insurance business. You collect a payment up front – called a “premium” – from investors who want protection. In this case, they’re buying what’s known as a put option.

Here’s how it works… You agree to buy a stock at a set price below where it’s trading today. For taking on that obligation, you’re paid cash right into your brokerage account.

If the stock never drops to that lower price, you keep the premium and move on to the next trade. If it does, you’re required to buy the shares – but at a discount to where they were trading when you entered the deal.

The sweet spot is when the options expire worthless – you pocket the income and never touch the stock.

How do we know which put options are most likely to expire worthless?

Our PoP indicator.

This simple-but-powerful tool shows you the probability of any options contract expiring worthless. If you’re trading for income, that’s what you want.

If you know how to easily find options that are most likely to expire worthless, you can continually sell these options and generate constant streams of income.

This works especially well during bull markets, when stocks are most often trending higher.

Our newest software tool goes a step further…

Selling options with a high probability of expiring worthless is great.

What’s even better is finding options like these that the market is overvaluing. This further increases your chance of success.

That’s what our newest tool helps you do. We call it the Thorp Line – or T-Line for short – after Ed Thorp.

It’s unique to TradeSmith. And it further stacks the odds in your favor when you’re trading for income.

Here’s a look at the T-Line for put options on the SPDR S&P 500 ETF (SPY) expiring this Friday.

The T-Line is the theoretical value of each put option contract based on their underlying volatility and other factors. Think of it as these options’ fair value.

The red dots show where each options contract traded as of Tuesday’s close. They appear above the T-Line. So we know that each of those options contracts are overvalued.

When you’re selling options, that’s exactly what you want. You want to capture more value than what’s “fair” to increase your odds of success. And since these are put options, selling them means you’re bullish on SPY.

The green dots are undervalued contracts – those are better targets to buy if you’re bearish on SPY through this Friday.

And the starred dots are the most over- or undervalued contracts relative to its fair value on the options chain – a prime target to consider.

This new breakthrough makes Options360 even more powerful…

The PoP helps you find the trade with the best odds of making money.

The T-Line helps you find the most overvalued options to sell, putting extra income in your pocket.

And these tools work in concert to help you build a long-lasting, low-risk cash generation strategy.

If you were among the nearly 3,000 people who joined TradeSmith CEO Keith Kaplan for yesterday’s live launch event, you already know how this tool can help you make thousands of dollars of extra income.

During his event, Keith covered:

How the T-Line can help you find quick, meaningful income opportunities where you’re in complete control
How you can use it to speculate on the upside or downside, and how that approach can uncover trades that double, triple, and even quintuple your money in a matter of hours
And how even this revolutionary tool is just one of several new features we added to Options360 as part of this launch (our new Trade Builder is a must-see)…

If you missed yesterday’s event, don’t worry. You haven’t missed your chance.

And if you think you can’t trade this way, think again…

The message below comes from an 80-year-old subscriber to Constant Cash Flow – part of Options360. He says he’s been doing 30 trades a month for over a year and a half.

We recently asked him for an update on his performance, and this is what he had to say:

I am completely sold on Constant Cash Flow.

Even through the turbulent times we have recently experienced, I still had no losers and continued with generating $5,000 to $6,000 per month using approximately $100,000 in trading capital (I trade in a portfolio margin account.)

As I said before, I am retired and not looking for the moonshots any longer, just consistent returns. So for anyone sharing my circumstances I highly recommend following the Constant Cash Flow strategy!

And here’s what Keith said in response during Tuesday’s post-summit Q&A…

These are the things that so many financial advisors would look you straight in the eye and tell you are simply not possible.

But you’ve got Mike D. here at 80 years old, saying, “Hold my beer…”

This exchange is what’s so great about TradeSmith.

A limited-time replay of our T-Day Summit is still available.

To find out more about this major software upgrade, and how it can help you generate constant streams of income in the market, watch Keith’s presentation for free here.

This Strange Device Holds a 64-Year Income Secret