Welcome! We’ll be laying out the fundamentals of trading options.
We’ll break down everything from how to grab triple-digit gains in a matter of days, weeks, or mere months; to how to find the perfect option and when you should pass up on a possible opportunity.
Today, I want to show you how the power of options can lead to potential triple-digit opportunities.
And I’m going to prove that finding one a month isn’t impossible.
Of course, when it comes to investing, you’re not always going to hit it out of the park and there’s always the risk of losing money.
But when you want to set yourself up for the greatest potential, you turn to options.
It all starts with the most basic option trade there is — buying call options.
STOCKS HEAD HIGHER 75% OF THE TIME
The first thing you need to know about options is how they make money.
Call options are the most straightforward and easy-to-understand approach to options that exists.
And it doesn’t get any easier to understand than this: As a stock rises, call options go up in value.
Remember that. There are a lot of nuances with options that can be overwhelming. But, when you boil it all down, it really is that simple.
Let’s put it this way…
Stocks are in a bull market, meaning they are climbing higher, 75% of the time. Bear markets, periods where stocks are falling, are sharp but usually short lived.
Call options are nothing more than a bet that the stock you picked will rise over a certain period of time.
If you are right, that stock will go up during the time you expected. Then, you are in a position for a potential triple-digit gain.
And since stocks are rising most of the time, you have history on your side to ride the bull market in stocks.
By focusing on just one type of options — call options — you can quickly grasp the ins and outs of a trade so that you understand exactly what’s going on each time.
LET’S INCREASE OUR CHANCES FOR A POTENTIAL TRIPLE-DIGIT GAIN
You want to be timely. Options have expiration dates (which we’ll talk about in a later weekly update). That means you need to pinpoint the right time to jump in to capture a move in the stock.
You want to look for a mispricing in the stock.
That’s a spot where the stock is low, but the tailwinds are so powerful that the stock has no choice but to continue climbing.
The bottom line is that you want the move of the stock to be 10% in just a few months’ time. I’m not talking about one day. You don’t want to gamble on an earnings announcement or any other event.
Once you find this, then you are ready to buy an option that doesn’t expire until after that move is expected to play out. Remember, a small move in a stock can translate to triple-digit gains in an option in a matter of days, weeks, or months.
I use this in my Quick Hit Profits approach to finding excellent opportunities every month.
I’m excited to go on this journey with you. Options are the most powerful tool in the stock market, but so many investors don’t fully understand them.
Until next time!
Chad Shoop, CMT
Editor, Quick Hit Profits