I once traded advanced option strategies which involved all sorts of spreads as well as buying options. At first, I was successful and doubled my account.
But also I wasn’t very comfortable with those trades. Many of them were directional trades and I was unable to make money. When the trade went against me, it was very expensive to repair it or get out, when the trade was directionally correct, the magnitude of the move was so slow that time value decay destroyed my trade and I ended up empty handed.
So soon I lost all the money.
This experience took me out of advanced trading or buying options and I rather started selling premiums, which are a safe bet compared to buying options for example.
Although my account is growing rapidly, currently my put selling strategy is up almost 24% for the year, my dividend income up 2.9% so far (up to date, the year-end income should be 10.54%), and my account is up 74.95% up to date, I am realizing that it can grow even faster.
There are directional options strategies which can grow my account a lot faster, exponentially faster. The key, however, is to find stocks, which show a setup for such a trade. But how to find them?
I am not going to reveal how I am finding those trades yet, but GLW is one of those stocks providing such probability.
|Max Profit||unlimited||There is no max profit on calls. In theory, the stock could keep going up forever. But remember, your profit is limited to the move the stock can make before the call option expires. Profit occurs anywhere above 22.57. With 1 contracts, you will profit $100 per point GLW is over 22.57.|
|Max Loss||$57||A call option gives you the right to buy the stock at the strike price. If the stock is below the strike price on expiration day, it will be worthless. So, max loss occurs if GLW is $22 or less on expiration day, which is August 15 for this option.|
With this trade I have a potential to double my money or even triple my money, if the stock moves up as expected. The key is to find the momentum. Is this stock going to have such momentum? All I can see now, that the stock is in a relatively long squeeze (since the end of April) with a very strong upside potential. I can see that there really is a very high probability that the stock shoots up.
But am I right? I do not know. I am taking a few more trades in my paper money account, but also decided to take a very small trade with real money to test the waters. If my new strategy ends up as correct, I may be returning to advanced options strategies once again.
Tomorrow morning I should open a test trade as follows:
BTO 1 GLW AUG14 22 CALL @ $0.57
Of course, the profit is unlimited, but if the stock moves fast up above 22.57 I should double my money.
And of course, once this test trade is done, I will report its result.