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A Great New Strategy That Most Investors Get Wrong

A whole new trading strategy has become mainstream.

If you are over 30 — between your Facebook posts and watching your mutual funds you might have missed it.

What we’re referring to is OPTIONS….

 

 

A tool that an entire new generation of investors have put into their toolkit.

Yet most of these investors are using the toolkit entirely the wrong way!

And that has given us the ideal set up: one of the lowest-risk, highest-reward opportunities that we’ve seen in our 30-plus years in the capital markets (more on that in a minute).

In fact, this next generation of retail traders has flooded the options market with money. Options trading volume has grown by multiples over just the last handful of years.

The market has gone from seeing 10 million options contracts trading daily…

To more than 40 million options contracts each day this year. And the number continues to grow monthly.

On some days the trading volume in the options market is now exceeding the entire amount of trading that takes place in the stock market!

Why did this happen?

It has been a timely convergence of commission-free trading, technology that allows retail investors to buy & sell options very easily — and COVID-19!

All of a sudden, many in society had A LOT of free time as everything was shut down. Then buckets of new, free money — every month!! — was handed out, so they could try these new ideas out.

It’s easy to understand the appeal of options to young people — options offer a high amount of leverage that allow young people to make exponentially more money from their good ideas.

Because newer investors have a limited amount of capital, options present them the chance to make real money now — rather than waiting decades for that capital compound with a diversified portfolio of stocks.

 

Here is an example that shows why this appeals so much to them:

A person can buy 100 shares of Disney stock at $100/share—for $10,000—and make $1,000 if it goes to $110.

That’s 10 PERCENT.

Or they can buy an option to buy that same 100 shares of Disney stock at $100—for a small fraction of that. Total cost is close to $100, not $10,000.

If the Disney stock goes to $110, they stand to DOUBLE their money – a (roughly) 100% gain. Not merely the 10% return they would’ve made from owning the stock.

So, instead of using $10,000 of capital to make $100, they have used $100 of capital to make the same amount.

 

That’s just a hypothetical example, but it shows very clearly how this kind of trading can attract a very large number of investors — especially young traders who may not have a lot of money with which to generate wealth.

And if you’re absolutely convinced you’re correct on a trade, why in the world wouldn’t you want it to pay off as much as possible – and to its maximum?

It is an exciting way to invest and get paid very well — BUT — as we mentioned, the vast majority of these new traders are using the options market in the exact wrong way.

The way to play this is take the other side of these trades – and become a “stock market landlord.”

Rather than play the part of the inexperienced gambler, the real opportunity is playing the role of the casino that makes money off of them… and to do it by taking very, very little risk.

Click here to learn how you can earn a 20% annual return – using our “In The Money” strategy.

Nathan Weiss & Keith Schaefer
Co-Founders, In The Money options trading service
Questions or comments? Reach out to us by email at: help@inthemoney.capital

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