I have written a lot lately on this blog about my secret stock replacement strategy. I want to expand on this technique by showing you how I have made $1000 a day using this strategy. As you remember the secret stock replacement strategy is buying deep in the money call and put options to replace buying the actual stock. The advantage of using options is that gives you free juiced leverage 10 to 20 times, with limited downside and low capital requirements (you only have to put 1/10 or 1/20 of the amount compared to buying the actual stock).
And this secret stock replacement strategy allows you to trade with an account as little as $5000 to make a $1000 a day swing trading and day trading stocks.
This honestly is one of the most exciting methods I have ever found to make a living trading in the market, I have personally made on several occasions $2000 or more in a day using this technique and at the time I was only trading a $5000 account!!!
The key to this strategy is to find highly volatile, liquid stocks that have options with high trading volume so that you have a very small spread when you buy the option. What this means is when you are day trading or swing trading stock options, you only want to buy puts and calls that have very tight spreads, (the spread is the difference between the bid and ask). You want the spread to be pennies.
Next, you need to understand that in the short term (anywhere from 1 to 5 days) price action, money flows and technicals drive 95% of the stock price in the short term. So you need to know what chart patterns work in the short term and luckily there are a few great ones that work almost all of the time.
Lastly, you need to use my secret stock replacement technique, that is only buy options that are deep deep in the money, so that the option moves almost one for one with the stock.
So to use this secret stock replacement tecnique of day trading swing trading options you need the follow these rules every time:
1) Only trade stocks that have options that are very liquid with high volume, so that you when you buy the put or call the spread is very low, (it should be pennies) so that you are not paying a big premium on every trade.
2) Only trade volatile stocks with great short term chart patterns. Like the one I found in Coach ($COH).
3) And most importantly, you want to use my secret stock replacement strategy of only buying deep in the money calls and puts, in which the options moves almost one for one with the stock.
Editor of the Billionaires Portfolio