Once a week now on this blog I will be trying to educate and teach my readers about trading. Why? First, I love educating and teaching. And I know there are so many secrets and tips I can share from my trading and hedge fund days that can really help the everyday investor.
Secondly, I was a teaching assistant in graduate school, and loved every minute of it teaching undergraduate economics. Speaking of grad school, I used this secret options strategy to pay for most, if not all, of my tuition using just a $4,500 trading account.
Since I was a poor grad student I only had a small trading account, so I had to figure out a way to build a diversified portfolio with just a little bit of capital. And that’s when I figured out my secret options strategy.
This secret options strategy is very simple. It focuses exclusively on buying cheap options, or what I call penny options.
Penny Options are one of the real secrets of investing. Penny options are options on liquid ETFs and stocks with a premium less than a $1.
By using penny options, you can build a diversified portfolio, even with a trading account as small as a few thousand dollars.
And now, not only can small investors trade penny options, but investors now have access to mini options. Mini Options are 1/10 the size of regular options. A mini option controls 10 shares, instead of 100 shares like a regular option. Mini Options are offered on widely owned stocks like Amazon, Google and Apple. Again, a Mini Option costs one tenth of a regular option. So if a regular option costs $950 dollars, a mini option only costs $95 dollars.
So that brings me to Amazon …
Amazon has a super cheap mini option that is also a penny option. It is the Amazon (AMZN) July $290 Mini Option Call. And boy is it cheap. For just 90 cents, I can control 10 shares of Amazon stock until mid July.
Now, Amazon has just broken out of huge sideways channel or flag formation, which projects a price target for Amazon of $320. So if Amazon hits $320 by mid July, those dirt cheap penny-mini options would give you more than a 200% gain.
Even though I have a much much bigger trading account today than I did in grad school, I still almost exclusively trade penny options (options under a $1). You get incredible leverage and you only need to put a little amount of capital down to make a lot of money. That’s what I call a great return on investment.
President of The Billionaires Portfolio