Options are all about leverage. We use a small move in the stock to capture a larger percentage move in the options. When you know and understand the math of my Weekly Income Now System, you’ll see week after week, options making ROI’s in the hundreds, thousands, sometimes even tens of thousands of percent! We focus on finding trades that double your money with options (at a minimum).
Some of you may have flinched at those gains, thinking I’m exaggerating. I’m really not! It happens – on a regular basis. We focus on options to double in value. That’s what I’m on the lookout for. Now, it doesn’t always happen. Sometimes we’ll find an option that only makes forty or fifty percent. Disappointed, we groan all the way to the bank with our meager forty percent return!
My goal is to find options that double in price. What do I mean by that? I mean, you buy an option for five cents and sell it for ten cents. Or you buy an option for five dollars and sell it for ten dollars. The price of the option doesn’t matter so much, as long as we can double our money on it.
It happens faster than you think – and more often
The exciting thing is, it doesn’t necessarily take a lot of time to see options double in price. When the stock makes a move, options can double within minutes! It’s really fun to watch!
There are actually three categories of options that could double your money:
Intraday – Options that double within the same trading day.
Overnight – Options that double from one trading day to the next.
Contract Life – Options that double sometime over the life of the option contract.
Some Weekly options have a Contract Life of only seven trading days. Most monthly options have a Contract Life of two months – they’re created one month and expire the next. LEAPS could have a Contract Life of over two years. If an option increases 100% in price at any time during the life of the contract, that counts as a double. There’s just one problem: I’m too impatient to wait two years to see my money double. I don’t even like to wait two days!
Leaps? No thanks. We’re looking to double our money with options
So, we’re not even going to consider LEAPS. We’re going to concentrate on overnight and intraday doubling. We’re looking to buy an option in the morning and see it double before the day is out – intraday doubling! This isn’t just wishful thinking either, it happens every day. We’ve seen options double or more within minutes.
We like short-term options. Little time to move, so little time value. Weekly options and options that are in their last week of the contract give us the best Gamma moves. Weeklys (and Monthlys too) have their highest likelihood for good Gamma moves on Fridays – the day of expiration. That’s when a small move in the stock can generate HUGE moves in the options and give us returns in the hundreds, frequently, thousands of percent!
Don’t panic… let me explain
I can see your faces now. “Gamma” what’s Gamma? It’s part of what I call squiggly line math. You know the kind that uses figures beyond a plus sign. In short, Gamma is the amount of change to Delta. It’s not the rate of change, as is so often mis-reported, it’s the amount of change. I like to call Gamma “acceleration”. If Delta is the speed of the stock and Gamma is the change of Delta, then Gamma is how you rate the speed of Delta. Gamma measures how fast Delta moves – in other words, Gamma is acceleration.
I won’t go into it further here, but for any “Geeks” out there that feel they need to know all the math, a study of the “Greeks” should give you pleasure in knowing our system isn’t “Black Box”. Our system is based on math. The math centers around but is not limited to option pricing and the “Greeks”. We add historical precedence to map out a game plan. We try to make low risk – high reward trades in an effort to get results in the range of “well above average” to “incredible”.
The primary function of our system is one of elimination. We strictly eliminate anything that doesn’t match our criteria until the few, the proud and the profitable remain. The key to this function is rejection. There’s a huge universe of stocks out there. We don’t want to have to wade through every one looking for a good trade. We want to whittle this massive menagerie of stocks down to an acceptable short list.
Our core trading concept is to focus on stocks whose price moves in such a fashion as to give its options a high likelihood of doubling in a short period of time. I do a lot of math trying to pare the large universe of possibilities down to a manageable amount.
6 steps to double your money with options
Let’s sum it up. In order to find trades that have a high likelihood to double your money with options, we take the following steps:
First: Determine if the stock has options.
Second: Look for short-term expirations. Preferably Weeklys, but could even be Monthly options close to expiration.
Third: Determine available strike prices. Many stocks have dollar-wide strikes, several are offering fifty cent wide strikes now. The narrower (on a percentage basis), the better!
Fourth: Evaluate option price increments. We like to work with penny-priced options. Remember, this doesn’t mean cheap options, but options with increments in pennies.
Fifth: Calculate the Bid/Ask spread. If it’s too wide, the Market Maker will take your profit and order himself a new boat.
Sixth: Make sure the stock is capable of moving. It doesn’t matter if the stock opens right on a strike price if it doesn’t move. The more movement potential the better.