I have been trading options lately instead of stocks.. and I have done better than I’ve ever done in stocks.. Keep in mind it’s only been a few months, in fairness, I’ll report back with any gloom I experience if it happens..
With options you get way more leverage and upside, with a predefined amount of loss risk up front.
The stock market has been so volatile lately, that with a very small amount of money you can see enormous gains in options.
I’ll give an example of some options that I bought and screwed up on.
I bought 500 PCUIP(Sep 80) calls on 6/13 for $3.30 cents each.. the total cost was: $1,713.25 including $13 comission. The underyling stock for these options is Southern Copper(PCU).
I sold a few days later, because I had realized some gains – and got a little skittish… well now 15 days later those options are at $14.20… If I hadn’t of sold(I don’t regret my instincts to sell, I’m happy with my gains) those options would be worth 500 x $14.20 = $7100, in other words $5387 profit.
I know it’s a woulda coulda situation, but I thought that would be better than sounding like I’m bragging.. in fairness, in the last month I did have 2 other notable situations, one where I realized 300% gain(Underlying stock = FRO).. and another where I experienced a -16k swing(Underlying stock = COP) that is now back to +2k(that was a 18k rollercoaster!)
Can anyone show another place you can put your money where you can get that kind of volatility? The example(plus one of the others I mentioned) was 300% in 2 weeks, with only a couple thousand dollar invesment.. Maybe this isn’t a fair example, as the oil and precious metal markets had a pretty serious downward correction with a recovery.
I feel that the stock market is going to be real reactive over the next couple of years, and in general I don’t see things going up much overall but just bouncing between their averages.. See CSCO, MSFT price over last few years for example. I believe this presents and incredible opportunity with options investing, because it doesn’t matter if the stock has year over year gains so much… just that it’s a solid company with alot of buy and sell activity.
This is just my perspective, I consider myself a amatuer investor. Zeal LLC, to which I’ve been a subscriber now for 8 months, is where I got the leads on 2 of the 3 option trades I referred to above.
