Option trading is not easy - if it was, everyone would be dong it. The instrument is there to hedge a position, not to create wealth. Any 'expert' would tell you not to trade stock options, and they would be correct in doing so.
From 2009-2013, option trading was a relatively easy. You bought calls in momentum stocks and banked huge coin. Stocks like LinkedIn( $LNKD ), Priceline ( $PCLN ) , Netflix ( $NFLX) , Fossil ( $FOSL ) , Wynn Resorts ( $WYNN ) , and others became a cash cow. Buy calls, sell them... Wait a few days and come back and 'Milk Em' dry again....
Netflix ( $NFLX ) and Priceline ( $PCLN ) are probably the best examples of some of these cash cows:
Netflix ( $NFLX ) : http://www.optionmillionaires.com/netflix-nflx-why-we-trade-options-follow-up/
Priceline Group ( $PCLN ) : http://www.optionmillionaires.com/booking-priceline-pcln-profits/
2014 had some nice opportunities as well, but surely not the same environment we were in from 2009-2013. A great example was OpenTable ( $OPEN ), Stratysys ( $SSYS ) , Solarcity ($SCTY), Intuitive Surgical ( $ISRG ) , and others :
- OpenTable ( $OPEN ) : We alerted the OpenTable (OPEN) June $77.50 calls @.20 via our text service, then the Sunday before the buyout, we talked about the buyout potential on our Week Ahead Webinar : https://vimeo.com/98140182 . Sure enough, 5 days later the buyout was announced, and those $77.50 calls went from bidless to over $27, meaning our 14 calls that were worth zero coming into the day, were now worth of $37,000. You can read about it here : http://www.optionmillionaires.com/opentable-open-trade-options/
- SolarCity ( $SCTY ) : Penned this on SolarCity (SCTY) the day before it ran from $54 to $70, and our June $55.50 calls we alerted via text/twitter at .52 hit over $14.50+ , or 2,800% +- http://www.optionmillionaires.com/bottom-solarcity/
- Stratasys ($SSYS) : The stock was one of my favorites for 2014, and provided some monster opportunities for big gains. Here is a trade when I spoke about the stock being my favorite play for the Week when it was at $95: http://vimeo.com/99412438 . I was already in positions to include the $115 July calls:
10 days later the stock hits $128, rallying over $33, and those July calls hit $14.10 or $500 into possible $14,100:
As we near the half-way point, 2015 has seemed interesting to say the least. There have been many big movers, but there has also been many stocks that have remained stagnant, which is kryptonite for an option trader.
I think there are many factors that are causing this, and I will cover in another post. But think things like weekly option popularity, readily available open interest and unusual option activity reporting, and better education of the use of options have caused some the issues.
I always think to myself, " If everyone knows where a stock is headed, who makes money?
So how does an option trader make money.? 12,975% five of the last six weeks to be exact? Especially one trading in straight calls and puts?
Be against the herd? Find undiscovered gems ready to move? Pure luck? I guess the answer would be all of the above.
Over the past 6 weeks, there have been plenty of losing trades, but these 5 trades shared in our chatroom and private twitter feed have yielded a cumulative 12,975% , more than making up for any losing trades. Most people would be happy with one 10x bagger in a month... a 20x bagger in 6 months... a 40x bagger in a year... we hit all three in a matter of 6 weeks:
$ISRG calls 4000% 4-10-15:
$CF calls 2000% 4-17-15
$ATHN puts 975% 5-1-15
$CF calls 4000% 5-8-15
$F calls 2000% 5-14-15
So to put in perspective what 12,975% means: $100 into $12,975 or $1000 into $129,750.
I called it lotto Thursday/Friday this week and we got lucky with Facebook ( $FB).. but then again, is it really luck?
Will we make it six of the last seven next week? We do have some limited 15 day offers to check us out, just send an email to firstname.lastname@example.org with ‘trial’ in header - first come basis(after that it's our normal 3-day trial : http://www.optionmillionaires.com/subscribe/ )
Have a great weekend!