Why Options Make Sense in this Market an ...

Why Options Make Sense in this Market and Here’s How to Do it.

Jan 19, 2024

The current market offers bearish profit opportunities due to event risk as well as profitable trading on the long side. Yet, after many years of gains in stocks, the prices for many individual company shares has reached a point where many investors are shunning opportunities to trade. 

The truth is that many stocks are just too expensive for the average investor.  But there is a great solution to the problem – Trading Options.

As a result, I’ve increased the number of option recommendations offered on my service – Joe Duarte in the Money Options.com, and will likely continue the practice for the foreseeable future.  So far so good; I recently recommended a put option trade based on Apple (AAPL), which yielded over 140% in profits in five days ($421 per contract), over which the stock lost 14% of its value ($1400 per 100 shares).  Of course, not every option trade works out perfectly. But my point is that when managed correctly, the addition of option trades to any portfolio is worthwhile. 

Here’s a great example of the logic behind another potential options trade.

A 100 share block of semiconductor juggernaut Nvidia (NVDA) recently cost around $55,000.  A ten percent move, which is not uncommon in 24-48 hours for this stock would yield a $5,500 gain or loss, depending on the direction.  In contrast, an NVDA option, such as the February 16, 2023 $560 Call Option recently traded for $25.20.  One contract would cost $2520. Thus, if NVDA moved toward the strike price of $560, the option had the potential to gain close to $600, a nearly 24% move. 

Moreover, a move above $560 would put the option in the money, which means it would trade on par with the stock (a $1 gain in the stock would equal a $1 in the option), offering the potential for extraordinary gains.  In addition, you can apply similar logic to a downside strategy via the purchase of put options.

Remember that options are best during periods in which markets exhibit higher than normal intraday volatility. These periods shake up the market’s sentiment eventually setting up the next market rally.  Options also offer the opportunity to generate income during uncertain periods in the market. 

Check out this video which goes over everything you need to know to make low risk, easy to execute option trades.


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