| October 22, 2018 | Our Next Case Study by Tom Gentile
Dear Power Profit Trades Reader,
Just a few short days ago I showed you how options work, and how it's possible for you to make money on even the smallest moves in a stock share price in a matter of days.
Today, I want to get you excited about the power of options trading by going through another case study on a situation where once again you expect the share price to move higher, but instead of doing so in a few days, it does so in a few weeks.
Here's the thing: even if it takes a few weeks for the stock's share price to move up, you will still make more money with the options than if you bought the stock outright. The truth is there is always a way to use an options trade on every stock.
Before we get started, you might be wondering, what is a case study?
I use case studies as part of my teaching strategy. In Power Profit Trades, I'll share them with you often, included as part of video chats and demonstrations so that you can see for yourself how options can dramatically enhance your moneymaking potential.
The more case studies I share with you, the more you'll be able to trade options like a true 1-percenter.
So let's get started...
Today's case study is on a trade that played out in about a 27-day span between June and July, and is focused on the SPDR S&P 500 ETF Trust (NYSEArca:SPY).
Thanks to an algorithm contained in my proprietary trading tool, I have developed a "Third Eye" for my analysis, and it's leading me to some very exciting opportunities.
The algorithm can look back day-by-day at up to 18 years of market data for the most popular stocks and ETFs. That's over 1 million calculations a day.
The algorithm tells me, based on past history, the BEST day to enter and exit any stock or ETF, ranked by historical accuracy and average move during its timeframe!
It's a virtual crystal ball on the market that I call the Money Calendar, and it's so incredible, it's already patented.
What my Money Calendar found in this case was a pattern as we exited Memorial Day and headed into July... a pattern that added $22.78 of profit to the SPY over the daily span during the last five calendar years.
How do you take full advantage of the move? With a simple call option.
Here's how it worked:
I set my date back to June 2, 2014 and looked at July options. Since they don't expire until the third Friday in July, they offer plenty of time for my pattern to develop.
Here's one options example during this time frame:
Click to Enlarge On June 2nd, the July SPY 190 calls were trading at a mid-price of $4.30 per contract. That's $430 for a contract, as one contract buys 100 shares.
Now let's fast forward to the options expiration, a few days after the pattern completed...
As you can see, on July 17th 2014 the SPY 190 calls were now showing a profit of $337 per contract, equating to a 78% return.
Compare that to the SPY itself, which moved up a maximum of five points between the low to the high during that pattern.
Click to Enlarge Which would you prefer?
A $5 return on a $195 investment...
Or a $3.37 return on a $4.30 investment?
You're starting to get the picture.
Options, when used properly in short-term trades or even long-term investments, aren't risky.
In fact, they can offer lower risk, higher reward scenarios... and when timed right, also give you a built-in exit strategy.
Now that's the power of options, and what you'll be learning from me twice a week in Power Profit Trades.
I can't wait to get you started!
Until next time...
Tom Gentile
Join the conversation at powerprofittrades.com. Or follow me on Facebook and Twitter.
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