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1:10pm (EST)
Imax (IMAX, $12.93, up $0.44) has sold $5 million worth of tickets to Avatar in 12 hours…we gave our rave reviews this morning in the Members Area and we profiled a trade for our current subscribers that should really do well. Imax is up 4% but the options we profiled are up 33%
Palm (PALM, $9.70, down $2.02)…If people ever ask why you are an option trader here is what you tell them.
“It is the most lucrative way to ever double, triple, or quadruple your money overnight, in a week, or in a month.”
Your friends or family might not know how options trade and don’t believe that you can make money trading options. You know why they say that along with 95% of the investing world?
It’s because they don’t know how options work.
Want proof to show them?
Palm’s stock is down 16% but the Palm December 10 puts (UPYXB, $0.39, up $0.28) are up 250% and your friends can look it up. The January 10 puts (UPYMB, $0.92, up $0.51) are up 125%. This means if you would have invested $410 in the January put options before the close on Thursday you would now have $920 in your account.
Or, how about a trade that is up 558%?
Celgene (CELG, $55.79, up $5.17) is up 10% today and we were recently stopped out of a trade that cost us 50%. However, the December 50 calls (LQHLJ, $5.60, up $4.75) are up five-fold today folks.
Our point is this.
We are going to put you in good trades with returns that rival those we just mentioned. In fact, we hope our Imax trade is a 500% winner, or even 200% would be fine with us.
The key to be successful in trading options is to always use the same amount of option contracts (10 or 20) for each of your trades. Sometimes take “half positions”. This way, if you do have three or four losing trades then it doesn’t affect you emotionally. And remember, if you have a trade that return 450% and have three 50% losers then you are still up.
It works like this.
If you had invested a $1,000 and made 468% on your first trade (hint, hint for some of you) then your account is now over $6,000. That one trade would have been buying 10 option contracts priced at $1 and selling then above $6.
Now let’s say you have 3 trades where you do the same thing but you get stopped out at 50 cents. That means you lost $500 per trade or $1,500 on all THREE trades. So you have had one winner and three losers. Your win rate is 25% (3 out of 4 trades wrong). Not a good track record.
Now here is the key.
Your account is still at $4,500 and your return is still 350% on your original investment.
Folks, we are reviewing all of this stuff because we are filling up fast. Remember, we said we would limit our subscription base to 1,000 subscribers so that we can stay under Wall Street’s radar.
We want you and your friends to learn option trading and learn how to develop a solid trading plan.
As we head into 2010 we are bound to see more market volatility but we want to show you how to make money in up and down markets. Once we are full, there will be a waiting list to get our trade picks.
It has been a tough market to trade lately but the opportunities are there.
With that said, we have updated all of our trades today one last time before the weekend. We can’t wait for the Imax numbers next week…
Current subscribers, please check for the updates. We will be back Sunday night with the Weekly Wrap.
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