Use This Robinhood Options Strategy to Bag a Quick 100% Gain

You've probably been taught that when the price of a good, like a bicycle, goes up, people tend to buy less of it. And when the price goes down, people will buy more of it.

But it's just the opposite in the stock market.

Traders flock to high-priced stocks that they would not touch when its price was falling.

And we can take advantage of that phenomenon with a simple options strategy. Today, we'll show you exactly how to use that strategy on Robinhood or WeBull to build the perfect options trade. This trade could double your money in a hurry while protecting your downside risk. It's easy enough to do for traders of all skill levels too.

Here's what makes this strategy so powerful...

This Signal Shows How to Build a Profitable Options Trading Strategy

Just like in the physical world, stock prices can have momentum. Stocks that are already moving higher tend to keep on moving higher, and stocks that are already moving lower tend to keep moving lower.

That sounds counterintuitive, but it's one of the simplest trends to spot. Investor A makes money so investor B buys. Then they make money, and now investor C wants a piece of the action. And that is where we get the old saw, "The trend is your friend."

Options 101: It's never been easier to learn how to trade options, especially with our free guide from top trading expert Tom Gentile. Click here to get it.

That is why the concept of a 52-week high is so pervasive in the market analysis world. If a stock is at its highest level over the past year, chances are it is strong, has upside momentum, and will make higher highs.

But many investors are scared away by 52-week highs. They believe when a stock is as high as its been in a year, then it must be expensive. Expensive stocks often get sold by skittish investors.

But again, the stock market does not work on logic.

Think about what it takes for a stock to reach its highest level in the past year. It is very likely in a rising trend, meaning demand for shares is outstripping the supply of shares for sale. Unless something acts on the stock, like a weak earnings report or some negative news item about the company or CEO, momentum will carry prices even higher. It is simple physics.

Now, we're using that trend to make the best options trade you can do right now...

The Best Options Trade on Robinhood Now

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Money Morning's options trading specialist, Tom Gentile, actually has some data on this phenomenon. He found that small-cap stocks gain 0.62% on average during the week following a 52-week high and 1.89% on average during the month following. Large caps did not fare quite as well but still managed to average 0.17% and 0.70% for the week and month following their new highs.

It may seem like small potatoes, but for small caps, that one-week gain is equivalent to an annualized return of just under 38%.

But what if we use options to ramp up returns? That 0.62% gain can translate into a triple-digit, not annualized, return when you buy the right option.

Tom recommends looking for stocks that are already in solid rising trends, rather than stocks that just eked out a new high after languishing in a range all year. Then he suggests buying a slightly out-of-the-money call option with a three-month expiration.

He used Facebook Inc. (NASDAQ: FB), currently trading near $295, as his example. The Jan. 15, 2021 $315 call will cost you around $2,430, vs. about $29,500 for 100 shares of the stock. Given the upside momentum in this stock, the odds it will continue higher are rather good. Don't forget that this target, or strike price, is only 6.7% or 20 points above where the stock is trading today. Facebook stock was trading 20 points lower only five days ago, so this stock can move!

But Tom still does not want to put up the $2,430 for this trade. He likes to keep his cost down to under $500, so he is looking at a spread trade. This involves buying a call on the stock and selling a call with a higher strike price on the same stock with the same expiration date. Basically, the higher strike option partially pays for the lower strike option, and your total cost - and risk - is down.

Here is how it is set up:

Buy one FB Jan. 15, 2021 $315 call - that'll cost us $24.20, or $2,430 for 100, same as before.

Sell one FB Jan. 15, 2021 $325 call - we'll get $20.59, or $2,059 for 100.

Your net cost, not accounting for commissions and slippage, is the difference between what you take in and what you pay, or $361.

All Facebook has to do by Jan. 15, 2021, is to be at or over $325, and you double your money.

Could that happen by Jan. 15? Judging by the way Facebook stock moves, you bet it can.

Finding trades like this shows you the power of having an expert in your corner.

That's why we're excited to show you this new system...

Millennial Millionaire's One-of-a-Kind Trading System

It's been generating money hand over fist since the recession of 2008... and now, he's finally sharing the secret!

Investors in today's economic climate need every advantage they can get, and I don't think I've ever seen a strategy more powerful than this.

Click here for the full story and the next three plays he has his eye on.

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