Tom has picked the 10 most likely short "Super Squeeze" bets out there right now, and he'll name each and every one of them and show you the best way to trade them for big gains right here in this latest video....
Best Options to Buy This Week
More people than ever are learning how to trade options. But knowing the basics of options trading is only half the battle: You need to know how to find the best options trades to make money.
That's exactly what you'll find here.
We'll show you the simple steps you can take to find profitable options trades.
Plus, we'll also show you the best options trades you can make right now, courtesy of the options experts here at Money Morning.
Speaking of experts, here's Money Morning's options trading specialist, Tom Gentile, with a brief overview on what makes options trading so phenomenal, plus why this is one of the best places to learn the ropes:
Why Options Trading?
Options are exploding in popularity because retail traders have seen their profit potential.
Stock options give you the right to buy or sell shares of a stock by a certain date. Since you don't actually own the stock, just the right to buy or sell it, you can control many more shares of the stock for a fraction of the price of owning them outright. That's called leverage. And it lets you amplify the profit potential of stock trades far beyond what you would see from simply buying and selling shares.
For even more detail on how this works, make sure you check out our guide on how to trade options.
What many new traders have found out the hard way is that there's more to making money with options than buying a call on a stock you like and waiting.
You need to find the right combination of a stock, the strike price of the option, the expiration date, and the cost of the contract to consistently find profitable options trades.
Here's how you can do it.
Finding the Best Options Trades
While there are a nearly limitless combination of options traders can use to create a strategy for any situation, we want to focus on finding trades using simple calls and puts.
There are three elements to key in on to take your trading to the next level.
Find the Right Strikes and Expirations
There are many variations of strike prices and expiration dates for every stock with options. A one-sized rule is nearly impossible.
But a few guidelines can help you find the best options.
First, look for strike prices just out of the money.
Options already in the money will be very expensive and that will cut into your potential gain.
Options far out of the money will be much cheaper, but the stock will have to move dramatically in order for you to make any money.
The best idea is to look for options one or two strikes out from the stock's trading price. This will give you the best combination of affordability and potential to hit.
Second, look for expiration dates three to six months out.
This is a broad rule since six months can be a lot of time, but you likely don't want to tie up your money any longer than that. And plenty of traders make good money with weekly options, but you'll want expert help before you dive in.
Similar to finding the right strike price, expiration dates nearer the current date will be cheaper if the options are out of the money. But you have little time for the stock to move, raising your chances of losing money. And if the option is in the money, close expiration dates will be very expensive.
Options with expiration dates far away will be more expensive since the stock has more time to get in the money too.
But an expiration date three to six months out is the sweet spot between giving the trade time to work – the stock moving into the money – and affordability, lowering your risk and maximizing your upside.
Trade Liquid Options
One of the most important factors new options traders overlook is liquidity in the options market. Liquidity simply means there are many buyers and sellers for a particular options contract. That means prices are accurate, and most importantly, you'll be able to sell your options contract when the time comes.
When the market for the specific options you're looking at isn't liquid enough, it means the price you see on you trading screen might not be the price you end up paying. It may even mean there are no sellers at all for the contract, meaning you can't enter the trade.
It also means that when you buy the contract, you may not be able to sell it. Imagine buying a call option on a stock that soars higher, seeing a profit on your trading screen, and not being able to sell the option for a profit.
The way to find options with liquidity is to look at the bid-ask spread. Options with close spreads are typically liquid enough to trade. If you see a wide range, or a range that includes $0, then the option is unlikely to be liquid.
That may eliminate little-known stocks from your plans, but that's all for the better. As Money Morning's options trading specialist, Tom Gentile, says, "98% of stocks and ETFs out there simply aren't worth a single penny."
But "the big banks and brokerage firms want you to gamble your money on all of them," says Tom.
That's why looking for liquid trades can go a long way toward making your moves more profitable.
Manage Your Risk
Options are great at helping you trade while lowering your risk, but that can go out the window if you aren't careful.
First, make sure you use limit orders when buying and selling options.
The options market can be fast-moving, and using a market order could mean you end up paying more for a trade than you initially expected. It may also mean you sell your contracts for less than you hoped. But using a limit order can make sure you get into and out of trades at the price you want.
Second, don't chase trades.
You may be dying to open a position on a particular option and see that your limit order isn't filling. Stay disciplined, and don't change your entry point just because the market isn't cooperating.
"If you do, you could end up buying at the high or near the high of the day only to see the markets calm down and the option prices start coming down," Tom tells us.
Third, stick with your plan.
Set aside a percentage of your portfolio you'd like to use for options trading and stick to it. It's tempting for traders, especially new traders, to make a ton of trades and chase bad money with good. That's only increasing your risk.
Tom tells us a simple strategy to managing your risk is to keep your risk the same on each trade. Even if you feel like the trade is going to be a home run, don't be tempted to increase the money you're putting in. Stick to your plan.
And never trade with money you can't afford to lose.
Best Options to Buy Right Now
Options trading is fast-paced, so you'll need to act quickly when you find the right trade. Not only do options change price as the expiration date nears, but changes in the underlying stock price can cause options prices to shoot higher or lower.
That means if you're looking for options trading recommendations, you can't rely on an idea that's out of date, even if it's just a few weeks.
Here at Money Morning, we publish options trade ideas multiple times a week.
You can find our latest trades right here…
- This "Short Squeeze" Options Trade Could Pop After Feb. 11
- The Smart Way to Play the GameStop Action Right Now
- This Options Strategy Can Help You Find a Quick 50% Gain
- A "Silver Cross" Means a Bull Run in These Two Stocks
- How to Play Netflix Next Week
- How to Trade Options on Tesla Stock Right Now
- The Best Call and Put Options to Buy Now for up to 300% Gains
- Two Sectors Are Offering Fantastic Profit Potential Now
- How to Play My Favorite 2021 Sector SPDR Right Now
- Best Call Options to Trade Right Now for 70% Gains
- These Two Trades Are Portfolio Insurance… for Pennies on the Dollar
- Why CuriosityStream Is the Streaming Stock to Watch of 2021
- Best Call Option to Buy for a Tidy 80% Gain
- Best Put Options to Buy for Potential Gains over 100%
- The Best Call and Put Options to Trade Now to Profit in 2021
- The Best Put Options to Buy Now for a 98.7% Profit Opportunity
A few other beaten-down, Redditor-controlled stocks aren't faring any better than GameStop.
But there's still money on the table here, so Chris recently found a "back door" trade for a fraction of the cost and risk of coming anywhere near these "radioactive" stocks and options... .
“Short interest” is a phrase you’ve likely heard a lot the past few days in regard to the GameStop drama.
Indeed, it’s information that gives you an extreme edge, and it’s one of Chris’ favorite indicators.
By using it, he’ll give you the names of 20 companies, any or all of which could be the next high-profit rocket ride….
Two of America's biggest defense contractors turned their earnings in this past week, and the results were... mixed.
Raytheon Technologies reported a solid beat on earnings per share, and the stock went up, but Lockheed Martin took a beating for missing on earnings expectations - a heckuva way for investors to treat the company that just this past Wednesday replaced Boeing as the world's biggest aerospace and defense operation.
But the common thread here is both companies' extremely iffy forward guidance on aircraft and equipment sales; forecasts were much lower than expected, and that's kept interest pretty tepid.
So far, 2021 is already shaping up to be great for traders.
Two days after the Nasdaq and S&P 500 reach all-time highs, the bears ravaged the market for its biggest loss in three months on Wednesday.
Short-sellers are getting crushed and even some the big tech leaders - like Apple Inc.
(NASDAQ: AAPL) and Tesla Inc.
(NASDAQ: TSLA) - are in play with huge moves higher and lower.
In other words, volatility is back and that makes this a great market for options traders.
Not only that, but earnings season is here and that is usually a major catalyst for stocks.
One of the themes Money Morning's Quantitative Specialist Chris Johnson has identified for this season is the rebuilding of America.
Since the beginning of January, a strange, but fascinating saga has surrounded GameStop stock, with billions gained and lost in a matter of days - even hours.
The best part is, all this drama's opening up an opportunity for small, level-headed traders to walk in, set a profit target, and get out with an absolute minimum of risk...
One of the biggest mistakes options traders make is also one of the easiest to fix.
Trading without an options strategy can doom your returns.
Fortunately, there's a simple trading strategy that can help you find upside right away.
Here's how to do it, including a stock that's currently flashing a 50-day buy signal.
We'll show you that stock and the call options to buy to make the biggest profit...
A bull market run, whether you're talking about a stock, a sector, or the entire market, is a powerful thing to behold - and I've been through plenty in my career.
There's cautious buying at the start, testing the waters... then a breakout... a top-feeding frenzy explodes as the financial media goes bananas... and, best of all, profits stack up fast.
It's incredible; there's nothing quite like it.
But I'm here to tell you, it's even better when you're in it from the start. Nobody wants to hang back on the sidelines while stocks go ballistic, but if you wait too long, it might be too late. Or worse, you could end up losing money.
Of course, everyone wants to run the distance with the bulls. That can be easier said than done; a lot of regular investors don't have the data or systems to give them that all-important "Go!" signal.
Well I do, and today I'm going to share it with you. It's easy to spot, easy to use, and it'll help you profit from bullish runs from start to finish - that's performance a lot of investors can only dream about...
After Netflix announced a dynamite Q4 earnings report and officially hit the 200 million subscribers mark for the first time ever, more investors than ever are piling in.
While Andrew trades this stock all the time, he'll show you the best way to play it this week...
has made shareholders a fortune over the last year, climbing nearly 700% higher.
That's also made the stock a prime target for options traders.
Investors should know that they can use options to profit from nearly any trend in the market.
Stocks near record highs as the upward trend continues, but there's plenty of risk ahead with turmoil in Washington and dire news on the pandemic front.
Investors are right to question how sustainable this latest rally is, but selling your stocks and hiding in cash could mean losing out on more gains.
A power shift in Washington usually translates into market movements, with some sectors that’ll be more bullish than others under the new administration.
The trick is to get your investing and trading lined up with those movements to rake in gains again and again.
Here’s how to do it the easy way… .
Recently, Tom did a deep dive on all 11 Sector SPDRs for his subscribers, but today he’s sharing this one with everyone because he’s not only excited about what he’s seeing on his charts, but he also sees it as a fantastic opportunity to make money throughout 2021….
Many investors fear volatility but without it there's no chance to profit.
When stocks are moving fast, as they are now with the VIX up nearly 10% today, it is this volatility that provides opportunities to make money.
And no matter which way a stock moves - higher or lower - you can profit with options.
We're going to show you how to use one of the best call options to trade right now to make the most of this volatile, fast-moving market.
That's because we want our readers to know that options trading is a valuable tool for almost all levels of investors, from the most sophisticated to savvy beginners.
The S&P 500 dipped around 2.8% early last week and turned negative again on Friday.
While it's not time to worry, it is the perfect time to pick up a little just-in-case "insurance" for your portfolio in the form of these two inexpensive trades....