The Options Manna Process
Portfolio & Position Balance
Portfolio Diversification
Diversification is key when attempting to create balance within your portfolio. Maintaining multiple active positions allows us to spread our risk while increasing our probability of selecting profitable trades.
However, having too many active positions at once can become overwhelming and will keep traders from being able to identify profitable exit points, resulting in a lesser return or even booking a loss that could have resulted in a gain if it had received the proper attention.
Position Allocation
Position Allocation also helps us when attempting to create balance within our portfolio. If our end goal is to generate consistent returns, we need simplistic, yet reliable data when determining risk levels.
By ensuring each position carries an equal amount of "weight" or capital, we're able to apply this balance within every other aspect of our trading. Especially when it comes to determining potential gains & losses.
Technical Analysis
Trend Identification
Applying technical analysis provides us many advantages. Especially when attempting to determine where a specific stock might be trading within its trend.
Attaining the ability to identify trends correctly increases the probability of placing ourselves on the right side of a trade.
"The Trend's Your Friend"
Determining Entries/Exits
Technical analysis also gives us an advantage when it comes to selecting profitable entry and exit points. Once we've been able to identify which direction a stock is trending, we're able to focus our attention towards identifying the best possible entry price and potential exit price.
Technical analysis open many doors for traders and investors alike by increasing our probability of success and keeping our emotions at bay.
Why Options?
What advantages do we gain by purchasing an option instead of shares of the underlying stock?
Options were created with the sole intention of providing financial leverage to both the buyer and the seller.
By purchasing options instead of the underlying shares, buyers gain the opportunity of taking a 10% rise in a stocks underlying price and turning it into a potential 110% gain on the option.
Here's a couple real examples of how we utilize options to increase our returns.
Looking at the chart above, you can see that from Tuesday, March 2nd through Friday, March 5th, GIS' stock price rose from $55 dollars to $57 dollars. That's a minor 3% gain. But look what happened when we purchased a Call Option Instead of the stock.
By purchasing the April 16th, 2021 57 Call Option, we booked a massive 97.33% return (IN 3 DAYS) compared to the "would be" 3% return from buying the stock!
Here's an example of how options can help us profit from a decrease in a stocks underlying value.
Looking at the chart above, you can see that from Tuesday, February 9th through Thursday February 11th, ZIOP' stock price fell from $5.60 to $4.90. That's an 11.6% loss in 2 days. But look at what happened when we purchased a Put Option instead of the stock.
By purchasing the March 19th, 2021 5.5 Put Option we booked a massive 116.67% return (IN 2 DAYS) compared to the "would be" 11.6% loss from purchasing the stock!
Putting The System To Work
Trade with confidence
We know what to expect our returns to look like regardless of current market conditions. In fact, just last year, 1,000+ traders followed along and joined in as we grew our portfolio over 210%.
So far, 2021 has been no different than any other year, so what are you waiting for?
