Do You Use This Technique to Make Money?
One of the benefits Trade of the Day readers (and especially War Room members) get is exposure to new ways of making money in the market. Sure, buying stocks is a great way to increase your wealth over time, but there are many other ways too.
Some of these techniques were once reserved for only the “in the know” traders. But now we are exploding those insider “secrets” and bringing you the real skinny on how to cash in on Wall Street!
The insiders use technical names for these types of trades – vertical, diagonal, calendar, bear, bull…
It’s all meant to keep you out of the game and remind you of geometry class!
Today, I want to talk about some of my favorite strategies: spreads.
This week, War Room members cashed in on two spreads…
The first was on Ford Motor Co. (NYSE: F), which has been red-hot this year and is the best-performing major automaker in the market in terms of 2022 options…
I just cashed out of the Ford trade with nice profit! In at $0.93, out at $1.61. – Bryan B.
I’m at 62%, started buying when it was $8 and kept adding along with you. 🙂 – Ira K.
Ford, in at $11.19, out at $19.25! – Paul H.
The second was in another red-hot sector – uranium. Members made money on uranium-mining giant Cameco Corp. (NYSE: CCJ).
CCJ. Closed out last 1/2 Dec 21 calls at $6.60. BTO same day as Karim’s longer-term call spread recommendation on 9/24 at $1.91 for 245% profit. Still holding the spread. – Donald M.
I closed the 2 Shares/Contracts I opened at $3.65 for $5 for a 37% gain. Nice trade, Karim, thanks! – Mike M.
Spreads are not complex trades. In fact, they are very simple when you understand the concept behind them.
And the concept is this: On a spread trade, you are buying one option and selling another option at the same time. The goal is to profit from the movement of the two options, and the spread is the difference between either their strike prices or their expiration dates.
For example, on Ford, members bought a January 2024 $20 call option and sold a January 2023 $25 call option. It was a diagonal spread by virtue of using options with two different strike prices and two different expiration dates. The spread on the trade was $5 – the difference between $20 and $25.
So members were looking to profit in two ways here:
- The first way was through the time decay of the earlier-expiring option.
- The second way was through the movement of the options’ values (which change along with the stock’s share price).
In this case, members did not hold on until 2023 or 2024 but cashed out in a matter of days. You never have to hold until expiration to make money from options, especially long-term equity anticipation securities (LEAPS) options.
Action Plan: If you want to learn more about these strategies and the different ways to profit from them, you’re just one click away from joining the huge number of War Room members who cashed in on a bevy of spread trades just this week! Click here to get started.