Good morning, traders…
Ben here.
One of my students recently asked me if I’m open to utilizing other strategies (aside from trading options)…
The answer is yes. However, I had to correct this student slightly because options are not a strategy — they’re an investment vehicle.
Just like a car can carry passengers, investment vehicles can bring different strategies along for the ride.
As an investment vehicle, I can use options within a wide variety of strategies — day trading, swing trading, Operation: Master Calendar, ‘Smart Money’ Sweeps, straddles, iron condors — the list goes on…
But options aren’t the only investment vehicle available. The key is to know when to “drive” one vs. another based on different market conditions, setups, and news cycles.
Today, I’ll show you how understanding the concept of investment vehicles can improve your trading performance…
5 Types of Investment Vehicles
You might be wondering why they’re called “investment vehicles…”
Well, just like a car takes you somewhere directionally, your investments are supposed to get you further financially.
Each investment vehicle works differently:
- Regular stocks are like sedans. They’re reliable, steady, and what most people start with. But then there’s…
- Penny stocks, more like sports cars, are designed for fast gains with a lot of risk. Do you know how long Tim Sykes holds a penny stock? You can measure it in minutes. For example, he might buy Richtech Robotics Inc. (NASDAQ: RR) at $1.87 at 9:37 AM and sell it at $1.95 by 9:42 AM.
- Options are more like a modified Corvette — fast and powerful.
- Futures? Think of them as a Lamborghini — extremely quick (but with significant risks).
- Options on futures? Now we’re talking Formula 1 cars — blazing fast (but dangerous if you don’t know what you’re doing).
So, if you’re trying to get somewhere fast, which of these vehicles will get you there quickest?
The F1 car, right? Sure, but are you even allowed to drive it on the road?
No — it’s so fast that it’s dangerous for you and others.
What about the Lamborghini? Sure, you can drive it on the road, but should you? The faster the vehicle, the greater the potential — and the risk.
NOTE: Always consider The 3 S’s of Options Trading — size, speed, and speculation.
Why Does This Matter?
You get to choose your investment vehicle. Penny stocks might be a good place to start because you don’t have to deal with complex concepts like the Options Greeks.
But if you want to do more with less, options trading offers an incredible opportunity.
For example: Last Friday, I day-traded Goldman Sachs Group Inc. (NYSE: GS), a $500 stock.
I bought the GS Aug 30 $520 calls for $1.85, or $185 per contract.
With that $185, I was able to control 100 shares of GS, which is equivalent to controlling about $51,000 worth of stock.
I got a 40% winner in GS options. They cost me $185 per contract, and I made $0.72, or $72 per contract. If I had 50 contracts, that’s $3,500. Even with just 5 contracts, that’s $350.
Options let us do more with less because of leverage. They give us opportunities with stocks that we couldn’t access if we were just trading shares.
However, they also carry more risk than trading common shares — like driving a Le Mans test vehicle vs. a minivan.
Our job as options traders is to find and exploit opportunities in the market. If I’m only trading penny stocks, I have a limited amount of opportunity.
How I Find My Stock and Options Picks
So, how did I choose the GS Aug 30 $520 calls for my recent trade? There was one key reason initially — level 2 data.
Tim Sykes uses Level 2 data, which illustrates the order flow, or the orders that are coming in.
This matters because of basic economics: supply and demand. As demand increases, it’s likely to drive supply down (and the price up).
But I’ll tell you an even better way to find juicy options-trading opportunities — following the smart money.
On Friday, Aug 23, I saw a trade for the GS Aug 30 $520 calls for a total amount of almost $200,000. That’s undeniable demand.
Sneaky demand + a solid technical setup = a powerful combo.
By following the ‘smart money,’ I give myself a huge leg up over my competition.
I can base trades on ‘smart money’ data without actually having it.
I don’t need to know the material, non-public information that these mysterious traders might be using…
I simply need to know what to look for, pay close attention to my Spyder Scanner, and pull the trigger when the opportunity presents itself.
And if that isn’t the ultimate evidence for the value of ‘smart money’ trading … I don’t know what is.
With that in mind, let’s take a look at…
💰The Biggest Smart-Money Bets of the Day💰
- $30.7 million bullish bet on XLF 01/17/2024 $43 calls @ $3.40 avg. (seen on 8/28) [MASSIVE SWEEP!]
- $4.8 million bullish bet on COIN 09/06/2024 $205 calls @ $3.01 avg. (seen on 8/28)
- $2.7 million bullish bet on IBM 10/18/2024 $200 calls @ $5.55 avg. (seen on 8/28)
Drive safely,
Ben Sturgill
P.S. If you want access to more ‘smart money’ sweeps like those, then it’s time to pay attention…
TODAY, August 29 at 12 p.m. EST — my colleague Danny Phee is hosting an urgent LIVE WEBINAR where he’ll reveal the most promising ‘smart money’ trades we’re seeing this week.
Stop missing slam-dunk setups — CLICK HERE NOW TO RESERVE YOUR SEAT.
*Past performance does not indicate future results
