How about some numbers? When you say conservative, what kind of annual return are we talking about here?
1-"Buy calls/puts or call/put spreads" Can you read? 2-Are you not capable of creating a call spread with low risk & big reward? Apparently not. (SLV ... $5 call spread for $0.23)
You should never use more than 20% of trading capital on one ticker. In the event it goes bad, you need to let it fall as far as possible to average down from the lowest spot. Averaging down too soon will have devastating consequences. If you have a trading method bringing in steady gains, don't mess with it too much. We're in a bear market, the Dow high is artificial. After a big crash/correctioon, which comes every 9 years and is now overdue, if you use your methods at the bottom, you'll make the big gains your after. "Playing with 5%" If you want to "play" with 5% (and it's only profits you're using), you can do that. You can continue to add to that (again, only with other small profits). The place for "big gainers" would be NASDAQs under .50/share. Why? The NASDAQ "1.00 Rule." These all need their share price over 1.00 for ten days in a row. Here's the 1.00 Rule Procedure -If a share's price is under 1.00 for 30 consecutive days, they get a letter from NASDAQ -They have 6 mos from the letter to get the price over 1.00 for 10 days in a row (7 months total) -At that point, they can file for a 1-time extension, stretching everything to 1 year overall (but extensions are not given that often) *the one thing: NASDAQ's not always super-fast on chasing these, so allow 2-3 mos extra Where's the Opportunity in This? The "bargain basement" here is the ones between .15-.25 cents/share. They're cheap, if they drop down to .12 cents, you can triple your position and drop your cost down fast. If they go to 1.00, your gain is 500%, if they go to .50, your gains are still 200% plus. Plan for these to be 6-month holds, so stay small on position size, and simply "manage" them until they "pop." Out of 1.00 compliance NASDAQ companies only have four choices: 1)-pump to over 1.00 2)-reverse split 3)-file for an extension (one-time only, 6 months beyond the first 6 months) 4)-get de-listed (unlikely) How to Shop The guide on what to buy is: a)- look for those that have already been under 1.00 for 4-6 months, they have to make a move fairly soon b)-under .25, it's hard to get "hit" on a reverse split c)-over .50, you could take a hit on reverse split (see AVGR recently) Strategies Plan A You'd pick 10 of these, spread your 5% evenly across all 10, add additional to each on subsequent drops, again only with profits do you add to this "pool." You select a bunch of others as they fall down to that price level, buy into those as you either exit some at 1.00 or flip on a gain. Plan B You can also "flip" some without them going to 1.00, but instead show a nice gain (Example: see TNXP recently went from .20-.36, then back to .22) - on that, you'd exit at .36 (nice gain), let it fall, buy back at .22). It could still hit 1.00, but you see a nice green, flip it, line up the next one, but keep buys on the under .25 and you'll do well. It can also go back to .36 again, another gain. Plan C Shop for NASDAQ's "flirting with 1.00" - these are ones that jiggle, like SNDL and CEI, that come close to or hit 1.00, but don't stay there for 10 days (they're both out of 1.00 compliance but still have a few months before it's six months). These are simply flips. Find a .10-.15 cent drop, flip on a .03-.10 cent gain. You can play these heavier, as intra day or intra week flips, just be sure you only buy big drops, otherwise you end up with holds. Wrap Up The lower these go, the more shares per dollar you get, the bigger the bang if they go to 1.00, greater leverage. Any that reverse split, exit the moment they split, so you can get out lateral or close, don't hold. Take a tiny hit if need be, then jump into another one at the bottom, where you'll recover the small "hit" anyway. It's a numbers game, law of average. Expect 10-20% of your picks to reverse split, not a big deal if 70% don't. Watch 8-Ks and check reverse split histories to improve vetting, and stay on top of company news. Don't think of "gambling" with the 5%, you worked for it. Play, but play a good game. Happy to answer any follow-ups. There are also OTC games to "play," but that's probably a few more pages worth of that as well. Hope this helps out. Happy trades!
He never said anything about the holy grail. It's true. Options can (depending on the structure) offer limited risk and bit profit potential. That is a fact. However, so does Vegas.
Not for spreads. They by definition do not offer large payoffs. If we want to talk outright options then sure, but that's another story.
Very cool. I like the regulation edge. I usually don't trade stuff under $1, so going to look into testing/automating this.
You should allocate the amount that you can sleep at night after figuring that your loss will be 100%.
Pick the right ones (under .30 cent range), you get get multiple-100% gains at 1.00, stay low on price, which is insurance against reverse splits. ZOM is one to look at, floor since December is .30-.33, with one spike in the middle to .50