What is the maximum "limited risk" leverage possible?

Discussion in 'Trading' started by Tompson, Jan 4, 2012.

  1. Tompson


    What would be the highest leverage 'limited risk' position (e.g. to play a possible move from lower to upper trading band)?

    Allow me to give an example:

    October 3, 2011: TNA at $28 (tops at $53+ on Oct 27).
    - Play for a 16 point move to $44, buy TNA 36 calls.
    - Approximate result: buy price $0.20, sell price $8.00, leverage 40x.
    - Allocating 5% of account yields 200% gain with 5% risk.
    (Winning percentage could be very low with acceptable return).

    Do any of the experienced traders on this board know of better trading instruments with which to achieve higher leverage (please show example calculation)? Ideally with less time decay.

    Ignore, for the purposes of this discussion, how trade timing is determined. Leverage versus risk control is the question.


  2. This kind of trading plan is flawed
    When ever you have this kind of complexity you are either running on inside information or you are just waiting to blow up.
  3. Having said that let me run a few numbers and get back to you in an hour.
  4. I think an out of the money option will be your best bet.

    Besides that you could take out a personal loan and use that as a cfd account deposit, infinitely increasing your leverage. Just place a careful stop.