Wednesday, August 14, 2013
Stocks are for fools.
Sorry to be so blunt. But there's just no other way to put it. Buying stocks is a foolish way to invest. And you know what they say about a fool and his money.
Think about it... When you buy a stock, you put up money and then you sit back and wait. If the stock goes up, you profit. If it goes down, you lose money.
At best, buying stocks is a 50/50 proposition. That's not much different than betting on a coin toss.
But what if you could shift those odds dramatically in your favor?
What if, instead of a 50% chance to make money, you could have an 80% or 90% chance to profit?
Well... you can – by using options.
Don't let the word "options" freak you out. It's true that most people lose money in the options market. That's because most people use options the wrong way.
Most people use options to increase leverage... to get more "bang for their buck." In other words, most people use options to increase risk.
That's wrong. That's the exact opposite of what options were designed for.
The options market was created so investors could reduce risk. Options allow investors to hedge their positions... and to control the same amount of stock by putting up much less money.
Let me explain...
Let's say you want to buy stock in Company X. It trades for $10 a share. You could put up $1,000 to buy 100 shares... But you can control the same amount of stock with one option contract. You can buy a contract for, let's say, $50... and leave the other $950 in your account.
If Company X's stock goes up, you'll make money. If the stock goes down, the most you'll ever lose is that $50. The remaining $950 is safely tucked away.
This is a simple example. And it's the simplicity that proves my point. Only a fool would risk $1,000 when he could profit just as much with $50.
Now, imagine you didn't even have to put up that $50. Better yet... imagine you could actually collect money upfront for making a trade.
All of your money is safely tucked away, and you collect a portion of your potential profit upfront. Your odds of making a profit increase dramatically.
That's possible with options.
I've been trading options for 30 years. I ran a brokerage firm that specialized in option transactions. I've written hundreds of articles about trading and using options the right way.
And I'm blown away by what my friend Porter Stansberry has just done.
Porter has created an advisory service that specializes in using options the right way. He takes his best stock ideas over to the options market and crafts a strategy that increases the potential reward while reducing the possible risk.
Porter is a brilliant financial analyst. He called the General Motors bankruptcy. He predicted the demise of Fannie Mae.
Porter is known for making outlandish predictions. But the thing is... he's usually right.
I've made a lot of money over the years using options the right way to trade off Porter's ideas. Now, with Porter's new Stansberry Alpha service, you can do the same thing.
In tomorrow's essay, you'll see exactly what Porter is doing... step by step. Don't miss it.
If you'd like to learn more about how it works right now, click here.
Best regards and good trading,
Last year, Jeff walked readers through the strategy he personally uses to reduce risk, increase returns, and dramatically improve the chances of profiting from options trades. Learn how to use this strategy to boost your own trades in Jeff's classic five-part series here:
Treasury bond fund TLT plunges to a two-year low... down 16% in nine months.
U.S. housing uptrend fades... big construction fund ITB hits its lowest level since January.
Oil services stocks Halliburton and Weatherford surge to 52-week highs.
"Big Cheap Tech" uptrend continues... Tech sector fund XLK breaks out to a new 12-year high.