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welcome back to my channel everybody

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thank you for tuning in

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and in this video i'm going to break

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down the difference between

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stocks and options trading and i'm going

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to also go through some real

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live trade examples of where we would

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have purchased

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the option in relation to the stock at

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the same price

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and time points and how that would

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compare to our return on investment

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by trading each of the different

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instruments and by the end of this video

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you guys are going to have a better

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understanding of how to use options

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and how highly leveraged they are

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compared to equities or the stock

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whereas you could buy only one share of

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a stock but you might be able to buy

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multiple contracts of an option with a

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highly leveraged position

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now with both instruments options and

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stocks they have risks involved and with

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options there are a little more risk

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is involved because you have different

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factors affecting the pricing of the

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option contracts

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but i just wanted to make this video as

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a starting point because i don't have a

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lot of new subscribers and followers

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that have a lot of options questions and

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that aren't very experienced

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whether they're coming from penny stocks

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or futures or forex

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and they want to learn options so i

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think this is going to be a good

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starting point for all you guys to

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understand

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how to use options properly and to not

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trade stocks

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if you are probably educated with

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options trading now before we get into

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the video

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if you guys could drop a follow on my

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instagram i will link that in the

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description below i post

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very good options trading tricks i post

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daily trade recaps

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on a daily basis so it's definitely

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worth a follow

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and also if you learn anything from this

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video if you could drop a

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like on it or even subscribe to my

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channel that would be greatly

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appreciated so without further ado

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let's get right into the video now the

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first trade i want to go over

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is on spy or the s p 500

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the option had an expiration for 717

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and it was the 321 strike put and we had

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an entry

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of 269 and an exit at 428 which is about

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a 59

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return on an investment now if we traded

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the equity or the stock

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spy we would have shorted at 322 and a

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half

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and covered at 319 and a half for about

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three dollar profit per share

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or about one percent return on our

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investment now this was

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the based off of a four hour supply zone

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so this was a trade that we actually

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took

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real time in the discord room and in the

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chat room so we chart

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the s p 500 future forward slash es

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but trade spy options around it

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so the s p 500 es had a four hour supply

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zone at three two

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three two nineteen and three quarters

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and the price

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broke high a day so i love higher day

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breaks going into supply zones because

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what happens is you have retail traders

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buying a breakout above a high a day and

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they're basically providing liquidity

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for these

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supply zone orders to get filled and

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once we had the supply exceeded the

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demand

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inside the supply zone gave us a

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confirmation to get short

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and hypothetically speaking if you were

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to trade the

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opt or if you were to trade the stock at

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the same time we traded the option

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you would have shorted at 322 and a half

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now down here on the bottom left we have

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the option contracts

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went from a low of where we would enter

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at at 269

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to a high if we were to cover at 15 to

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minute demand where we did

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at 431 or 428 area which is about a

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59 return on investment if you were to

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buy one contract

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and entered at 2.69

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you would have costed the trade would

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have costed 269

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because every one contract equals about

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100 shares of

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the stock if we were to buy them

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outright now if you were to buy five

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contracts it would cost us thirteen

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hundred dollars and we could sell those

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same contracts

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30 minutes later 45 minutes later for

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2100

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and 21.40 for a profit of about 800

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so no matter how many contracts you buy

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your return on investment is going to be

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the same

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but it's no-brainer when you have a

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stock if you were to trade the same time

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you bought the option

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and only make one percent on your money

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now yes there are other risks involved

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you could have a time decay issue you

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could have

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not proper strike price play on the

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option contracts

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you could have not a proper expiration

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you don't give yourself too much time

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so there are other factors and other

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risks involved with options trading

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and i do have other videos on that on my

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channel if you want to understand

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strike prices and expirations but this

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is just the

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a realistic trade that we took in the

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chat room and i'm just showing the

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difference between if we were to trade

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the option like we did

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versus the stock now the next trade is

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on tesla

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and this is something we call a lotto

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trade and it only happens on fridays

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where

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contracts you could pick up for very

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cheap you know a couple of pennies

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and these things could triple double

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these things could go up by a thousand

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two thousand percent

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uh within a couple of hours now with

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lottos

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you have to accept the risk of your

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premiums going to zero

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before you enter the trade because it's

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basically a lotto ticket you know you

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buy a lotto ticket if you don't hit on

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it

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then you don't win nothing and you

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basically lost your initial investment

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but if you do hit you know you're going

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to win big on it and the

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profit and the return on your investment

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is going to be very high

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same thing with options so on fridays

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you have option expirations

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and all the contracts that are way out

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of the money that are have

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a slim chance of becoming in the money

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by the time they expire that day

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they're going to be worth pennies and if

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they do get closer to in the money and

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they

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actually do go in the money those

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contracts are going to

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you know skyrocket and this happened

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here with tesla

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as you can see we had a low of 39 cents

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to a high of 65 cents

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now the realistic trade was watching and

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speculating

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out of 90 minute demand forming so tesla

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made a crazy rally

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then started basing out over here

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creating demand

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if we got a bullish move to the upside

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we got that bullish move out of demand

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the demand was then validated look at

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the volume coming through here on the

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stock

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top left we have tesla on a 30 minute

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and on the right we have tesla on a five

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minute

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and you could have bought calls here

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above 90 minute demand

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out of speculation for a rally up and

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you had no reason to sell

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maybe had a little reason to sell here

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once we were trading sideways and stuff

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so realistically i'm just putting an

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exit here at the 1483 mark

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it would have been a sick trade if you

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held it all the way to end of the day

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but here we have the example trip of the

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option versus the stock

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so if we were to buy the stock we would

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have bought at 14

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19 and sold at 14.83 for about a five

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percent return on investment

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again 1419 to about 1483-ish here at

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this red candle

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now if you were to trade a lotto buying

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way out of the money for 72 cents in

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this case

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i know the low was 39 cents but in this

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case where we entered

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it was 72 cents you have to enter the

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trade

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knowing your risk that those contracts

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are going to go to zero

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but if we do hit on it we're gonna hit

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big and in this case you know it did the

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contracts went up almost 1700 percent

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to a high or to an exit price of 12.92

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you could have bought one contract and

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it costed you 72 dollars

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so with options longing calls or puts

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your initial investment

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is the max risk that you can lose if you

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were

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on the debit side so the most we could

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lose is 72 dollars and if you

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sold where we sold you would have made a

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1200 profit

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or about 1700 on your money now if you

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bought let's just say in this case 10

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contracts it costed you 720

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bucks you could have sold for a profit

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of 12 200.

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this does not happen every day and i

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just want to make it to the point that

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this is considered a lotto and before

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you enter the trade

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you have to expect your premiums to go

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to zero and it is very risky because the

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chances of it happening are very slim

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but when you do hit you're going to hit

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big on this

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so i didn't really want to include this

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in the video but just hypothetically

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speaking and experimental purposes only

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let's say we bought the tesla contracts

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at low of day for 39 cents

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and held all the way to the end of the

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day and held all the way

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and sold at the high of the day

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hypothetically speaking so the chances

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of this happening where you're going to

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buy at the low

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and sell at the high very very very slim

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you know if you could do that

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you know please message me um but just

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hypothetically speaking and showing you

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the power of options

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if we entered at that 39 cent sold at 65

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that is a 16 567

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return on investment again assuming the

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premiums go to zero

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one contract costed thirty nine dollars

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so we went to the store bought a lotto

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ticket for thirty nine dollars

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and we hit the lotto for sixty four

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hundred sixty one dollars

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you could have bought fifty contracts

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you know spent almost two grand on the

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on

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on your lotto tickets and you could have

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made 323

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000. like i said there's other factors

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involved

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completing you know with strike prices

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you're gonna have different percent

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returns and stuff like that

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but just hypothetically speaking i

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posted this on my crazy option of the

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day

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on my instagram story um you know it's

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just funny seeing how this happens on

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options and the realistic

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uh let's be realistic here but

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you know the chances of it hitting this

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big is very slim but i just find it

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funny how the options do move this way

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now the last trade i want to explain is

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boeing and boeing had a nice four hour

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supply that formed

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the day prior and then price was gapping

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down

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then we rallied into that four hour

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supply zone and started rejecting it

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where we started to play puts now the

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contracts or the

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the stock at this price was at a 179 and

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a half

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and we wanted to cover at 15 minute

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demand so somewhere in this area

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and for this illustration we're just

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going to call it 176.

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so going back to my spreadsheet we could

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have shorted at 179

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and covered our position at 176 for

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about a 1.7 with

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five or one point seven percent return

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on our investment

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or about three dollars per share so for

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every 179 dollars we put into the stock

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we're only going to make back three

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dollars profit

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now if we were to trade the option

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contracts which we have right here in

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the bottom left

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we have boeing and let's call it in this

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case

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four dollars and 61 cents and we exited

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at

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15 minute demand when the stock or when

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the option was at six dollars and 12

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cents

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so that is about a 33 percent return on

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our investment

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if we entered and exited where i just

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explained so one contract would have

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costed us 461

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and we would have made 151 bucks out of

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461.

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so nothing crazy you know options are

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going to be different depending on the

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strikes you play

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the expirations you play so nothing

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crazy but it's a no-brainer to

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trade the option versus the stock

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again the reason for this video was just

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to show the power of the leverage with

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options

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and like i said earlier there are other

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risks involved so if you're not properly

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educated with options

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you can lose your full premium if you're

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not smart with it you know you're

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holding for closer to expiration

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there's just a bunch of different

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variables so it's important for you to

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get educated properly on it

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before you make your real trade but this

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video was just to show real live

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trades that we did take and the options

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how they moved

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in relation to the stock if we were to

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trade the

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equity so i hope you guys enjoyed it

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like i said drop a like subscribe to my

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channel

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if you guys learned anything or enjoyed

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this video