Trading options is an extremely lucrative endeavor. However, it’ll take you some practice and dedication to learning how to trade options. Now, if you don’t already know my story, I started off as a broke college graduate working at a real-estate company. I knew I needed a change, so I played to my strengths: biotech stocks. I have a background in biology, and once I was able to generate profits using my knowledge, I moved onto the options world. However, that doesn’t mean I’m not still trading biotech stocks. It’s still my bread-and-butter strategy, and I was able to turn an account with just over $15K to 7 figures in just a few years. I use some of what I learned when trading biotech stocks and applied it to options trading.
Enough about myself. Basically, I use my I.G.N.I.T.E trading system to let me know whether I should be buying puts or calls. It’s easy to use and simple, but powerful at the same time. Let’s take a look at how to trade options and potentially generate high returns.
How to Make Money With Options (replaced previous H2)
When you’re learning how to trade options, you need to be patient and have a rules-based approach. If you’re able to follow a rules-based approach, everything will be much easier. Here’s a look at my trading strategy.
- INSIDERS – I will be looking for my favorite insiders and their track record of buying and selling. This “Insider” Indicator is what gives me the initial reaction to dive into the technicals of the trade. If the big funds are buying it, I’m looking to figure out why before everyone else does.
- GROWTH – I want to analyze the growth prospects of the company. If it is earnings based…are we on the cusp of another big earnings beat? Or, if it’s a speculative company without earnings, I will analyze whether the technology is about to disrupt the market.
- NEWS – Analyzing past (historical) and future (catalyst) news which the market hasn’t realized yet or has pegged completely wrong. This is my proprietary method which I’ve developed from 5 years experience and an average of $1M per year over the last 3 years.
- INSTITUTIONS – Like you can follow me, I’m going to be following the activity of the “big money”. There are funds out there that know more than I do. By carefully tracking their moves, I can lay the foundation for trades that may have high upside potential with limited downside risk.
- TECHNICALS – This is chart analysis and the best part is that you won’t have to do it! I’ll be looking for the perfect entry point based on my four favorite chart patterns. This is where my service separates itself from others. No one is really using these chart patterns like I do.
- EARNINGS – Earning calls give us updates on catalysts and future drivers of growth. I listen in to those calls and look for opportunities others are missing.* Most don’t have time or want to put in the work, but I do, and I’m streamlining this information directly to you.
Trading Options Can be Risky
Take note, these results may not be typical and might vary from person to person. Keep in mind, the best way to make money with options takes time, dedication, and hard work. There are inherent risks involved with investing in or trading the stock or options market, including the loss of your investment.
I.G.N.I.T.E System Example
One of the pillars of the I.G.N.I.T.E system is news. Well, I saw Skyworks Solutions (SWKS) got beaten down after an earnings report. For the most part, it looked like the company crushed their earnings expectations. However, the market doesn’t always agree with you. Now, I waited a bit to see if the stock could find some support.
Well, the company announced an acquisition, which should benefit their earnings as soon as its next earnings report. The company acquired a private fabless semiconductor supplier, which should positively synergize with SWKS.
Now, here’s a series of emails that I sent out to the community to let them know exactly what I was doing with my options.
I added to my call options, and my target was for the stock to move back up to the mid $95 area.
I sold half of my SWKS calls to take a small profit, only a 16% gain. However, when you’re up in a trade, you have to take some profits and let the rest ride. I did exactly that.
I sold the rest of my options for a 75% win! Not too shabby.
Well, this is what we do with the I.G.N.I.T.E system. We find some sort of catalyst, combine it with chart patterns and properly risk manage our positions.
If you understand how to trade options, it might not be too far-fetched to generate high returns. Remember, not too long ago, I was just a biotech and pharmaceutical stock trader. However, with some grit and dedication, I started to learn how to trade options, and I’m putting my skills to the test.
Kyle Dennis runs Kyle Dennis’ Biotech Breakouts (biotechbreakouts.com). He is an event-based trader, who prefers low-priced and small-cap biotech stocks. He’s also using his knowledge and looking to multiply his capital through options trades.