Retail traders have flooded the stock market… and many have just caught wind about the options market.
They realized they can place directional bets on their favorite stocks on the cheap, and the returns can outpace stock returns.
I think it’s great because that’s just fresh meat… and I can take advantage of these “suckers” in the market.
This new breed of options traders only cares about one thing in my opinion… getting more bang for their buck. What they tend to do is go super far out of the money to get their hands on the cheapest contracts out there.
The thing is…
When they do that, they’re actually placing themselves at a statistical disadvantage.
You see, the cheaper the options contract and the further out they go (in terms of strike price)…
The Lower The Odds
They Could Win
Take a look at these calls my Sucker Bet Scanner detected in Tesla Inc (TSLA) — every trader’s favorite electric vehicle and energy company.
This came across my screen yesterday at 9:55:21 AM ET.
What was so interesting about this trade?
First off, these “suckers” purchased TSLA $1,580 calls expiring in just one day, when the stock was trading at $1,485.83.
That means they didn’t buy themselves enough time for TSLA to get to their target.
You see, at the time the trade went off, they would need TSLA to move more than 6.5% in a day’s time…
Just To Break Even On The Trade
I don’t know about you, but who in their right mind would place such a bet?
To me, that’s just a gamble because there’s no real catalyst in play for TSLA for it to move that much.
Could those TSLA options have exploded and expired in the money?
Sure, but the odds of that happening were pretty slim.
The one factor I believe most new options traders don’t focus on is the chance the options can expire out of the money (OTM), or worthless.
I really don’t know why, cause that number actually tells traders the likelihood they’ll make money on the trade.
For example, that specific TSLA trade had a 91.72% Chance OTM (as shown in the screenshot of the scanner above).
I don’t know about you, but I wouldn’t put money behind a trade idea if I knew I had a 91.72% chance of losing my money.
Well, I don’t want to spoil it for you.
I put together this special training session so traders can learn how I stack the odds to my favor and take advantage of the low-odds bets in the market.