Owning call or put options on a particular stock can generate massive returns in a very short period of time with small amounts of capital risked.
While options can be used to generate yield or hedge an investment, they can also be used for pure speculation.
Get the direction of any stock move right and you can significantly augment your returns by owning call or put option contracts.
How does doubling your money or much more in say a month or two sound?
Generally speaking, it takes a stock moving anywhere from 5%-10% for an option contract to double in value. As you know such moves are a regular occurance in the market.
It’s fertile ground for risk-hunters. The only trick is to find the right opportunity.
One place to look is when a company reports quarterly earnings reports. These regularly scheduled news events are rife with wild stock swings that often result in option contracts gaining 100% or more.
Another way to target these big movers is to focus on high beta stocks. Beta is a measurement of volatility. A beta of more than 1 suggests that a stock will move higher than the major indexes in an up market and vice versa.
Whatever your preferred hunting ground may be, why not take some of your fun money and play the option game by owning calls or puts? A few hundred dollars is all it takes to generate an extra grand or two each and every month.
Here are three ultimate risk on option trades that have the potential for huge moves: