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1K21M Options Strategy

corneliussmurphy 0

My absolute favorite options play is what I call my 1K21M Options Strategy. In this scenario, one starts with the finish line in mind and works backwards. Sounds confusing? Okay, then I’ll do my best to explain in detail below how to make this one a win.

The idea came to me after watching the TV Series LOST when the only conclusion that made any sense whatsoever was that the show was actually written backwards, starting with the ending and then fitting all of the puzzle pieces together; again, written in reverse chronological order.

With that in mind, I’m currently investing in FORD options for a variety of reasons that you can see in one of my previous posts (URL below).

Ford as an option play . . .

Ford has much to offer, and if it repeats what it did in 2021 then the math suggests Ford’s stock price will be somewhere between $40 and $53 per share by the end of January, 2023. Keeping that in mind, my 1K21M Options Strategy is a trilogy-trade (yes, I’m a good Catholic boy from Notre Dame). I start with $1,000, (hence, the 1K) and buy 100 contracts of near-term CALLs where ever the strike price allows. With the recent market pull back, that currently equates to March CALLs strike price $20. I’m looking for what I call a +3 selling price (selling those contracts for $3 or more). If that turns out to be successful, then I parlay some of that $30,000 (after paying myself back for the initial $1,000 so we are essentially playing with the houses money) and do the same with mid-year option CALLs. This time, I buy 1,000 contracts of Ford and try for a back-to-black +3. If again successful, my selling price nets me $300,000. The final trade will be a big one . . . 10,000 contracts on Ford for a January 2023 +3 selling price, resulting in a net $3,000,000. For this last trade of the three, just keep telling yourself that its the houses money as this one could and probably keep you up a night.

Below is some additional detail of my Ford projections.

RISK – Trading options may result in potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the options markets. Do NOT trade with money you can’t afford to lose.