What are lotto options
Option Trading College
Subject: Hitting The Options Lotto
Instructor: The donFranko
Length: 3 sessions
Do you want to make money and feel like you hit the lottery?
Session 1 — What is Options Lotto?
Have you always looked at past trades that turned out to be massive winners and you say to yourself you wish you would have just taken the trade because now you would be rich?
I have been there and done that my trading friends!
It’s a painful thing to look at the past and play the should of, could of, what if game, but that is the problem with this line of thinking. It’s looking back at the past. and that past does not equal your future!
Picking massive winners is a very difficult thing to do. In fact, most of us speculate only to lose valuable trading capital; and if we manage to hit a few winners, we tend to take the profits early because we are grateful just to get our money back.—this is trading with fear, and scared money never wins in trading.
My subscribers know that I have a solid track record for finding massive winners, but it’s taken me a very long time to gain the insight of the markets to know how and when to harpoon Moby Dick Lotto Trades; and routinely catch weekly Lotto Trades; however, trying to find them is not the way you do this type of trading—letting them find you is the best way. Think about it, how would you like to come into your trading day and turn on the computer only to find you have a nice six figure profit waiting for you to just push the button and take? Well, it happens, will happen and should happen to you in the future!
The reason most, if not all, traders never seem to catch the “big ones” is because they are doing the wrong thing—you do not catch them by trying to pick your spots; and then buying your option contracts; you simply lay the nets out (with my proven formula) and the White Whales find you; then you can harpoon the Moby Dick occasionally; and that is when you can buy the Ferrari, Yacht or take a World Wide Vacation. maybe even a private Jet some day!!
Let’s explore how to do this type of fishing.
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Session 2 — Making a net?
For many years I would hunt and search for option trades that could make me hundreds of percentage points in returns. Just look at some of my model portfolios and you can see that I have a consistent track record for that; however, those trades are nothing compared to the massive winners I discovered that opened my eyes to this type of trading strategy. These types of trades literally make you THOUSANDS of percent in returns—and typically the very next day!!
Just look at the bottom of this page you will see some of my massive winners over the years I have posted to this site. BEFORE they happened!
I magine seeing profit gains of
waiting for you to claim the next day!
I know what you are thinking, in order to get these kind of winners, you have to get lucky, and sure, luck is what you need to win any type of lottery, but the kind of luck my formula gives you is MADE LUCK! —besides, do you know what the definition of luck is? It’s where opportunity and preparedness meet so get prepared to meet my kind of LUCK!
The best way to win the options lottery is NOT trying to pick the plays, because you will eventually use up your trading capital, or worse, get greedy and buy way too many contracts on what you think is a sure deal only to see them expire worthless. The best way to stay in the game and keep fishing is to find a good low priced stock; and then day trade it with share size for quick profits that will pay for your Lotto Trade nets. That way, you are not playing with scared money when most of these plays do not work out. That’s right, most of them will expire worthless, so you better have a consistent profit strategy to fund them or a very large account to absorb the losses until the winners come—and they WILL happen often!
The winning Lotto Trade will come, and when it does, all the nets
that let the fish get away will have zero effect on you because
you will be too busy counting the money
that White Whale Trade brought you!
The best way I have found to make your Lotto Trade Nets is day trading slower moving stocks. Huh? I know, it seems a bit strange to think this way since my website is actually based on options trading, but let me assure you that if you attempt to day trade options without the years of experience it takes to master them, then you are destined to blow up any and all trading accounts you fund—take it from my hard learned experience and DO NOT attempt to day trade options on a regular basis.
Ok, so now you may be thinking you will just trade the “fast movers” like: AAPL, CMG, GOOGL, NFLX, FB, BIDU, AMZN, TSLA etc. NO WAY, the key to this strategy is to just go for the stocks that will make you consistent small gains ($0.05 – $0.10 cents) that you can do large share size with—your goal is to capture small consistent moves and make measured gains over and over again.
One of my favorite stocks to do this with is GE. This stock has one of the largest market caps on the DOW and it’s traded very heavily by fund managers; which means that you could actually trade up to 100k shares and get filled rapidly. This stock also does not move up or down enough to crush your account like the high beta volatile stocks can, so you can be patient and trust it more if things do not necessarily go your way for the day.
If you watch GE for a week, you will start to see a consistent pattern of movement which will allow you the opportunity to make the consistent gains you need to build your cash pile for Lotto Trades. Once you get the timing right, you will start to make money hand over fist, and with that said, you can take the profits to start laying your Lotto Trade nets on multiple stocks and catch trades practically every week—and then harpoon the occasional White Whale like this one:
Here is the latest Moby Dick JACKPOT trade on AMZN!!
AMZN MOBY DICK Posted on 10/25/17
It’s happened in the past and it will happen again and again!
This part of my strategy requires a “day trading” account and that requires that you have a minimum of $25k in your account at the beginning of each trading day. By having a margin account, you will be given 4:1 buying power during the day and 2:1 if you hold over night; however, you must have a minimum of $25k in account equity each day you start, so the best thing to do is open an account with at least $30k to assure you have enough wiggle room to work your trades and maintain the liquidity requirements.
If you do not have that much capital to start, then you will have to be patient with Lotto Trades and build your contract size with my compounding strategy until you get enough winning trades to grow your account the required amount for day trading status.
I prefer a stock like GE it is a solid low priced stock that you can control more shares with and it has 100% liquidity, is traded heavily by large cap funds and the company is rock solid with low volatility just in case you have to hold onto your positions over night.
So, if you have say $30k, then you can use up to 4:1 margin (never hold shares with margin over night) and control up to 8,000 shares with each trade vs gambling with a stock like AAPL or GOOGL and only be able to control 50 – 100 shares. Sure you may be thinking these stocks move so much more; and that gives you a quicker profit; however, it will give you an even bigger loss more times than a profit because your “fear/greed” instincts kick in and, well, sheeat happens in trading and that is a FACT! Remember, a trade is a trade, and what determines your gains is the number of shares you buy, not the movement of a stock—take if from me, trading slow and steady stocks win this race.
When you start trading, NEVER open a trade with full margin. Once you are filled, you can adjust your position and add more share size if you need to. I would never recommend using more than 3:1 to add shares in order to get your desired profit. If you need to hold over night, you definitely need to go back to 1:1—you always have tomorrow to work your trade so why take unnecessary risks?
Because GE is a Dow listed stock, it’s traded by a Specialists and that is why I always trade GE off a 30 minute chart so you do not get “sub-pennied” or suffer whipsaw from the Specialists and bigger fish out there (trade robots, large cap fund managers or program trading etc.). To help you gain a slight edge over most retail traders, you can subscribe to the NY open book (a live quote feed that shows you the size of orders on both sides of the market); however, I do not recommend this unless you are going to trade more than 10k shares.
Remember: If you are trading in too tight of a time frame, particularly a 1 or 5 minute chart, you are going to feel a lot of pain and frustration because a Specialist can manipulate the bid/ask spread causing you to get pushed around on your orders. Since we are only looking for $0.05-$0.10 cent profit targets, just spare yourself the frustration and use a 30–minute time frame to make your trades.
Below is a typical 30-minute chart of GE: (+$0.17)
Here is strong moving day for GE (+$0.61)
Here is a weeks worth of trading on GE with a comparison graph of the Dow Jones 30:
As you can see, the movements are predictable and consistent. You can easily get your $0.05 – $0.10 cents a day trading GE.
The best way to trade this stock is wait for the topping or bottoming tails to show and then work you way in the direction of the Market to capture your profit. GE will follow the overall direction of the DJ-30 better than 90% of the time. So if the market is Up, then GE will be up and vice versa—by working with a larger time-frame, you will be able to make consistent gains every day without a lot of stress or risk.
Ok let’s do some math and see just how profitable this can be for you to build your Lotto Trade nets with.
Taking into consideration that you will have a $30,000 trading account and use 3:1 margin when placing your trades, I have prepared some trading examples below; however, in the beginning I strongly recommend you start with 1000 shares until you are familiar with this stock and your abilities, then you can go with 3000-4000 shares per trade.
Your target profit is between .05 – .10 cents per trade and once you get good at trading this stock, you can typically catch 2 – 3 of trades a day if the stock is making moves. Some days GE will trade pretty much flat all day and other days it will move well over $0.35-$0.75 cents so do not get greedy and force trades; there will be plenty of trades throughout the week to make money on—this is not a sprint, it’s a marathon.
Below are two examples of the possibilities when you are making just 1 successful trade a day:
Depending on your monthly financial needs and account size, you can can see this can add up very quickly. Because this stock is very scalable, you can keep adding shares as your profits rise—and so will your income!
The main goal here is to make more than enough profits to cover your monthly income needs and have plenty left over to start casting your Lotto Trade nets on multiple stocks without depleting trading capital and stressing over the cost of the plays that do not pay off.
SCARED MONEY NEVER WINS!
Here is a spreadsheet for you to play with and see what the possibilities can be: GE Trde Calc.xls
The best way to catch a White Whale Lotto Trade is to cast your nets down below the stocks you pick. Stocks fall much faster and harder than they go up, so using PUT contracts is where you will find the most profitable plays; however, we play both sides of a stock with both CALLS and PUTS, but I add more contracts to the PUT side for the big winners.
The time to place these trades is either a couple of days before a major earnings announcement, FOMC or FDA announcements etc. and especially the week of options expiration during earnings season. What we are looking for is a stock that misses or received very bad news and in turn, gets whacked in price. You need to choose stocks with high volatility and the potential to make big moves in price. Stocks like: AAPL, CMG, GOOGL, NFLX, FB, BIDU, AMZN, TSLA etc. or any hyped up drug stocks with very publicized anticipated news events coming up like this example of DNDN had with it’s potential prostrate cancer drug that failed to get FDA approval.
When these types of stocks do not get the expected outcome, they will fall hard and fast giving our cheap put options very large swings in price. The goal is for us to end up in-the-money (ITM) with our puts and that guarantees we get filled and cash in. Remember, we are not trying to pick the winners, we are just getting into position to benefit from an unexpected massive drop or pop to the upside.
Ok, so now that you understand the basic concept, there is a secret to picking the correct options that will make you a guaranteed winner:
Some of my best picks that tuned into White Whales were on GOOGL, AAPL and NFLX. Google routinely announces their earnings the day before options expiration, so you can imagine the volatility that can happen with this stock. Sadly, it does not make the huge swings it once did before it was part of the S&P 500. Now there are too many fund managers who buy the stock making its moves more controlled, but it can still pay you off quite nicely when it does work out. Because Google is such a loved stock, you better believe that one day it will fall from grace, and when it misses earnings in a big way, I will be there with my nets to catch this mother of a White Whale stock!
It’s happened in the past and it will happen in the future!
2019 ULTA was crushed (29%) in after hours trading!
2013 MEGA POWERBALL LOTTO WINNER: NFLX
As you can see below, just one of these can pay off ALL of the nets you had to lay.What are lotto options Option Trading College Subject: Hitting The Options Lotto Instructor: The donFranko Length: 3 sessions Do you want to make money and feel like you hit
So You Want to Hit the Lotto in Options?
Many traders look to hit home runs with options plays, but understand that the odds of a big payoff are low and manage your risk accordingly.
Options provide a great deal of leverage versus stocks, the one difference being time decay with options, although that can be overcome in the right situation. If you’re looking at charts and technicals and buy into the theory that momentum continues to move stocks, you’ll find a world of opportunity.
Have you seen stocks soar or fall hard on news-related events? Some options will move 10 to 12 times more than the stock. Options are defined-risk trading vehicles; you can only lose what you put in (there is no margin provided, cash only). We have seen some amazing returns in options over a short period of time.
But some traders out there look for the home run trade, the one that will make up for the previous 50 losers. We’ve seen 200%, 300%, 500% winners in few short days. Those can really have an impact, even if you keep the trades small. You know, the one trade that when it comes in will put our accounts in another stratosphere. The lottery winner! Imagine randomly picking a few of these each month; that would do wonders for your portfolio, right?
Frankly, these plays are not to be relied upon, and should be more strategic than random. The probability of the lotto play is very low, and considering 80% or more options expire worthless, the odds become even tougher. But if you manage your risk carefully, understand the outcome and are fine with it, then if the setup is there; why not take it? If you’re only risking a small amount, even if the play dissolves to zero we can recover the loss on a different (less risky) trade.
Last week we had an earnings release from Alphabet Inc. (GOOGL) after the close on July 25. The market was expecting a pretty good move, but smaller than normal. LeeAnn, one of our best traders from the chat room, decided to try a lotto play on this name. Knowing Alphabet did not report well in April but that the chart and technicals were coming around, she chose to go with a 1200 strike expiring on Aug. 2. This call cost quite a bit, about $7.50. She knew the odds were long of this move paying off, but with about six days to go and the earnings catalyst it was worth a small play.
Turns out, the call rose up toward the $60 level after Google soared on Friday. That lotto play paid off for LeeAnn to the tune of 700%, and that was for one day. Of course, LeeAnn understood the risk and was OK with losing the entire premium if Alphabet didn’t rise or turned downward.
What is a good size for a lotto? Just use a fraction of your normal size. If you trade about 3,000 normally, then a lotto play should be 1,000 or less.
In the end, lottos are a nice way to enhance performance; in isolation they can be good, but the results cut both ways. If there is something to learn here, please know your risk tolerance, check yourself once and maybe twice before you hit the buy button, and then accept the outcome. If poor, it should not devastate you. If good, it may give you a shot in the arm.Many traders look for the big payoff lotto play when trading options, but understand that the odds of a big payoff are low and manage your risk accordingly….GOOGL ]]>