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Learn more Got it! * Investing Daily * Premium Services * Wealth Society * Crypto Trend Investor * Income Forecaster * Investing Daily * Investing Daily Insider * Jim Fink's Inner Circle * Jim Fink's Options Bootcamp * Marijuana Profit Alert * Mayhem Trader * Options for Income * Personal Finance * Personal Finance Pro * Profit Catalyst Alert * Rapier's Income Accelerator * Real World Investing * Seasonal Stock Alert * The Complete Investor * Utility Forecaster * Velocity Trader * Investing Topics * Stock Market Investing * Stocks to Watch * Options Trades * Marijuana Investing * Cryptocurrency Investing * Analysts * Jim Pearce * Jim Fink * Robert Rapier * Stephen Leeb * Scott Chan * John Persinos * Alex Benfield * Help Center * Log In * Menu * Help Center * Log In * Premium Services * Wealth Society * Crypto Trend Investor * Income Forecaster * Investing Daily * Investing Daily Insider * Jim Fink's Inner Circle * Jim Fink's Options Bootcamp * Marijuana Profit Alert * Mayhem Trader * Options for Income * Personal Finance * Personal Finance Pro * Profit Catalyst Alert * Rapier's Income Accelerator * Real World Investing * Seasonal Stock Alert * The Complete Investor * Utility Forecaster * Velocity Trader * Investing Topics * Stock Market Investing * Stocks to Watch * Options Trades * Marijuana Investing * Cryptocurrency Investing * Analysts * Jim Pearce * Jim Fink * Robert Rapier * Stephen Leeb * Scott Chan * John Persinos * Alex Benfield VIDEO: JIM FINK REVEALS THE KEYS TO UNLOCKING WEALTH By Jim Fink • October 4, 2024 • Stocks to Watch Printable PDF Greetings! I’m Jim Fink, chief investment strategist of Options for Income, Velocity Trader, Jim Fink’s Inner Circle, Seasonal Stock Alert, and Options Bootcamp. My colleague, John Persinos, is the editorial director of Investing Daily, the parent company under which my trading services are published. John recently asked me for an interview on my options trading methodologies. Of course, I obliged. I’m always eager to share my trading secrets with investors. In our interview, we emphasized Velocity Trader, but our remarks are applicable to my overarching investment approach. The article below is a condensed excerpt of our discussion. John’s questions are in bold. To unlock the keys to building wealth, just hit the video play button! Click for sound 26:01 Jim, I’ve often heard you advise investors: Don’t trade stocks, trade velocity. What does that mean? Velocity refers to the speed of generating profits. Stocks can double or triple over time, but it usually takes years. There is a way to generate 100% and 200% returns much more quickly…in days rather than years…and that involves the use of options as a substitute for stock. In chemistry terms, call and put options are the “atoms” that make up a stock “molecule.” When you buy a stock, you are buying exposure to the full range of a stock’s price movement, up and down, for an unlimited period of time. Stock is a very blunt, and expensive, investment instrument that’s sort of like being forced to buy a 300-channel cable TV package when all you want to do is watch Nickelodeon and the Food Network. Options allow you to limit your capital at risk to only those portions of a stock’s price movement that you want…and for only the period of time you think necessary. This provides the trader with the ability to benefit from a stock’s price movement but at a much lower cost than buying stock. But there is yet another step you can take with options to reduce your risk even further. It is a secret that option professionals have been using for decades but which has only recently entered the mainstream. This extremely powerful tool is known as spreading. Remember, since an option is a derivative contract, it can be sold without owning it first. By selling an option at the same time that you buy an option, you can actually help finance the cost of the purchased option and lower your cost basis further. Remember, a lower cost basis while maintaining the same profit potential increases rate of return. Because the outperformance of spreads is limited to cases where the stock rises only modestly, option traders often characterize spreads as possessing “regional leverage.” Within the region of modest price appreciation, the spread can’t be beat, but individual calls will outperform in cases where the stock makes a huge price move. But isn’t it better to bet on modest price moves than huge price moves? You betcha. Another advantage of selling a call to reduce cost is that you can often totally eliminate the “time value” surcharge on the long-term call option that you are long. You get all of the upside of stock ownership (up to the strike price of the sold call) at a fraction of the cost of stock and without suffering any time decay…the best of both worlds! In other words, options provide tremendous leverage that speeds up profit generation. Faster profits equal velocity. I like case studies; they’re very persuasive. Could you provide one? Sure. Imagine that you looked at Broadcom (NSDQ: AVGO) stock on November 19, 2020. Now, you might have noticed the semiconductor giant had excellent third-quarter financials that year, beating analyst estimates in both revenue and earnings. So, you figure you might as well go ahead and buy the stock. By the end of the year, you would have earned a solid 15% gain. That’s nearly twice the average annual return for most investors… in a little over a month and a half. Now, on the surface that sounds pretty impressive. But when you think about it… If you’d invested just $5,000, you would have only made about a $750 profit. BUT… If you’d traded Broadcom’s velocity…BOOM! You could have doubled your money in ONLY 8 days. And that means… Instead of sitting on $5,750… You’d be sitting on $10,000…in just over a week! That option leverage has the power to generate huge profits in a short amount of time, which is what I mean by velocity. Thanks for your time. -------------------------------------------------------------------------------- Subscribe to the Investing Daily video channel by clicking this icon: ABOUT THE AUTHOR Jim Fink Bio | Archive Jim Fink is chief investment strategist for Options for Income, Velocity Trader, and Jim Fink's Inner Circle. He has traded options for more than 30 years and generated personal profits of more than $5 million. Jim also serves as an investment analyst at Investing Daily’s flagship investing publication, Personal Finance. Hopelessly overeducated, Jim holds a bachelor's degree from Yale University, a master's degree from Harvard's Kennedy School of Government, a law degree from Columbia University, and an MBA from the University of Virginia's Darden School of Business. For good measure, he has been a member of the Illinois and D.C. bars. Prior to joining Investing Daily, and when not incurring student loans hiding out in academe, Jim practiced telecommunications regulatory law for nine years until he realized that he made more money trading stock options than writing briefs. After attending business school, Jim switched gears to the investment realm full-time, working for a university endowment, a private wealth management firm, an insurance and financial planning company, and as a Senior Analyst for an online investment newsletter service that encourages the wearing of funny hats. A possible but unlikely descendant of legendary brawler and boatman Mike Fink, Jim defies his heritage, believing that investing success requires patience and analysis, not swashbuckling bravado. Besides his passion for analyzing and writing about stocks, Jim likes to hike in the desert Southwest, vacation in Las Vegas, play tennis, and feed his toddler son Cheerios. Free E-letters We offer a variety of FREE analysis delivered straight to your inbox. Please enter your email below. Submit We do not sell or share your information with anyone. MARKET OVERVIEW Financial Markets by TradingView * Home * Events * Terms and Conditions * Media Inquiries * White List * Privacy Policy * About Us * Contact Us Investing Daily is not a registered investment adviser or broker/dealer. All information provided on the Investing Daily network of websites is provided as-is and does not represent personalized investment advice. These sites do not constitute a representation by the publisher or a solicitation for the purchase or sale of securities. All opinions provided are based on sources believed to be reliable and are written in good faith, but no warranty or representation, expressed or implied, is made as to their accuracy. There are risks associated with any investment and we strongly encourage readers to supplement the information in these articles, special reports, and newsletters with independent research and other professional advice before investing in any security. Copyright © 2024 Investing Daily, a division of Capitol Information Group, Inc. All rights reserved. We'd like to show you notifications for the latest news and updates. AllowCancel