198. Invest almost riskfree and 5-fold your investment each 3 years with LEAPS options - Turn a $200 a month loan into $1 million over 9 years time
This is an options LEAPS strategy which is almost riskfree, my best options strategy.
As you know, you can buy LEAPS 3-year options on stocks, a call 3-year option costs about 20% of the stock price (at-the-money), like with AAPL a 3-year call costs $22 for a stock price of $124 (at the time of writing), so if you would buy a call LEAPS on Apple (AAPL), you only need to increase the stock price by 40% to double your money on the call option. If Apple price increases by 80% in 3 years time, you quadruple your money on the call option. In 3 years time, likely the stock doubles so is worth $248 and your $22 options contract (x100 = $2,200) is worth $124 (x100 = $12,400). So you 5-fold your investment on Apple stock if the stock doubles in 3 years from now.
On the other side, to protect yourself from a downturn, you could buy a LEAPS put option at the same time, which costs about the same as the call option, so you are protected in case the stock halves, you make 3-fold your investment on the put (from $20 = $2,000 to $62 = $6,200).
So if you buy a straddle call + put LEAPS Apple options, you at least triple-quadruple your money each 3 years. The only risk is if Apple price doesn't move, then you lose your investment, however it will move by at least 40% over the next 3 years up or down so either your call or put is worth double so you make your money back on one side.
This is however Apple, a trending, non volatile stock. If we apply this technique on stocks that go 5-fold in 3 years from now, we make at least 10-20-fold our money on the call option, while the put option protects us on the downside, so you have 10-fold return over 3 years time almost riskfree.
Over a 3-year period (hold on to your LEAPS options)
Take 10 volatile individual stocks (over 3 year period), whereby you buy the 3 year LEAPS straddle (call+put), then 3 out of 10 cases give you 10-fold ROI, 2 cases 5-fold ROI, 3 cases double ROI, 2 cases breakeven, so you 5-fold your money on average every 3 years.
The key is to find stocks which have potential to go 5-fold or more in 3 years time. There are hundreds of stocks which you can find to invest into with this strategy.
Take $10,000, or take a 5-year loan of $200 per month, every 3 years you 5-fold your investment, $10,000 becomes $50,000 in 3 years, the next 3 years $250,000, the next 3 years $1,250,000, over $1 million in 9 years time!
Over an 1-year period (close your LEAPS options after 1 year)
You can choose to hold on to your position for only 1 year, then close the options trade. Then you risk to lose only 30% of your investment if the stock doesn't move in 1 year time (because of the options time premium decaying 1 year out of the 3 years) and you can make 50-100% return per year if the stock moves by only 20-40% per year. This is the least risky strategy with a 3-year options LEAPS straddle. You make money each year.
This is a very easy way to accumulate wealth with a LEAPS straddle options play, and you are protected on the downside as well (in case of a stock market collapse or crash of the stock)!