Options are a great way to make outsized returns on relatively small moves in a stock.
If you buy a stock and it goes up 10%, you make 10%.
But if you buy a call option instead, you might double your money… or more.
An Insider Tip
This is an excerpt from a recent trade recommendation I issued to my Insider Effect members last month…
Following heavy buying from company insiders, we bought the common stock of ExlService Holdings, Inc. (EXLS) at $136.75 a share.
Yesterday, the stock was up just over 12%, which was a great move.
But as you can see in the alert excerpt above, the option I recommended, the EXLS July 15th expiration $145 strike call (EXLS220715C00145000), was up almost 200%!
Growing Your Account
EXLS is a higher-priced stock. At $136 per share, folks trading in smaller accounts might only be able to buy a few shares of the stock.
This when options can be beneficial.
When I sent the alert, the call option was trading for around $5.
Because options represent 100 shares of common stock, that means each contract cost around $500 a piece.
So, instead of buying four shares of stock, traders could instead control 100 shares of stock for roughly the same amount of money.
This is what allows you to achieve outsized returns on a relatively small move in the underlying stock.
What’s the Catch?
There are downsides, too, of course.
Since options are leveraged instruments, potential losses will be greater as well.
But unlike shorting a stock or buying on margin, your maximum loss is capped.
Whatever you paid for the option (around $500 in this case) is the most you can lose.
So, if your goal is to grow a small account, options are one of the best tools to capture large gains in a relatively short amount of time.
And when you know how to use corporate insider trading to your advantage, options become even more powerful.
Join the Insiders
Remember… Corporate insiders like CEOs, CFOs, executives and board members are always buying or selling shares in the companies they operate.
And these folks have a footing of knowledge that Main Street investors simply do not.
It’s absolutely free to attend, so I really hope you’ll join me.
I’ll cover my strategy for trading alongside corporate insiders and generating potentially massive gains with minimal risk.
I look forward to seeing you there!
Embrace the surge,
Editor, Stock Surge Daily