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Need help finding a way to trade with a 1/100 (risk/reward)


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Need help finding a way to trade with a 1/100 (risk/reward)

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  #1 (permalink)
Denver, Colorado
 
 
Posts: 3 since Jan 2019
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Could someone please point me to a relatively safe trade with a 1/100 Risk Reward.
For example, I'm willing to risk all of $10k (and lose it all) in order to potentially make 100 times of it which is $1 million.

I'm not looking for a trade, but a way to best make the trade. That is, using which instrument: options, futures, stocks, pairs, forex, options on futures, etc.

I'm guessing options would be the way to do this, but which option strategy is most likely to potentially provide what I'm looking for? E.g., spreads, iron condors, butterflys, etc. I really don't know much about options, except straight calls and puts.

Some parameters on the trade I want to make, which might help you in answering my question:
I plan to make a short trade, in a fast downward movement environment with increasing volatility.
I will be looking to stay in the trade for about 250 days (I will exit the trade after ~250 days).

Well, actually, while you're at it, if you could tell me what exactly would potentially have the best chance to provide a 1/100 risk/reward in the scenario outlined above: /ES, TVIX, /GC, etc.

Thank you!

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  #3 (permalink)
Market Wizard
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anycolour View Post
Could someone please point me to a relatively safe trade with a 1/100 Risk Reward.
For example, I'm willing to risk all of $10k (and lose it all) in order to potentially make 100 times of it which is $1 million.

I'm not looking for a trade, but a way to best make the trade. That is, using which instrument: options, futures, stocks, pairs, forex, options on futures, etc.

I'm guessing options would be the way to do this, but which option strategy is most likely to potentially provide what I'm looking for? E.g., spreads, iron condors, butterflys, etc. I really don't know much about options, except straight calls and puts.

Some parameters on the trade I want to make, which might help you in answering my question:
I plan to make a short trade, in a fast downward movement environment with increasing volatility.
I will be looking to stay in the trade for about 250 days (I will exit the trade after ~250 days).

Well, actually, while you're at it, if you could tell me what exactly would potentially have the best chance to provide a 1/100 risk/reward in the scenario outlined above: /ES, TVIX, /GC, etc.

Thank you!

not to be blunt but if you expect someone to give you a trade like that your crazy .


For shits a giggles, lets say you trade the ES you will need to go long 100 contracts which would equal 5000 dollars a point , that means you will need to see the market move 200 points before it ticks down 2 points and wipes you out.

not to mention the R/R would be totally screwed .

even if you used all 10k to buy 78 shares of Apple last year you still wouldn't be up 1mil and apple is up 50% this year.

safe trades don't have returns like you are asking,

even to ask a "pro" to turn 10k into a mil in 250 days, id assume only a few people in the world would be able to do it with the r:r you asked.

-P

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  #4 (permalink)
Denver, Colorado
 
 
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Play the game with me please. I'm not asking for what to trade. I'm asking for how to place the trade/what to trade with.



Let's entertain the idea that I've got a 90% high probability trade idea that the /ES would move down 20% any time within a 250 day time frame. I've got $10k max to trade with, and I'm going all in (willing to lose it all, but not lose more than that $10k). What would be the best instrument and strategy to trade this scenario? Straight calls/puts? futures? or something else?

I'm guessing some kind of option strategy would be best?

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  #5 (permalink)
Market Wizard
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anycolour View Post
...
Let's entertain the idea that I've got a 90% high probability trade idea that the /ES would move down 20% any time within a 250 day time frame...

This is impossible. One trade = one occurence = 50% probability at best to win/lose. Don't forget, your 10K needs some margin to stay in the game.

Your best bet is to go in a Casino and bet your 10K on one number at roulette with a 1:35 payoff. Or bet on Red/Black for a 1:1 payoff.

Good luck as you'll need it.

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  #6 (permalink)
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Even with options 100:1 payouts are difficult to achieve, but possible. 'Playing your game' $10k capital, 250 day time horizon. ES Sep20 4000 Calls (which is the highest strike currently listed) are worth approximately 2.25 which would be $112.5. So you could buy 88 of them. To make $1M on the trade you would need to make $11363 per option, which is 227 points, so the S&P 500 would need to go to 4227 by next September which would be an approximate 37% return. (This all ignores commissions and bid-ask spreads!). There are other more complicated option structures that could get you there as well but they depend upon margin requirements not premium levels which are more difficult to quickly calculate. For example the ESU20 3800/3900 1x2 Call Spread has a value of about 0.9 which is only $45. So you could buy 222 of them. At expiration if the market was exactly 3900 you would make about $1.1M (222*100*50) but I have no idea what the margin requirement is for a position like that, as opposed to the initial premium.

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  #7 (permalink)
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Before starting off, NEVER gun for these

This thread caught my attention since recently (just last week on monthly expiry day) there was a stock which is actually in our National Index had something like this happen to it in options

What that message in image is saying is that strike of 60 CE was trading at 0.05 value and it went to 18.40 in just half an hour, that is 350+ times increase. Lot size of the traded option is 2200.

Needless to say now that this was on basis of some rumors, and this stock has taken a beating in last year or so due to some frauds after enjoying couple of years boom period.

There is your "possible trade" (or what could've trade?), that is if you play those kind of things. Its what many retailers dream of when they come to market, I did too, for year or so I would try to catch that "Awesome 10fold+" move on BankNifty (Which is extremely volatile), but I never managed it, in fact slowly my capital kept eroding. Now I don't even trade on expiry day. I learned that "keeping your 10k and adding to it slowly is probably better way than to make a million in one trade and lose 10k on 100 such a trades each before making a million or worse never making a million"

I'm not saying no one made money by doing this, ppl probably did, and they probably lost much more in catching these unicorns.

Also, that message is saying something similar to what you wanted to gain. 1 lacs which is 100k in INR and around 1.4 k in USD, turned to 3.68 cr INR, which is 368 lacs in INR. This is that unicorn story that lures unsuspecting newbies and retailers with all their hard earned money to market. And worse they start with probably the most dangerous things, options, future, penny stocks based on rumors and keep no SLs, because they don't know that they exist

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  #8 (permalink)
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Maybe put spreads or digitals with strikes 20% OTM. Better q is why do you think ES will go down 20%? Would think if u can define a specific scenario it's easier to construct such a r:r


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  #9 (permalink)
Chicago, IL
 
 
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as long as you understand this is 100% gambling...buying far otm options is your best bet to achieve 100x.

if you insist on futures, i guess the way to do it would be to open an AMP account and apply for $300 margins for the NQ. with 33 NQ contracts, to go from $10k to $1mil would require a 1500 point move. i guess that could happen if there's a crash or insane bull-run in the next 250 days but that's not as important as the fact that with $300 NQ margins, you're employing a leverage of around 552x.

at 552x leverage, it's guaranteed you'll never survive the intraday whipsaws. not to mention, if something goes terribly wrong and you aren't liquidated before it's too late, you'll end up owing money to AMP.

so buying far otm options is your best bet. but if you're aiming for 100x, why options on ES/NQ/indices? you'll have a much higher chance with 100x by buying OTM options on individual stocks. volatile tech stocks are a good candidate. i mean, just look at tesla this year lol

if you bought far otm calls during the big dip in May this year with a strike close to the previous resistance area where it consolidated for over a year, you'd have 100x your money easy.

for yolo "lambo-long" or "short-for-freedom" plays, futures aren't the way to do it. go with options on volatile tech stocks or if you insist on futures, go with otm futures options on an extremely volatile instrument like CL, NG, palladium, or even Bitcoin (deribit).

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  #10 (permalink)
Amsterdam Netherlands
 
 
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anycolour View Post
Could someone please point me to a relatively safe trade with a 1/100 Risk Reward.
For example, I'm willing to risk all of $10k (and lose it all) in order to potentially make 100 times of it which is $1 million.

I'm not looking for a trade, but a way to best make the trade. That is, using which instrument: options, futures, stocks, pairs, forex, options on futures, etc.

I'm guessing options would be the way to do this, but which option strategy is most likely to potentially provide what I'm looking for? E.g., spreads, iron condors, butterflys, etc. I really don't know much about options, except straight calls and puts.

Some parameters on the trade I want to make, which might help you in answering my question:
I plan to make a short trade, in a fast downward movement environment with increasing volatility.
I will be looking to stay in the trade for about 250 days (I will exit the trade after ~250 days).

Well, actually, while you're at it, if you could tell me what exactly would potentially have the best chance to provide a 1/100 risk/reward in the scenario outlined above: /ES, TVIX, /GC, etc.

Thank you!

You seriously made me laugh, thanks for that! But I will give you a serious answer. You might not get to 1 million but who knows, you might come close ...

Do thorough research on possible take over candidates (in any industry). After that, make a list based on potential. Next is buy the call option that fits your time horizon after you've seen that the stock made some sort of a dip but still looks good to go up (you'll never know, but still) and then wait. If a possible take over is already priced in to the option premium leave it of course. Don't go selling calls or puts that could bring you in very, very nasty situations.

Again, thanks for the laugh!

PS a more simple way is to buy a $10 lottery ticket

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February 12, 2020


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