Does Weekly Stocktip use stock options?

Short answer: No, we don't recommend options or recommend you buy call options on our trading signals.

We specialize in picking high quality companies with a great risk/reward ratio. This is how we have managed a +90% win ratio in the past.

While at first this might seem like a great opportunity to utilize options for there are 2 important things that makes this unattractive for stock options.

#1 The holding period.

Our strategy selects stocks selling a price well below their intrinsic value and waits for the market to recognize and correct its errors. It invariably does and share price climbs. However, we cannot predict exactly when or how fast this happens. That isn't much of a concern when you own the stocks. But call options have an "expiration date", an exact point in time where if you don't exercise it before set date, it becomes worthless. Since we can't predict exactly when our stocks go up, this makes options extremely risky.

#2 The downside risk is much higher
Options are inherently more risky than value investments. Weekly Stocktip has historically had around 7% losing signals.

Those 7% of stock picks have lost an average of around -16% in value. (that is a pretty low downside, compared to the average +102% gain on the +90% winners)

However when you trade call options your downside is fixed to -100% (unless you hedge your bets where you limit the upside instead), that's about 6 times the risk of owning the stocks outright!

In conclusion:

Using call options, you are speculating/gambling on when a stock goes up in value, you are paying a premium (limiting your potential return) and you are taking on the risk of losing your entire investment if the signal is a loser, you set the value too high, or you didn't time the market as well as you thought you did.
Options are inherently very risky and we highly recommend not buying call options when using Weekly Stocktip.
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