Buy an inexpensive options contract at the market open and make a huge gain by lunch. Sounds amazing, right? That’s what The 25 Cent Trader promises. And after doing some research, the basics behind the service looked legit. So with a 90 day money-back guarantee I gave it a try late last year (note: the guarantee isn’t offered anymore).
From their marketing site:
The 25 Cent Trader with Nomi Prins gives you access to Nomi’s proprietary momentum model that incorporates a range of co-dependent variables that combine to capture market momentum in selected stocks. Based on her extensive experience on Wall Street, as well as her mathematical background and expertise, Nomi utilizes this model by having a pre-selected and pre-screened index of companies and using an options-based strategy for maximum gains.
The model pinpoints discernible momentum and volume-related activity in order to achieve large gains within one trading day and compares the associated analysis against the pre-screened index of viable names. If a company appropriately achieve target momentum model levels, weekly option trades using strike prices and entry limits are suggested on either Monday or Tuesday around 10 AM or earlier, and generally be trading near $0.25 per contract.
While I’m a seasoned options trader and fully believe in their power for financial gains, the main issue I had with this service was the timing problems.
Here’s an example of the type of trade the service recommends:
Buy to open JPM October 18 $121 call option, up to a maximum price of $0.35.
In three months of using the service, I was only able to actually make a couple trades using her instructions and upper entry limits. Despite my being ready at the market open early each week waiting for the email and text message with the trade, by the time I actually got the trade details, the price exceeded the entry price limit.
So yes, based on when the trade was determined, the email was sent and if you could actually get that price, the track record is amazing. But in the real world, in the time it takes for that message to reach its destination, the option already moved too much. You’re dealing with pennies here.
- Theoretically the service works. Assuming you get in at the price recommended, it appeared very profitable.
- The delivery method and speed was just too slow for a service that relies on quick moves.
- It’s expensive — the 25 Cent Trader service is currently $5,000 per year.
If you’re looking for additional ways to juice your investing returns with options, then this service could work for you. As mentioned above though, your mileage may vary based on when you actually get the trade recommendation and how fast you can enter it. It never worked for me, but maybe they realize this is a limitation and have improved in this area.
If you’ve used this service and had better luck, let me know in the comments.
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