Keyword being greatly eg, 1000% gains.
I’ve been hearing a lot people on my feed talk about buying stock to profit greatly later however I don’t understand how it works. I’m excluding long term stock holders from this scenario.
Ex: appl stock is about 188$ right now, let’s say i buy 10 shares=$1880. if the stock recovers to $250 2 months from now then the 10 shares are worth $2500. if i sell them=$620 not including any selling/brokerage fees. however, i’ve seen people do these kinds of trades but profit more than $620 (like, $6000 for example) and i dont understand how this is possible. i feel like i’m missing something very obvious. can someone explain using this example to guide it^?
is it just options? and if so, can you explain more in detail how a deal like this would play out realistically with options (assuming this is from options?)
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Well the simple answer would be they bought cheaper at a different time, or waited longer to sell to do so at a higher price. Without knowing exactly when they bought and for what price it might seem like they are doing better then you but a lot of the time it’s just they’ve been doing it longer
If you had perfect foresight of all the ups and downs over that period, sold at each peak and bought again at each dip, the overall gain would be more than the start to end gain. Of course this doesn’t take into account selling/buying fees so when you sell and buy has to be a large enough gap to make a profit.
Through a leveraged stock buy – someone loans you extra shares – for a price – and you reap the benefits. This also means that you’ll be margin called if the value falls below a certain threshold.
For Apple you can buy a 3x leveraged fund for example:
https://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0001K23S
https://www.investopedia.com/terms/l/leveraged-etf.asp
In your example you’re only buying 10 shares. What would your profit be if you bought 100 shares? How about 1000? What if you did that with more than one company’s stock? Basically, the more you risk the more you stand to gain.
Can you provide an example of what you’re talking about? Your question doesn’t really make sense. Your profit will always be the increase in value (minus fees, but that’s generally negligible). If you buy something for $10 and sell it for $20, you made $10. There’s really no getting around that
It’s all about betting on in the future of the stock, not buying it directly.
They are called options and come in various flavors of “calls” and “shorts”.
Essentially with a call you are betting the price goes up, so instead of buying 1000 stocks at market value, you buy the “option” to pay market value on them at a later date. These are sold in bulk and prices vary depending of the volitility and market consensus.
In this way you can get options to buy 1000 stocks at only a 5% investment. If they go up, you either need to sell the option before it expires, or use the option and buy the stocks yourself below market value. The risk here is that if you can’t exercise your option before the expiration, it’s worthless.
Shorts work in the opposite way. If you bet the price will go down, you can do the same thing.
Your math is inaccurate, as you’d net $62 per share, or $620 for your 10, disregarding fees and such.
Your scenario is accurate, though. There are really two ways that people profit more greatly from the same scenario.
First, they get a better profit. Maybe they sell at $300 instead of $250, earning an extra $500 for those 10 shares.
Second, they have greater volume. Maybe they have 1000 shares instead of 10, netting them $62,000 instead.
There is potential for repeating that on more than one trade, too. And played right, there are winners who short stock, profiting when the price drops. There’s also opportunity to gain from dividends while holding the stock.
Options are really just a promise of a stock price. Maybe in your scenario you had options for those shares at $150 each. Exercising your options allows you to buy them for less, the $150 price, increasing that margin. Then you’d clear $1000 in your scenario because you had access to shares at a lower price than the market offered.
Those are the fundamentals of profit through trading. Mostly, though, wider prices or higher volumes are where the greater profits come from. No one buys and sells at your numbers and ends up with more than $620 in gains without some kind or promotion add-on, which are usually like reduced fees, not bonus money.
you could do this with options. An option doesn’t necessarily cost as much as a share.
https://finance.yahoo.com/quote/AAPL/options/?date=1745539200
aapl options at the time of closing, expiring on april 25.
Lets say you grab a call contract for april 25 at a 220 strike, that’s $0.75. A contract is for 100 of them though so x100 that to $75. You’ve paid $75 (+broker fees, say $10)
If April 25 rolls around and AAPL is worth $240, you can exercise that option to buy 100 shares for $220, sell them at $240, and you’ve made $2000 – brokerage fees.
Some of these can be well beyond 100%, or even 1000% gains.