| 71.2% Profit Potential for CRSP Option Now, since CRSP’s 50-Day EMA is trading below the 100-Day EMA this means the stock’s bearish decline will likely continue. Let’s use the Hughes Optioneering calculator to look at the potential returns for a CRSP put option purchase. The Put Option Calculator will calculate the profit/loss potential for a put option trade based on the price change of the underlying stock/ETF at option expiration in this example from a flat CRSP price to a 12.5% decrease. The Optioneering Team uses the 1% Rule to select an option strike price with a higher percentage of winning trades. In the following CRSP option example, we used the 1% Rule to select the CRSP option strike price but out of fairness to our paid option service subscribers we don’t list the strike price used in the profit/loss calculation. Trade with Higher Accuracy When you use the 1% Rule to select a CRSP in-the-money option strike price, CRSP stock only has to decrease 1% for the option to breakeven and start profiting! Remember, if you purchase an at-the-money or out-of-the-money put option and the underlying stock closes flat at option expiration it will result in a 100% loss for your option trade! In this example, if CRSP stock is flat at 58.78 at option expiration, it will only result in a 5.6% loss for the CRSP option compared to a 100% loss for an at-the-money or out-of-the-money put option. Using the 1% Rule to select an option strike price can result in a higher percentage of winning trades compared to at-the-money or out-of-the-money put options. This higher accuracy can give you the discipline needed to become a successful option trader and can help avoid 100% losses when trading options. The goal of this example is to demonstrate the powerful profit potential available from trading options compared to stocks. The prices and returns represented below were calculated based on the current stock and option pricing for CRSP on 3/2/2022 before commissions. When you purchase a put option, there is almost no limit on the profit potential of the put if the underlying stock continues to move down in price. For this specific put option, the calculator analysis below reveals if CRSP stock decreases 5.0% at option expiration to 55.84 (circled), the put option would make 32.8% before commission. If CRSP stock decreases 10.0% at option expiration to 52.90 (circled), the put option would make 71.2% before commission and greatly outperform the stock shares over the same period. The leverage provided by put options allows you to maximize potential returns on bearish stocks. The Hughes Optioneering Team is here to help you identify winning trades just like this one. 
Interested in accessing the Optioneering Calculators? Join one of Chuck's Trading Services for unlimited access! The Optioneering Team has option calculators for six different option strategies that allow you to calculate the profit potential for an option trade before you take the trade. Get Chuck's Trades Sent to You! Do you want to start receiving hand-picked trades from 10-Time Trading Champion, Chuck Hughes? As a Trade of the Day subscriber, Chuck is offering you a special discount on his Weekly Option Alert Trading Service. Just call Brad at 1-866-661-5664 or 1-310-647-5664 to join and use the code "Optioneering VIP" to receive special pricing! You can aslo click here to schedule a call! Wishing You the Best in Investing Success, 
Chuck Hughes Editor, Trade of the Day Have any questions? Email us at dailytrade@chuckstod.com | 
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