Use Call Options for Low-Cost Bullish Bets

A call option can be a very profitable play since it usually costs just a small fraction of actually buying the stock.

Instead of paying $35, $78, $112 or more for a single share of stock, you can use call options to control 100 shares of stock for as little as $25. That's quite a bargain!

But millions of other traders also know the benefits of buying options, and as a result many times the prices of options become overvalued. 

To be successful you must find options that are cheap and underpriced, and also make sure that you buy them for an undervalued price.

Entering Orders
When you buy options always use a limit order, good for the day only. A limit order requires that you get your price or your trade won't be made. 

Don't use a market order, which executes your trade at whatever the ask price is when your order makes it to the floor of the exchange.

Option prices can change quickly and a market order could cause you to pay more than you thought you were.

Sometimes it may take four or five tries before you get an order executed. For example, Ultimate Option Strategies editor Ken Trester likes to tell of a time when he was trying to buy a Jan 15 Call when the stock was at 14.5. 

The bid-asked prices were .12 point - .31 point. Ken never initially pays the ask price; he always tries to get a better price. So he entered a limit order to buy the option at .18, just .06 of a point above the bid price.

Three hours later he got the order filled at .18 ($18), which is a lot cheaper than .31 ($31).

The lesson here is that sometimes it pays to try to get a price between the bid and ask prices. 

A limit order helps you do that; a market order does not.

The key to success in the options game is price. Unless you know if an option is truly a bargain you cannot win! Bargain hunters who consider price first and foremost are the ones who consistently win the options game.

Options market professionals ALWAYS use pricing formulas. They're constantly on the lookout for underpriced options.

So it makes sense that YOU need an options pricing formula that gives you that insider's edge, such as the one we use in Ultimate Option Strategies.

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