As we await the Federal Reserve meeting this afternoon and the press conference to follow, I thought I would tackle one of the questions I get most frequently: What is the difference between Cabot Options Trader and Cabot Options Trader Pro?
Essentially, in Cabot Options Trader, we execute the following trades:
Buy Call
Buy Put
Buy-Write/Covered Call
In Cabot Options Trader Pro, we execute those trades as well as:
Bull Call Spread
Bear Call Spread
Bull Put Spread
Bear Put Spread
Diagonals
Iron Condors
Time Spreads
Naked Put Sales
Essentially, any trade that best fits the stock situation
In general, Cabot Options Trader and Cabot Options Trader Pro positions are in the exact same stocks. For example, both services right now have positions in Blackstone (BX), United States Oil (USO), Astra Zeneca (AZN), Microsoft (MSFT), Symantec (SYMC), Coca-Cola (KO), Oracle (ORCL) and a bearish Nasdaq (QQQ) position.
However, while both services have positions in those stocks, some of the positions look quite different.
For example, our Cabot Options Trader Microsoft position is Long MSFT April 62.5 Calls, while our Cabot Options Trader Pro Microsoft position is Long MSFT April 62.5 Calls and Short April 67.5 Calls (Bull Call Spread).
In both services, we sold half the calls for a quick profit of 34%. However, in this case, the Cabot Options Trader Pro trade produced the better results:
As MSFT ran up in early December, against our April 62.5 Calls, we sold short the April 70 calls for $0.84, as I didn’t think that MSFT was going to blow through 70 by April. A couple of weeks ago, we bought back those calls for $0.14, a profitable scalp of $0.70. Then we sold the April 67.5 Calls for $0.49.
We may buy those calls back soon for around $0.17. Essentially, we have dramatically reduced our risk in this trade by selling calls against our long calls.
That said, there are other times when Cabot Options Trader positions have turned out better. This was the case with our positions in Nvidia (NVDA) last year.
In March 2016, I recommended Cabot Options Trader subscribers buy NVDA June 33 Calls for $2.19. We quickly sold half of the position for $2.90, and then let the rest run much higher. In June, we finally closed the position for $13.25, or a profit of 505%.
Meanwhile, Cabot Options Trader Pro subscribers also put on a bullish position that worked, but not nearly as well. We bought NVDA June 35 Calls and Sold NVDA May 37 Calls in a Diagonal Bull Call Spread that netted approximately 79%. And then in September, Cabot Options Trader Pro subscribers sold a NVDA November 50/45 Bull Put Spread that collected its full yield of 13%.
So which service is best for you? It depends on what you are comfortable with.
If you are a beginner, Cabot Options Trader is the right place to start.
If you feel that you are ready to move on to more sophisticated trades, Cabot Options Trader Pro is the logical step.
In both services, I give VERY specific instructions on how to get in and out of trades. And in both services, your risk is always capped. And members of both services can always send me an email with any questions about the market, our positions or anything related to the market.