Penny Stocks vs. Options - Which is Better?

Penny Stocks vs. Options - Which is Better?

Do you have a smaller trading account if so you're probably thinking should i do penny stocks should i do options maybe you've never even heard of options maybe you've never even heard of penny stocks either way they're both crucial tools for those with smaller accounts so let's compare the two hey it's clay trader at clay trader comm in this video like I said I want to talk about penny stocks verse options and really break down all the different components that you should be thinking about when you're considering what Avenue you want to take and right off the bat I'm going to say that I'm not biased I do firmly believe and firmly favor one and I'm going to try to prove it with this but at the end of the day you may be thinking well clay you just like that one because you have a course that you're trying to sell well in my defense I have courses for both of these so it really doesn't matter which one I choose or which one you choose both courses are priced the same so like I said I have no bias here I'm just looking at it in a very factual way and one of those things where you know just out front no bias no hidden agenda here I offer courses on both same price so let's get started so the first thing that you want to consider with anything is well what kind of fees are you going to be paying what are the commissions and with penny stocks and options both are pretty darn similar pretty close like any broker you can find some that have really you know messed up penny stock fee structures but other ones are very straightforward very cut and dry same with options some options out there other fee structure is just crazy I mean it's just terrible but other ones can be much more favorable so I'm going to call the fees pretty much a wash there's really none nothing none has a advantage over the other however when we move from fees into the government regulations you know pattern day trader rule if you haven't heard of that then it's only a matter of time before you do this is where options just blows penny stocks out of the water in fact you know this is quite a bit a bit of a game changer as far as I'm concerned like I said if you haven't heard of the pattern day trader rule you will and it's just a pain bit bottom line it were it doesn't allow you to trade for as much as you probably would like to it really hinders that but with options it's a way to get around this whole rule in fact I've done a whole video on that so you can click on the annotation that you see popping up on the screen I'll also link it down below I did like I said did a whole video on that just explaining how options can help you get around the pattern day trader rule so for this because of that because of the fix they allow you to do for the pattern day trading rule I'm going to have to go with options for this comparison next the amount of opportunities so what do I mean by opportunities well how often you know it doesn't opportunity present itself in order for you to act on it and make some money in penny stocks you know depending on the cycle sometimes there can be quite a few but most times there's rarely any you got to sit and wait and wait maybe wait two three four days sometimes you got to wait weeks before you finally get a move that makes any sort of worthwhile you know impact on your account with options happen every day all the time I take that back not all the time but they happen every single day as long as you know what stocks to be looking at they literally do and anybody that has traded options knows that you know there's big movements you know it's not if I were to sit here and say yeah an option went from 50 cents to a dollar or a dollar to a dollar fifty that wouldn't be shocking at all it happens on a routine basis however for penny stocks that have a penny go from 50 cents to a dollar I mean you really see that that often you don't so as far as amount of opportunities there's always something going on in the world of options always something going on if you've been around pennies you know I've had a lot of penny stock in my trading group that are converted to options because that all they really say is you know penny stocks are it's like watching paint dry you get in now you just wait and wait a day goes by another day and nothing ever really happens maybe something eventually does happen but you know for all the time you're waiting watching that paint dry for it to finally happen within the options market there's been you know multiple moves that have happened now potential gains for penny stocks and options this one is going to have to be a draw I mean you got to give credit where credit's due penny stocks can give very nice gains however the big differentiator here goes back to this one up err yeah they're big games but they don't come around that often up here they really do and this should actually be green since that is the color we're using for penny stocks so yeah credit where credit's due big gains can happen on both there's no denying that but the like I said the thing that really separates is going back up to this point well the amount of opportunities big gains are happening quite a bit within options not so much on penny stocks now cost to get involved what do I mean by this well a lot of times what people hold or you know what keeps people away from big boards so I say you know I'd love to play big board stocks I'd love to play a stock that trades for you know $300 well with options the cost to get involved can be very minimal it can be as low as you know $50 if you really want to so again for this we're going to have another draw obviously penny stocks that's one of the big draws to them is you know what a stocks trading for you know 15 cents I can actually afford that a stocks trading for 75 cents per share well the way options function and you know by all means go out there and learn more about options same exact thing you can literally get involved on a chart that you know that the stock itself trades for $400 per share but through the way options you could get involved you know within that trade for as little as $50 $75 hundred dollars you could obviously do more but the you don't need large amounts of money to get involved with big board stocks that's you know the big power of option so we have another draw here now at the mercy of this is a very I've never really thought about this but I had some like I said a lot of people my chatroom have gone for penny stocks options and they said you know it's so nice to not have to worry about management all of a sudden saying well we're having a reverse splitter well we're going to have to dilute or else we're you know we're gonna have to raise the share structure if you've been around penny stocks you know that management is pretty shady they're not the brightest bulb in the box so you're really at the mercy of them you're you a trade could be going well then all of a sudden like that management could put so out some press release or do something just bizarre that all of a sudden ruins everything however with options like I said these are based off of big board companies I mean think about stocks that are household names you're at the mercy of them do they have bonehead management sure all management's make questionable decisions but you know does a CEO of Apple the CEO of Google the CEO of you know any of those big-name companies are they really boneheads no they have you know it's them they have their board of directors so to me just an absolute no-brainer I will rather be at the mercy of big board management then you know you know at the mercy of a penny stock CEO who's probably got like a criminal background or something so no contest here not even close um you know every single that yeah put me at the mercy of people that are actually running legit companies how fluid what do I mean by fluid for this I mean no volume wise for anything you need volume and especially for me and you know the group that you know I teach I'm all about charts and charts can be used for penny stocks no doubt about it I know it's one of those things where the CEO says I'm not diluting I'm not that looting yet the price keeps going down however in terms of fluidity how smooth the charts move how well they're constructed and just you know the way the way they come across your screen you know they're not just not as choppy penny stocks you have very choppy charts a lot of times because there's just not that much volume it's not as liquid so it's not as fluid so in terms of how fluid options and if you don't believe me you know pull up a penny stock chart and then pull up like apples chart or you know Netflix Charter you know Facebook's chart or just a big board stock pull up those charts and then look at let's say a 15-minute time frame of a penny stock verson options you're going to see one very fluid verse one that's very choppy so again options went out what about the ease of selling now selling is the key word here because you can always buy something I mean everybody's always got some especially in penny penny world I'm going to see you is always gonna let you buy shares however the big question comes down to can you sell because right buying is only half the equation you got to be able to sell and with penny stocks again not even close if you don't believe me that's fine go buy a bunch of shares you know let's let's say you know go buy ten thousand dollars of shares and some penny stock company and then let you know how easy it is to sell when you want to sell that's the key when you want to sell let me know how easy it is with options go put ten thousand dollars in and you'll notice that hey when I want to sell you'll be able to sell very quickly you know not much hassle so again one of these things where it's not even close if you have experience then you probably understand that yeah penny stocks you know I bought the thing but then when I wanted to sell you know the bids kept dropping and I mean all sorts of things happen not a coincidence penny stocks just are not very liquid making money flexibility what do I mean with us well with penny stocks you can essentially only make money if the price of a stock goes up sure there's people others all you can short penny stocks and this then the other I suppose you could but that's going to require you going to an offshore broker paying crazy amounts of fees because it's the way it's all works so technically speaking if you want a massive headache and want to do a bunch of you know dirty work in its yeah I guess technically you can make money from penny stocks if they go down but just a much easier streamline option it's no problem if you think a stock is going to go down the way options work you can still make money from it it doesn't cost you any more fees you don't have to go to offshore brokers nothing like that it's just very streamlined for money making flexibility again yeah I guess technically you can make money from penny stocks if they go down but trust me just try it you know if you don't believe me said you don't fine go on and find a broker that's going to let you short penny stocks and I'll just leave it at that you'll see exactly what I mean about the headache and ease whereas options no problem you'll be able to make money if a price goes out and then finally and I really like this one learn personalities what do I mean by that well with options it's not a vast market I mean not every single stock out there has options but that is the hidden beauty really there's I probably say 10 to 15 stocks out there that have really good liquid option markets so what a lot of people do is that they'll create a basket of stocks and they watch those same ones day after day remember opportunities there's always opportunities happening within those 10 to 15 stocks something's always going to happen but it also forces people to just watch the same charts the same stocks over and over and what's that can allow you to do all stocks have personalities anybody that's been trading for a while can attest to sir in stocks they have a rhyme and a rhythm to the way they trade and they have you know that's what that's what I'm calling the personality so when you are forced to look at a select amount of stocks you're going to get to learn their personality whereas penny stocks you know it's what's the flavor of the week there's one stock that maybe everybody's talking about and then that one drifts off into oblivion now there's another stock that one drifts off to there's there's no continuity there's no way to really learn the penny or the personality of a penny stock because they're not around long enough they're just they're gone and that of course at the mercy of when you have bonehead management's of course the those stocks are never going to sustain themselves whereas when you have at the mercy of actual CEOs actual you know shareholder or actual Board of Directors you know it's going to be a lot they're going to be around and you're going to be able to learn their personality so without question I mean this one not even up for debate at all options wins out there so as you can see looking down here again I you know I started with I have no bias I don't care if you want to play penny stocks awesome I offer a course for it if you want to play options awesome I offer a course for it so like I said no bias I don't care what you decide but it's very I think in your face and it's one of those things where if you have any experience you can relate to some of these in regards to penny stocks and or options the one thing is all but options are so risky I hear that all the time with no plan with no strategies with no rules so our penny stocks so is Forex so with futures so or Toer bonds you know anything without a strategy and without rules and you know systems in place is risky so the whole thing all but options there's so much risk here no that's why am I saying you just go out and blindly start doing options no you definitely need to learn a system and learn strategies like I said for me and the members of my group we use technical analysis and charts and I'm not going to say that's what you absolutely have to do but as far as the whole risk argument all that's that's the one thing we're penny stock penny stocks are much less riskier than options give me a break the same amount of risk for either one that all is a function of do you have a plan do you have a set of rules and a system in place you know if I cross the street and I don't have a plan instead of rules you know the rule of looking both ways that's a the risky situation so the whole wrist thing risk is a function of a plan not you know just any of these by themselves so hopefully that helps narrow it down questions or anything like that maybe if you have some other areas I'll leave those down in the comments below where you want to you know look for a comparison but I'd like to hear from people as always if you enjoyed this and found it helpful I'll click that like button little things like that go a long way so thanks for watching hopefully this helped separate out the two a little bit get out there and trade without emotion.

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