Posted in
Options Trading
By: Tom Gentile
on August 4th, 2023
The last, most recent decision form the US Federal open Market Committee (FOMC) was to raise interest rates yet another quarter of a point. This has interest rates at a level not seen since 2001.
Whether or not this was good or bad and what it would do to the stock market right now (as that is what we focus on as option traders – what will the affect of a rate hike have on prices RIGHT NOW), wasn’t too dramatic. Keep in mind they may not be done for the year either.
I believe it was because that decision was already baked in to the market and priced in. Because there was no surprise things went as they have been for most of the year – bullish equities.
My Concern with Robin Hood
While the markets seem to be in fine shape trending higher, my concern and what I constructed my video found below on is Robin Hood and their boosting their interest rate on cash up to 4.9%. Which they say is 8x the annual savings account rate. True or not, depending on your level involvement with Robin Hood this may be the highest return on cash of any broker.
That level you have to be at, as I understand it, is you have to be a Gold level member with them. Aside from all the perks that come with that what I see as the best perk is the interest rate on uninvested cash of 4.9%.
As an (option) trader I always look at what is my risk, what’s my reward and what’s my break even.
In my video I break down what the reward vs risk is and a base batch of numbers to show what one would need in the account to break even and anything under that breakeven number is risk and anything above that is your interest income.
I further provide a few other monetary scenarios so you could see how those numbers should work out.
All to show you that even though they say the interest rate is 4.9% it will take some work and certain amounts of cash to get that 4.9% and make it at least break even on your uninvested cash.
Would You Like to See How to Do Better than that 4.9%?
My video shows a way to go after a 5.25% or better return in a way that doesn’t even require you to have a gold account or even a Robin Hood account.
It has to do with a specific Treasury Bond ETF.
I educate you all on what that ETF is and provide some background on it and the strategy that may just accomplish reaching the ROI goals I spoke about that has the opportunity to beat the 4.9%.
Keep in mind, as the Fed raises and lowers interest rates it will affect this ETF and the numbers i am going to show you in the video, but remember a big benefit is you have the flexibility to be able to buy or sell at any time.
Enjoy the video and the education and be well options traders.
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
Other times I will have other charts may work to amplify my educational points.
Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.
Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.
Disclaimers
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
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