alright guys now I just have to preface
this video by saying that I am NOT a
financial advisor this is not any kind
of financial advice here guys
this is merely something I have decided
to do with my money and I understand the
massive amount of risk involved with a
trade like this but it’s one of these
trades out there where I could easily
lose 100% of my investment or I could
easily triple or quadruple my money
based on how this stock performs and the
idea for this trade came from something
I experienced about a week ago so guys
about a week ago I was on the hunt for
some home gym equipment because I
typically go to the gym three times a
week at least sometimes even four or
five if my schedule allows it and as I’m
sure we all know due to the closure of
businesses gyms have been closed for
about four or five weeks now now I
wasn’t exactly sure how long this
closure would last so I didn’t end up
buying any equipment but when the
closure was extended until May 15th I
said I got to get my hands on some home
gym equipment because I was losing my
mind not being able to work out so I
went on Craigslist and I typed in free
weights for sale and I found somebody
selling a Bowflex bench as well as some
adjustable weights for fifteen hundred
dollars now I’ve never bought any
Bowflex equipment so I didn’t know what
these things actually cost but I decided
to go on the Bowflex website to
determine what the actual price was for
these weights to see if this was
actually a fair price so I went on the
Bowflex website I found pretty much the
exact adjustable weight set and bench
that this person was selling and the
combination of those two items would be
around $500 brand new so this person was
price gouging tripling the price of this
equipment because of the demand for home
gym equipment
so I decided screw it I’m just gonna
order this off of the Bowflex website
but then I went to order this equipment
and I got hit with an out of stock
notification and then I looked at the
other
free weights that were for sale and all
of those across the board were also out
of stock so I decided to broaden my
search and I figured okay maybe I’ll
take a look at the bigger home gym
equipment it’s more expensive but it’s
probably a decent investment in case
anything like this happens again and yet
again I find they are entirely out of
stock of this multi-thousand dollar
equipment for setting up a home gym so
then this got me thinking and I said you
know what I bet you that Bowflex has
sold a lot more home gym equipment over
the last couple of weeks than they had
anticipated because nobody saw this
pandemic coming or the closure of
businesses so it wasn’t forecasted into
any of their sales models so I looked
into a little bit guys and I found out
that Bowflex is owned by a larger
company called Nautilus which is
essentially this very large home gym
equipment supplier now as far as the
stock goes it’s basically what we call a
penny stock meaning it trades for under
five dollars per share in fact earlier
this year before the pandemic started
this stock was barely above $1 per share
which is immediately a red flag that
this stock is under some kind of
financial duress because if a stock is
below five bucks per share that is a
major red flag meaning this company is
at risk of being delisted from the stock
market but in the recent weeks this
stock had gone from about one dollar and
50 cents per share up to around $5 per
share so I’ve noticed that I must not be
the only one that came to this
conclusion that Nautilus is likely going
to sell more equipment in the next
couple of months than anticipated so I
decided to go out on a hunch here guys
and I made a speculation and it’s very
important that we understand the
difference between an investment and a
speculation an investment is where there
is minimal downside the risk is
understood and it’s very unlikely that
you’re going to lose your entire
investment with a speculation it is
largely uncertain and you need to
understand that it’s very possible to
lose 100% of your in
state capital and as a general rule of
thumb guys back to Benjamin Graham you
should speculate with no more than 5% of
your portfolio so this is a relatively
small investment compared to my total
stock market investment but I didn’t buy
shares of Nautilus stock for the first
time ever I dove into the world of
options and I bought some options
contracts on Nautilus but this isn’t
going to be a video dedicated towards
options contracts I just want to give
you a quick explanation to what I
purchased and how this vehicle works and
what types of returns I may be able to
see as a result so I ended up buying
something called a call option on MLS
stock or Nautilus and this is like the
most basic beginner options out there
they get far more confusing than this
but a call option essentially gives the
owner the right to buy shares of a stock
at a set price at a set point in time so
essentially there is a set price that
you’re able to buy that stock at
regardless of if it’s double that price
or triple that price you can buy it at
that price at that date in time now the
important thing to understand here guys
is that if the stock is below that price
when that date comes around your option
expires out of the money and you lose
100% of the option premium which is
essentially the money that you pay in
order to have that option to buy those
shares
so I ends up buying six call options of
NLS for one dollar and fifty cents as
the premium for those options but you
have to understand it didn’t cost me $9
or a dollar 50 times 6 and that is
because every options contract is the
right to buy or sell 100 shares so by
purchasing 6 contracts I now have the
right to buy 600 shares of Nautilus at
the strike price of $5 per share so the
true cost here is a dollar 50 times 600
meaning these 6 options contracts cost
me $900 now if I had gone out and
purchased 600 shares of Nautilus stock
directly it would have cost me around
$3,000 so
by purchasing these options contracts I
am employing something called leverage
which gives me a control of a larger
amount of assets for a smaller amount of
money and that is why there is a
significant amount of risk associated
with options trading and it’s important
to understand here guys that if my
options contracts expire out of the
money so for example if Nautilus stock
does not climb above five dollars per
share
I lose 100% of that invested money now
if there’s somewhere above five dollars
but they’re not above my break-even
point I would make some amount of money
but I wouldn’t recoup my initial
investment so in order for me to make
money from these options contracts by
october 18th of this year nautilus stock
has to be at six dollars and fifty cents
or above for me to break even or make
money but the exciting part here guys is
that for every dollar above 650 that
Nautilus climbs I earn a return of $600
because I am in control of 600 shares
now I don’t necessarily have to hold on
to these options contracts until the
expiration I can sell them at any point
in time and since Nautilus stock has
gone up significantly over the last
couple of days I’m already in the money
on these options contracts with a pretty
sizable return based on the small amount
I have invested so I bought these
options contracts through Robin Hood
Commission free so now we’re gonna open
up the app and I’ll show you guys
exactly what I purchased and what my
return is so far on these options that I
purchased on Monday alright guys so here
we are inside of my Robin Hood app and
just so you guys are clear here that’s
not my total return on these options I
do have a couple of shares here of
Boeing and then two index funds that I
did in a $500 portfolio I put together a
couple of weeks ago but up top here you
can see my Nautilus options now have an
options premium of $1.00 90 and as I
said I paid a dollar 50 so as of right
now I am up 26% already on these options
contracts meaning if I were able to sell
them at the option premium here of $1.00
90
I would effectively make about $240 as a
return now again it’s important to
understand here guys that there’s no
guarantee that I could sell these
options at a dollar 90 because there’s
not a massive amount of people looking
to trade these options so the prices can
fluctuate drastically but what I’m
likely going to do since I have until
October 16th I’m gonna hold on to this
and see what happens
maybe if I double my money I will sell
these options but I’m gonna take it
day-by-day and see how this stock
performs but again guys this is not
something I would be doing with a
massive amount of money it’s a total
speculation or a gamble I could lose it
all or it could pay off pretty big but
since it’s the first time I’ve ever
traded options I wanted to share the
video with you guys and be as
transparent as possible so anyways guys
there you have it that is by far the
riskiest investment I have ever made in
my investing history let me know what
you guys think about this trade down in
the comment section below do you think
it’s a good one
do you think I’m gonna lose all my money
I would love to hear what you guys think
and if a lot of people want to see it I
can do an update video down the road if
I decide to sell these options or let
you know what I’ve done with this
investment if you guys want to check out
the Robin Hood investing app yourself
they offer commission free stock ETF and
options trading as well as
cryptocurrencies and I’ve got a link
down in the description below if you use
that link you’ll get a free stock when
you sign up I am affiliated with Robin
Hood so I may also earn a commission in
the process but thanks so much for
watching this you guys I hope you
enjoyed it subscribe and hit that bell
if you haven’t already and I hope to see
you in the next video