Penny Stocks vs. Options – Which is Better?

Penny Options Trading

Are you curious about penny options trading. 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. The first thing that you want to consider with anything is what kind of fees are you going to be paying? What are the commissions? With penny stocks and options, both are pretty darn similar, pretty close.

About Penny Stocks

Like any broker, you can find some that have really messed up penny stocks fee structures. But other ones are very straightforward, very cut and dried. Same with options. Some options out there, their fee structure is just crazy, is just terrible. But other ones can be much more favorable. There’s really, none has an advantage over the other. However, when we move from fees into the government regulations, 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, this is quite a bit of a game changer if you haven’t heard of the pattern day trade rule, you will. It’s just a pain. Bottom line, 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. Next, the amount of opportunities. In penny stocks, depending on the cycle, sometimes there can be quite a few. But most times, there’s rarely any. You’ve got to sit and wait, and wait. Maybe wait two, three, four days. Sometimes you’ve got to wait weeks before you finally get a move that makes any sort of worth while impact on your account.

Finding The Potential

With options, happen every day, all the time. 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 any body that has traded options knows that there’s big movement. As far as amount of opportunities, there’s always something going on in the world of options, always something going on. A day goes by, another day, and nothing ever really happens. Maybe something eventually does happen, but for all the time you’re waiting watching that paint dry for it to finally happen, within the options market there’s been multiple moves that have happened.

Potential gains. For penny stocks and options, this one is going to have to be a draw. You’ve 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 here. Yeah, there are big gains, but they don’t come around that often. Up here they really do. 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. Big gains are happening quite a bit within options. Not so much on penny stocks. Now, cost to get involved. Well, with options, the cost to get involved can be very minimal.

Studying the Markets

It can be as low as $50,if you really want it to. You can literally get involved on a chart that the stock itself trades for $400 per share, but through the way options, you could get involved within that trade for as little as $50, $75, $100. You could obviously do more. But you don’t need large amounts of money to get involved with big board stocks. That’s the big power of options. So we have another draw here. Now at the mercy of. A trade could be going well, then all of a sudden, like that, management could put out some press release, or do something just bizarre, that all of a sudden ruins everything. You’re at the mercy of them. Do they have bonehead management? Sure, all management’s make questionable decisions.

But does the CEO of Apple, the CEO of Google, the CEO of any of those big name companies, are they really boneheads? No, they have, it’s them, they have their board of directors. However, in terms of fluidity, how smooth the charts move, how well they’re constructed, just the way they come across your screen, they’re 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. In terms of how fluid, options. Everybody’s always got something. Especially in the penny world. The CEO’s always going to let you buy shares. However, the big question comes down to can you sell? Because buying is only half the equation. You’ve got to be able to sell. With penny stocks, again, not even close.


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