3 Best Call Options to Buy for 2022

what's going on option investors my name's henry and if you're new i'm continuing a series on options because that's my area of expertise when i was working for goldman sachs and in this video i'm going to reveal the best call options to buy for january 2022 based on the research that i've done on three specific stocks i think are not only big wins but also have very attractive options before i jump in and flood your pockets with money make sure that you smash that like button for uncle henry and subscribe to the dopest youtube channel these calls are going to print money well at least as long as the economy continues the way it is because after all i'm an ex goldman sachs ex-hedge fund analyst not a genie in the bottle but i think these plays are highly likely to have success i have had 96 success in the private option discord so far so if you'd like to check that out then you can do so in the first link below buying a call is betting on a stock rising calls give you enormous leverage because after your break even price it's all gravy and you can only lose what you paid for the option so a call option is just a contract that allows the buyer to purchase 100 shares of stock at the call options strike price and it's the easiest beginner option strategy out there so let's take a look at the three best long call option plays that i have for you with the stock analysis of each coming first the first talk i want to discuss is activision blizzard this was a stock i bought for drexel university's endowment back when i was in college studying finance and data analytics and my thesis was that esports would do very well in the future just take a look at this chart of how much viewership is actually rising activision blizzard is a large american video game publisher with three main studios activision blizzard and king king by the way was another driving force behind my conviction and activision i believe when i made an investment decision that candy crush was increasing bottom line margin for activision and made my discounted cash flow model screen for the stock as a very attractive investment back when it was about 37 dollars per share this was about four years ago at this point but i still believe this stock has a really bright future activision blizzard is guiding for 3.1 billion in operating profits in 2021 with a market cap of 63 billion dollars that gives the stock a forward price to operating income a ratio of 20 which is well below the current market average price to sales is just under seven the business is wildly profitable if you believe in the durability of call of duty the resurgence of blizzard games and the continued growth of king advertising revenue then activision blizzard is your bet if i had time for video games i'd be one of the 26.6 million monthly esports viewers in 2021. now let's take a look at call options and do some analysis what's going on guys so i have a little new setup here i'm super excited about but let's take a look at my portfolio i am down a good amount of money today but the good news is all the call options i'm going to be recommending to you guys today are going to do super well or they should do a lot better than if you were going to open them on friday because today the market is down a lot it's down about four percent for a lot of different stocks especially growth stocks gonna be really interesting the first thing i'm going to be showing you guys is activision blizzard so activision blizzard today on september 20th is down 3.59 it's gonna be really good to take a look at this stock and i'm currently selling puts on the stock but that's not what this video is about this video is about buying call options i'm gonna go to trade atvi and the first thing i'm going to do is i'm going to go down to january 21st 2022 that's about three months from today actually it's about 90 days exactly i'm gonna go down to the strike price and basically guys what you can do here is if you're really bullish on activision i am pretty bullish i think that this stock could easily be maybe an 87 dollar stock so we have about 10 dollars worth of upside maybe we can even see 90 but 90 would be a little bit aggressive in january because in three months if this stock were to move about 15 that 15 would translate into about 10 so let's just say i believe that this stock is an 87 stock now what you can do here is for january 21st you can go ahead and buy a number of different call options so one of the first call options you can buy is a nearer to the money call option which is a 77 and a half call as you guys can see here the break even is 82.90 so basically after 82.90 all gravy from there you just need the stock to go to 82.90 if it doesn't again the risk is you can lose this premium right here which is 540. however the good news is you can only lose 540 so you have a very good amount of upside potential for a limited amount of risk the next thing that you guys could do is also buy the 80 or the 82 and a half now i would not buy the 85 call because that goes into the territory of just too far out of the money and you would really need activision blizzard to move a whole lot very quickly and i'm not a fan of that because that's kind of a casino mentality where you need something to happen and it must happen quickly that is a pretty bad situation to be in so i would rather go for something closer to the money so i explained the 77 and a half now i want to explain to you guys the 80. so the 80 is going to be very similar to 77.5 and the reason why you would pick 80 is because you would have a little bit more leverage what i mean by leverage is if this stock were to go parabolic you would only have to put up 430 rather than 540 so you save yourself 110 in terms of upfront cost but then again you would need the stock to go up to 84 and 30 cents right here as you guys can see on the screen because now although you're paying less premium because you're having less risk in terms of how much you have to pay up front the market understands this traders know this so they require you to have more upside in the stock because they're not gonna give you an 8290 break even if you're paying less money that wouldn't make any sense the farther you go out the less you pay however the more you need the stock to go up to break even and let's say that activision blizzard ends up being about 84 per share in that scenario if activision was to go up 10 that would be about 84 so if you bought a 77 and a half call option you would make 100 or you know roughly 640 on your 540 investment so you'd be making about 20 which is not bad at all 100 doesn't sound like a whole lot but it's actually about 20 6 divided by 5 is about 120 in terms of the 80 call option now if activision went up to 84 guess what you'd actually be in a pickle so for me i'm really heavily looking at the 77.5 call option next stock i have on the list which strong call options is lemonade ticker symbol lmmd now for this one i want you to exercise more caution because buying call options you can lose all of the premium that you pay don't blame me later and say i didn't tell you because you thought i'm a genie in a bottle here's why lmnd has more risk but also a lot more reward and i enjoy the options look at this chart this stock peaked at around 180 per share in january in july it was just under 100 per share and since then it has trended lower and done completely nothing this stock is a bet on a turnaround but when i look at it it's hard for me to understand why this stock looks so undervalued lemonade is a tech company that's disrupting the insurance industry while traditional insurance providers employ actuaries to estimate risk agents to sell policies and adjusters to handle claims lemonade cuts back on human inefficiencies with artificial intelligence specifically its digital first platform uses ai chatbots to engage customers allowing lemonade to price policies in just two minutes and pay claims in as little as three seconds this results in a delightful customer experience while also keeping the company's payroll expenses low more importantly lemonade's platform was designed to capture far more data than traditional systems by blending those signals with artificial intelligence a company aims to quantify risk more precisely in turn that should keep its loss ratio for example the percentage of premiums paid out in claims below the industry average allowing lemonade to undercut its rivals on price or just spend more money on advertising dollars this creates a network effect as more consumers buy insurance through lemonade the company will collect more data sharpening its ability to predict risk in turn that should translate into lower prices making lemonade a more attractive option to all consumers of course a lemonade hasn't been around long enough to know whether this theoretical advantage actually holds up against industry titans like state farm and geico but the early indicators are very promising the company posted a gross loss ratio of 74 in q2 2021 roughly eight percentage points lower than the industry average in recent years and lemonade has grown customers and gross profit at an impressive pace lemonade recently announced that it would soon be launching an auto insurance product lemonade car this adds 300 billion to its addressable market cap in u.s bringing the total to over 400 billion dollars that move should have investors excited and option traders sharpening their spears to go on a hunt so why don't we jump into my screen again and go hunting with uncle henry alright let's take a look at lemonade lemonade is down six percent which is again a really good thing because now we're getting a discounted price to buying call options as you guys can see here lemonade was trading for 80 not long ago at all and now this is an under 70 stock it's 68 dollars per share and i honestly believe lemonade has a lot more room for upside than activision activision is more of a long term play so maybe you would even want to go out longer than january but i still think in january would be successful but with lemonade goodness we can actually go back to about 80 in the very very short term which would be amazing right the first thing i'm going to do is go to trade lmnd options and i really like the stock because it's a really good insurance stock they're really disrupting the industry i've actually used their service and it was super easy it literally took uh like a minute of my time they were very very customer friendly and i was super happy with them i live in airbnbs now so i don't really need their services but if i did need them i would totally go with them and i'm not sponsored by anyone all right looking at lmd so i think it could be like an 80 stock so any of these strikes would be amazing 69 70 71 72 because what i'm really looking at is the break even and if i believe lm and d can be 80 or 85 or even a hundred dollars per share eventually then any of these would be very very well suited now i'm looking at the wrong date i do want to go to january 21st 2022 that would be a lot more time it would make a lot more sense because i don't like buying short-term call options they usually end up not going too too well and it's because you pay a lot of money and you need something to happen really really quickly and sometimes it happens and it works out but most of the time you're going to be losing maybe 70 75 of the time obviously it depends on the delta but most people are gonna be buying something like a hundred call option and if you take a look at the delta it's 20 so you're going to be losing 80 of time instead don't do that to yourself just listen to uncle henry uncle henry got your back i would go for something like 75 and the reason why again i'm going closer to the money is because you have more delta you have more opportunity to make money if lemonade was to go up to 85 per share or 90 per share you're going to be making money on the 75 call option and you're certainly going to be making money on this 70 call option and this 70 call option looks really attractive because if lmd went up to 85 per share then you're paying about 960 dollars but you'll make a profit about 500 or in total you would make about 1500 and 1500 divided by 1 000 is a 50 return so you'd be making about 50 in just three months obviously i wouldn't put your whole entire retirement into this but i think it's a very strong play for a 1 000 trade which is not a whole lot and you can make a 50 upside again it's riskier than some of the other strategies that i really like if you want to know what strategies i like i'll have the links for you below in the description and selling puts put spreads and all of the other stuff that i talk about and mainly selling options for income however i'm really looking at the 70 call option i think there's a 50 return here if you take a look at the 75 call option you're gonna have to put up only 775 dollars however if it was to be 85 dollars per share you would be making about 10 dollars and 10 divided by 775 you're probably gonna be making around 30 return maybe it's 33 returns your return does go down that's why i would probably if i was going to be buying call options which i am not i don't usually like buying call options except for lulu which i made a absolute killing on and you guys can watch that video as well i really prefer going for something with more delta more closer to the money that way when the stock does go up i get to participate as much as possible and honestly speaking when i'm really bullish on a stock there's something called stock replacement strategies which is just buying in the money call options what that would look like would be like buying the 65 dollar call option as you guys can see your break even actually continues to go down however you need a little bit more capital here because you're gonna have to put up a little bit more money but if i look at the 65 strike i can guarantee i can promise absolutely promise before i scroll down it is going to be above 50 delta you guys ready for this boom 6296 basically 63 right this is going to be a much safer play because it's an in the money option and an in the money option has a higher delta i already knew it was going to be above 50 because an at the money option is always going to be 50 so an in the money option is going to be higher than 50. so basically here we have a 63 chance of making some type of profit on this trade we would of course need the stock to go up about 12 to break even but again i've seen lemonade at 100 per share so i think this is a very strong play if you're going to buy call options the third stock i have is square traditionally small and medium-sized businesses or smbs have turned to banks and independent sales organizations for merchant services but these providers often require long-term contracts and they typically bundle hardware and software from different vendors which can lead to compatibility issues that's what makes square so compelling there are no contracts and its self-service platform offers all the hardware software and services sellers need to run their business also see a disconnect in the stock the disconnect is roughly 8.5 take a look from august 23rd until now we had triple peak on august 23rd then the 30th and again on september 3rd that's important because if square can retouch these levels on the technical chart that's eight percent gap that it would bridge which would move a short-term call option a significant amount due to the nature of leverage in an option oftentimes an eight percent move can be three to five times more so it would be a forty percent gain on an option so with that being said let's jump into the last option analysis i have for you guys to get stupid rich all right for the people that are making it towards the end of the video i wanna reward you with some analysis on a square so square is the last stock obviously but i want to do a little bit of an extra deeper dive into square so if you guys take a look at my screen right now i have the moving average the bollinger band and what you guys will notice here that square considerably fell below the moving average which is this purple spot right here this purple line where try to touch the moving average and then it dipped below of course the whole entire market is dipping below and square is actually only down three percent and i've seen other growth stocks related to square like tesla down a lot more about four percent right i think square actually has a lot of resilience i think this stock has trimmed the support it's already below the moving average it's below the bollinger band moving average as well and i actually don't see it really trending down a whole lot more what i actually see happening i'm gonna actually zoom in here to the one month you guys see here this is a little support here at 246 it bounced off heavily right i mean it tried here it's right here and then we have this little cup formation forming right here so that little cup right there it's a very good support i like to see that it's like a coffee mug right and then square was trying to go up and then it went down and basically this is because of the overall market but i believe that square is just being dragged down by the entire market and i don't actually think it deserves to be dragged down what i think is going to happen is square is going to bridge the gap and it will certainly go to 256 dollars again i'm not a financial advisor so i think it's gonna go to 256 dollars i would place an 80 probability on that but i can also see square going back to the bollinger band average which is 260 dollars per share so again i don't see a whole lot of upside i'm not gonna go hey this is gonna be a 10x stock guys you better come in i'm gonna be a hype stock youtuber it's not like that i do think we have upside but i'm gonna be very modest especially because we have a lot of turbulence and volatility in the market right now i'm gonna be pretty realistic with you guys okay so let's just say 260 dollars per share in terms of that let's see what would be profitable in terms of buying a call option and now i'm not going to forget i'm going to go to january 21st 2022. can you guys believe it's almost 2022. it is insane i wish that we will all have a great rest of our 2021 and make a lot of money and get stupid rich in 2022. i already know it if you're watching this part then just smash the like button shoot a comment down i already know that you're gonna get stupid rich i think it's gonna be about 260 to 70. so what you guys can see here is because i think it's only gonna be 262.70 buying a call option here would not make sense because it would not be very profitable unless you expect square stock to go up to about 300 per share and then i can actually go to three months here as you guys can see square was as high as 281 and take a look over here our break evens are very close to 281 at least well this one isn't but these two are so buying a 270 call would make no sense in my opinion you will probably lose your money if you buy the 260 call you'll make a little little profit most likely based on my 280 price target and 250 would make sense however i don't think most people want to pay 2 33 to bet on a stock that is probably not going to rise too much and if it does rise this would be a smaller payoff than the other two stocks that i covered so there you have it i'm actually going to be unbiased and say that square is a very good buy but in terms of call options uh i guess this video is going to be two call options to buy in one call option and not to buy but at least you guys understand the full logic of what i'm saying here so there you have it the top three call options that are likely to crush it we're up over 500 in less than two weeks on my scaling with spreads challenge and i'm taking 7k to 17k in the private group and it's not too late to book a call with myself and the team so you can do it too click the application link below and thank you so much for watching i'll see you guys back here very soon [Music]

Channel: Invest with Henry

Views: 14,616

Rating: 4.9172153 out of 5

Keywords: Options, Call Options, Stock Market, Option Trading, Stock Trading, Invest with Henry

Id: d2kb_PbPcCw

Length: 17min 56sec (1076 seconds)

Published: Wed Sep 22 2021