Sounds like a great idea?Is it possible?

Absolutely! And I’m going to show you how.

There are several ways you can invest in the stock market and never lose a penny and I’m going to show you one of them now.

The idea come about when a friend of mine said I would love to invest in stocks but I’m too scared to lose, I tried to assure them the risks can be minimalized in many ways.

But they would not have any of it, they actually said to me “I will only invest if you can come up with a way that’s 100% guaranteed I cannot lose”.

My mind went crazy thinking about ways someone could invest by not risking any of their initial capital. I asked myself “is it even possible someone can invest and not risk losing any of their initial capital”.

And then it hit me “YES” there is a way, there are actually several but this is one of my favorites so this is the one I wanted to share with you first.

Step 1 – Have Money To Invest

Step 2 – Find a safe guaranteed term deposit or bond

Step 3 – Pick a direction for the market or not

Step 4 – Buy Options

Step 5 – Laugh all the way to the bank

Let’s say you had $100,000 to invest.

Now what you need to find is an investment that may not return that much but is guaranteed or even better insured like Bank Term Deposit(make sure you pick one that guarantees its deposits) or Bonds.

Now this will vary tremendously by where you live in the world and the current economic climate but I will low ball it and say you can get 3% interest per year based on our criteria.

Now a little bit of math to get the ball rolling

$100,000 x 3% = $3,000

So if you took out $3,000 to invest in the stock market and we put the other $97,000 in the term deposit at 3% a year at the end of the year even if you lost your $3,000 you invested your $97,000 invested would have become your original $100,000 after interest for the year.

(I know it’s not exact I’m rounding for the example, but the difference is a fraction of a percent so stay with me).

Ok so what do you now know so far, you now know that if you invest $97,000 in a term deposit (or equivalent) you will have your original $100,000 back at the end of the year no matter what.

Which means you have $3,000 now you can invest in the market and even if you were to lose that $3,000 you will still would have your original $100,000 by the end of the year and will have lost nothing.

So you have $3,000 to invest do I recommend you go and buy some stock with it, NO!

Honestly what type of impact could you expect $3,000 worth of stock investment to have as an impact on your total capital which is $100,000?

Not much unless of course you used a strategy like covered calls implemented properly which could actually give you a fairly nice return by years end if compounded.

I have a post on how to use that strategy you can find here Check It Out Here

But I have a better idea lets buy a an option. Either buy a Call, Put or both (called a straddle or strangle).

That way you can get tremendous leverage without being worried about risking any of your initial capital.

So now your only choice is do we buy a Call or Put Option?

Well if you think the market will go up over the next 12 months you would buy a Call Option and if you think it was going to go down you would buy a Put Option.

And if you had no idea where the market was going to go over the next 12 months you would buy both as either a straddle or strangle.

Ok great so let’s say it was the beginning of 2013 and you decided you thought the market was going to go up over the next 12 months so you went out and bought a Call Option.

If you had done that here’s what would have happened by the end of the year.

If you had spent that $3,000 on OTM Calls (Out Of The Money).

The value of those calls would have had a value of around $22,000 on 16th December.

So take that $22,000 value of the Call Options and take away your initial $3,000 you spent to buy them and you are left with $19,000 profit.

Which is a 19% return on your initial $100,000 not bad considering you did not risk a penny of your initial starting capital ever to achieve it.

Now of course you could have done a lot better than this if you had chosen some great individual stocks and implemented the same approach with them.

Which could have doubled or even tripled those returns, but using the market makes for an easy example and we can get fancy later.

So when somebody tells you investing in the stock market is risky, just smile and know you know better.

There are many ways to make this better but to prevent this post from getting to long I will keep it to just a few for now.

• Most definitely one of the best ways to improve it is by screening for great stocks (you have criteria you screen for right?) that have a catalyst (a reason) for them to move big, make life easy and scan for them.
• The biggest impact we can have on the returns we can produce is by choosing the right option, there is so much garbage out there on how to trade options, but let me give you a BIG hint it relates to the Gamma of the option you choose and the amount you buy.

I have also created a short video that shows you the process of How To Invest In Stocks And Never Lose a Penny and some extra tips on how to go about it.

WATCH THE VIDEO Here

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