Chart: ONXX, Higher Priced Momentum Stocks vs. Cheaper Stocks



Just a quick analysis I did of this stock today.

I was sharing with a fellow trader of why I like to trade the higher priced stocks, which I will relay here about our discussion.

A Nov40P on this, the cost on 10 contracts pre-commission would've been $5200.

On another stock, FCX, that's trading around $117, which is 2.7x the cost of ONXX, some might say, they don't want to trade higher priced stocks. Here's why I disagree.

To use the same $5200, the cost for slightly OTM Nov115C, they were going for about $6.40, meaning I would have 8 contracts.

Both these I would've gotten in yesterday.

Todays' move was typical for both stocks. The ONXX option moved $0.30 in the option price with about a $1 range in the stock's price. FCX moved $2.50 on the option price with about $6 stock price move range.

On 10 contracts of ONXX, that's $300 profit in one day. That's 6% ROI. Still very good for one day.

On 8 contracts of FCX, that's $2000 profit in one day. That's 38% ROI. That's fantastic.

Hmmmm....using the same money, where the ONXX was ITM and the FCX was slightly OTM....hmmmm.....and buying fewer contracts on FCX.

Which would you rather have?
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