Happy Friday, friends…

Traders tend to prioritize the wrong things.

They love to be correct, to make a bold call and have it play out exactly as they “predicted.”

But they’re chasing the wrong kind of success…

Making money is more important than being right. 

You could have a 90% win rate, but if you’re only making pennies on each setup, your win/loss ratio is utterly meaningless. 

The biggest gainers aren’t the setups with the highest probability of success. They’re the ones that pay off big when they work. 

This is the core idea behind asymmetry in options trading. 

Asymmetry means that a trade’s potential reward is significantly larger than its risk. It allows traders to take small, controlled losses while staying in the game long enough to catch the occasional enormous winner.

Options trading is the most effective way to capitalize on asymmetry. Unlike shares, where gains and losses tend to be linear, options can generate exponential returns when a stock makes a big move. 

A 10% move in the underlying might double the price of a short-dated option, but a 20% move could send it soaring 1,000% or more. 

This non-linear nature of options pricing is what makes them so powerful for asymmetric trades.

Let’s Break This Down With Some Real Examples So You Can Start Weaponizing Asymmetry In Your Trading…

How Asymmetry Works

Say you’re looking at a stock trading at $100, and you decide to buy a 10% out-of-the-money (OTM) call option with a strike price of $110, expiring in a month. 

The cost of the option is $2 per share ($200 per contract).

Let’s consider a few different outcomes:

• The stock rises 5% to $105: Your option is still OTM, but the premium might increase to $4-$6 depending on volatility. That’s a 100-200% return on your initial investment.
• The stock rises 10% to $110: Now, the option is at the money, and its value could jump to $8-$10, meaning a 300-400% return.
• The stock explodes 20% to $120: Your option is now deep in the money and could be worth $20 or more, delivering a return of 1,000% or higher.

This is asymmetry in action. The stock’s second move (10% → 20%) is twice as large as the first (5% → 10%). 

But the option’s return isn’t just doubled — it’s 5-10 times higher.

This happens because options pricing is non-linear. The deeper an option moves in the money, the more its value accelerates. This is known as convexity. 

A small move can result in a modest gain, but a bigger-than-expected move can turn a cheap option into a massive winner.

This is why professional traders aren’t worried about being right all the time. 

They’re looking for situations where they can risk a small amount but have the chance to make a return many times that (if the stock makes an unexpected surge).

Legendary trader Stanley Druckenmiller, famous for compounding a 30% annualized return over three decades as a portfolio manager (and making one of the greatest asymmetrical options trades of all time), once said: 

“I like the concentrated bets. I like the fat pitches and the ‘swing big.’ And I also like it when you don’t see a fat pitch, stand there, and let the pitches go by…”

Why Assymetry is So Powerful

The power of asymmetry is that you don’t need to win most of the time to be profitable. A trader could be wrong on eight or nine trades in a row but still come out ahead with one big win.

Let’s say you take ten trades, risking $200 on each one, for a total of $2,000. Nine of them expire worthless, but one makes a 1,000% return, turning $200 into $2,000. 

Even with a 10% win rate, you’ve broken even. If just two trades hit, you’re sitting on big gains.

This is the strategy that many traders used successfully during the market’s post-pandemic rebound in 2020. 

Stocks like Tesla Inc. (NASDAQ: TSLA) and Shopify Inc. (NYSE: SHOP) saw explosive moves, and traders with small OTM call positions enjoyed 1,000% gains (or more). 

Even if they had taken several failed attempts before catching the right move, those one or two big wins more than made up for the small losses.

I’m bringing this up now because the Israel-Iran conflict might present some seriously asymmetrical trading opportunities soon…

And I want you to be prepared to make the best trades available. 

3 Steps to Identifying Asymmetric Trades

How do you find the trades with true asymmetric potential?

Here are a few key places to look:

1. Breakouts from Key Levels

When a stock has been consolidating in a tight range and finally breaks out, the move can be much bigger than expected. Traders pile in, momentum builds, and the stock can quickly run 10-20% or more.

For example, in late June 2024, when Amazon.com, Inc. (NASDAQ: AMZN) broke the $190 level after months of pent-up momentum, I went “irresponsibly long” and made one of the best trades of my entire career. 

If you had bought OTM calls before the breakout, like I did, you could have turned a few hundred dollars into several thousand.

2. Earnings Reports & Major News Events

Earnings announcements and major company news can lead to huge, unexpected moves. Options premiums tend to be elevated ahead of earnings, but when a company surprises the market, the stock can explode past expectations.

A great example was Netflix Inc. (NASDAQ: NFLX) Q4 report on January 22. Analysts expected a modest earnings beat, but the company reported massive subscriber growth, sending the stock up 14% in a single day. 

OTM call options that cost $3-$4 before earnings were suddenly worth $40+. 

1000% overnight.

3. Volatility Mispricing

Options can be mispriced relative to the stock’s potential movement. 

This often happens when a stock has been quiet for a while, and traders don’t realize that a major catalyst is on the horizon.

For example, in early 2021, GameStop Corp. (NYSE: GME) was trading in the $20 range with relatively low implied volatility. 

But once it morphed from a garden-variety bounce into a historic gamma squeeze, the stock surged over 1,000% in days. Traders who had picked up cheap OTM calls before the move saw astronomical gains.

These opportunities don’t happen every day, but when they do, they’re exactly the kind of asymmetric trades that can double, triple, or quadruple your account in a short period of time. 

Managing Risk in Asymmetrical Trades

The key to making asymmetrical bets work is staying in the game long enough to catch the big wins. 

That means managing risk and position sizing correctly, by:

• Keep your position sizes small: Since most asymmetric trades won’t work out, never bet too much on a single trade. Many traders limit these trades to 1-2% of their portfolio.
• Don’t overtrade: Just because a trade could be asymmetric doesn’t mean it’s worth taking. Look for situations where the odds are stacked in your favor.
• Accept small losses as part of the process: You might lose five, ten, or even twenty trades in a row before hitting a big one. The key is staying disciplined and not overextending yourself.

Asymmetry is one of the most powerful concepts in trading. It allows traders to risk small amounts with the potential to make many times their initial investment.

While most traders focus on being right, asymmetric trading focuses on making the most out of the rare times when a trade goes far beyond expectations. 

With the right setups, disciplined risk management, and patience … a small handful of big wins can move your account into a whole new category. 

Happy trading,

Ben Sturgill

P.S. You don’t need a fancy setup. 

You don’t need a bunch of “algos” and “indicators.”

You don’t need to spend all day watching charts. 

And you don’t need a lot of money. 

All you need is a working phone, internet connection, and a trading account…

And you could begin targeting gains up to 20%… 39%… 100%… 148%… 200%… and even 300%…*

Join Danny Phee this SUNDAY, June 22 at 8:00 p.m. EST to see how my brand-new day tool can transform your strategy overnight.