What is a Good Small Cap Strategy?
Consider small caps, stocks priced under $10 and are optionable for a small cap strategy of investingA small cap is generally a company with a market capitalization of between $300 million and $2 billion. The advantage of investing in small cap stocks is the opportunity to beat institutional investors. Small cap stocks have historically outperformed large cap stocks.
Let's examine the technicals of the chart of (INSG) Inseego Corp provides fifth generation (5G) and intelligent Internet of things (IoT) device-to-cloud solutions.
As of 01/20/2020 RSI is at 69.30 and appears to be moving higher. INSG is at 9.15 and above the mid-point on the Keltner channels. The 50 day EMA has crossed over the 100 Day EMA which indicates a bullish move. The 50 day EMA is also looking like it's moving higher. The Force Index is Green and appears ready to go higher. The ADX Green line is above the Red and the black line is above 20 at 34.89 which indicates a strong trend. My recommendation is that it has the right characteristics to be a buy but may soon be ready for a pull-back.
This Information is not intended as investment advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security, or fund. The opinions and analyses included in the Information are based from sources believed to be reliable and written in good faith, but no representation or warranty, expressed or implied is made as to their accuracy, completeness or correctness. Stocks and Options involve risk and are not suitable for all investors.I am currently Long the stock and option.
Fundamentals for a Small Cap Strategy
Since the Technicals look strong let's examine some of the Fundamentals. INSG is part of the 5G revolution, which is currently a hot sector. As of 12/31/18 INSG had positive Operating Income of $14,011. So for my small cap strategy: I like to buy the stock of a well-positioned company and also buy call options In-The-Money(ITM) as I can afford for the longest time period of time. Since the option is in a strong sector, 5G, I can afford to hold it longer and the ITM option should lose less value if there is a down-turn. My Total investment was $480 to test the system, $220 invested in the stock and $220 invested in the call option. It's a low cost strategy(Under $500) that can bring high reward potential and I can sell the Call option and buy a put option if I want to protect my stock. I bought various purchases of INSG since 11/19 when it was trading for $5.11.I may never have to sell the stock, as I ride both puts and calls on the stock.More Notes on the Small Cap Strategy
I only hold the option for a week or two unless it shows good strength. If it is progressing well, then I can hold it for a profit and even sell some and buy-back either more ITM calls or shorter time periods to ride the option, if its moving to oversold territory. With options I have the potential to hold the stock forever using puts and calls for protection and income to buy more stock. Options give me additional diversity. Another stock to consider in the 5G zone would be Qualcom (QCOM) or Gilat Satellite Networks(GILT). For QCOM I didn't have enough money to buy many shares so I bought the option for 1 QCOM Jan 31 '20 $92 Call(QCOM) @ $1.40 for = for $141 on 1/16/20 and I sold the option one day later 1 QCOM Jan 31 '20 $92 Call(QCOM) @ $3.10 for $169 Profit. For GILT I bought some shares and 3 options 3 GILT Jun 19 '20 $12.50 Call(GILT) @ $0.15 for $47 and I sold two days later 3 CALL GILT 06/19/20 12.50 GILAT SATELLITE NETWORKS for $88 a $41 profit. Find the hot sector or stocks with good potential and use both stocks and options to ride the wave. There are plenty of inexpensive services that will tell you what's hot and do your own analysis to find them.As you make profits and want to diversify, other than stocks check-out LeadFlow 247. You can have an internet business where your product is leads in a DFY (Done For You) manner. Lead Flow 247 lets you build your list on Auto-pilot. Because the leads are on auto-pilot, without any other effort on your part except the initial set-up, this is the closest business to automatic residual income that I've experienced in quite some time. After the first day I had over 83 leads that I can email with minimal effort on my side and I get new leads every hour. After two days I have 185 Contacts. I'm averaging over 80 leads per day. Nice!!
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