What is Financial Options?
Financial Options is an innovative new system to trade in the financial markets, designed and exclusively offered by RCI – Rainbow Century Investments. Similar in part to a margin account offered by many brokerage firms and investment banks, Financial Options offers client an edge that you won’t find anywhere else worldwide.
How do Financial Options work
A margin account lets an investor borrow money from a broker to purchase securities up to double the account’s cash balance or 50% of the amount deposited. For example, an investor with $2,500 in a margin account buys Company A’s stock for $5 per share. With the broker’s $2,500 loan, the investor purchases $5,000 of Company A’s stock and receives 1,000 shares.
Financial Options allows investors to take advantage of the market using leverage provided by RCI. RCI offers up to 90% financing at a low 2% interest rate, allowing investors to take advantage of situations in the market that they normally couldn’t.
Example: Let’s say you want to buy Google stocks, but you don’t have the money to buy them and the prices are rising every minute.
With a Financial Options account, RCI can provide up to 90% financing, allowing our clients to utilize leverage in order to benefit from the financial markets! Now you now can purchase the Google stock in the amount of 50K with only an investment of 5K. Now should that stock go up 10% by end of day, you can then sell off the stock and retain a profit of 10K minus interest rates and fee’s! ( 5K investment and 5K from the 10% increase in the stock price). The investor has made a 200% profit utilizing Financial Options with a minimum investment!
What Are The Benefits Of Financial Options?
Why use Financial Options account? It’s all about leverage. Just as companies borrow money to invest in projects, investors can borrow money and leverage the cash they invest. Leverage amplifies every point that a stock goes up. If you pick the right investment, margin can dramatically increase your profit.
A 75% financial option allows you to buy up to three times as much stock as you could with just the cash in your account. It’s easy to see how you could make significantly more money by using a Financial Option account than by trading from a pure cash position. What really matters is whether your stock rises or not. The investing world will always debate whether it’s possible to consistently pick winning stocks. We won’t weigh in on that debate here, but simply say that Financial options does offer the opportunity to amplify your returns.
The best way to demonstrate the power of leverage is with an example. Let’s imagine a situation that we’d all love to be in – one that results in hugely exaggerated profits:
We’ll keep with the numbers of $20,000 worth of securities bought using $15,000 of margin and $5,000 of cash. Cory’s Tequila Co. is trading at $100 and you feel that it will rise dramatically. Normally, you’d only be able to buy 50 shares (50 x $100 = $5,000). Since you’re investing using financial options, you have the ability to buy 200 shares (200 x $100 = $20,000).
Cory’s Tequila Co. then locks in Jennifer Lopez as a spokeswoman and the price of shares skyrockets 25%. Your investment is now worth $25,000 (200 shares x $125) and you decide to cash out. After paying back your broker the $15,000 you originally borrowed, you get $10,000 which is profit. That’s a 50% return even though the stock only went up 75%. Keep in mind that to simplify this transaction, we didn’t take into account commissions and interest. Otherwise, these costs would be deducted from your profit.
Benefits of Financial Options
Financial Options can be a low-cost, flexible way to seek increased investment returns or to meet your personal financial needs. Some of the primary benefits associated with Financial Options include:
Increased Buying Power – Trading on Financial Options allows you to purchase a greater number of securities ( up to 3 times as much) than you would have been able to purchase with cash only, thereby giving you more exposure to the market and offering the possibility of greater returns. Having a Financial Options account also allows you to sell short and attempt to profit from downward price movements.
Competitive Interest Rates – Financial Options can be more cost-effective than credit cards or other lending options. RCI offers competitive interest rates based on the amount you borrow.
Repayment Flexibility – There are no minimum monthly payments on a Financial Options accounts as long as you maintain the required account equity level. Each security may be subject to a different maintenance requirement.
An Accessible Line of Credit – Once you’re approved for a Financial Options account, you can borrow against your assets, in the form of a margin loan, to meet your personal financial needs. There’s no extra paperwork, credit checks or permissions required to access the borrowed funds after your initial approval.
Increased Ability to Stay in the Market – A Financial Options account can help you stick to your trading strategy by offering additional funds. Rather than selling securities for immediate income and decreasing your exposure to the market, Financial Options offers you a way to stay invested and defer capital gains until you’re ready to close a position.
Tax Deductions – In some cases, the interest on a Financial Options account may be tax deductible. Consult your tax professional for more information.
Portfolio Diversification – By increasing your buying power, trading Financial Options allows you to diversify a heavily concentrated portfolio composed of only one security or several very similar securities