What Are Alan Knuckman’s Penny Contracts?

Alan Knuckman has been going on about a unique kind of asset he calls “Penny Contracts.”

I have seen him promote the concept a couple of times as these contracts you can use to make money in the stock market without having to trade stocks.

I decided to look them up and wrote this article to give you an idea of what they are, how they work, and why he has been teasing them.

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What are Alan Knuckman’s Penny Contracts?

For a while now, Alan Knuckman has been promoting the idea of a new way of making money without buying stocks i.e. trading “Penny Contracts.”

Towards the end of 2019 and well into 2020, he released teasers in which he was presenting his viewers with a “dirt-cheap” way to make money in the markets. One of the headings read “The Most Dirt-Cheap Way To Get Rich in 2020” and another read “Dirt-Cheap Riches.”

Alan Knuckman's Penny Contracts

The idea was that you can start investing with very little capital and still get rich. On one of the pages on the St. Paul Research website where he promotes a report called The “Penny Contract” Primer, you will find this statement:

“You might be surprised at how little cash you need to get your own personal profit machine up and running.”

Now, Penny Contracts, as he calls them, are a unique kind of options contract whose price is influenced by the price of the underlying stock.

While it sounds like he meant penny stocks, which are microcap or small-cap stocks trading for less than one dollar per share (although the definition varies depending on your source), he meant options contracts.

The word penny contracts is a misnomer in many ways if you seriously take into consideration what he meant, and we will explore this as we find out what they are.

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How Penny Contracts Work

In his presentations, Knuckman mentioned that penny contracts were launched in 2005 as an experiment on Wall Street and that very few traders knew much about them, let alone know they exist.

He learned about them as an insider because he was working at the exchange as they were launched and was, therefore, one among a handful of traders who knew what they were and how they worked.

After doing my research, I found out that these contracts are Weekly Options. The TD Ameritrade website defines them as options that are issued on Thursday and expire on Friday (except during designated holidays). They last for eight days.

They were introduced by the CBOE in 2005 to give investors better exposure to things like earning report releases and other events that can affect the price of a stock short-term. It began as a pilot program, which is what Alan Knuckman usually alludes to in most of his presentations.

Weeklys are extra-sensitive to price changes in underlying assets whereby they exhibit bigger price changes than their long-term alternatives when the stock price shifts.

So, naturally, you may be wondering whether weekly options are different from other options, and the answer is that they aren’t that much different. The key difference between them is their expiration period.

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How Alan Knuckman picks his trades

Alan usually talks about a system he uses to find the best weekly options. He calls it The Rapid Riches BluePrint. To use it, he follows four steps:

  1. Identify: The first step is to find a good stock and to achieve that, Alan uses something he calls a Penny Contract Multiple Scanner (PCX Scanner) that scans 4,000 stocks for unique indicators. This is not unique to Alan as we have seen it used by Jim Rickards’ Crash Speculator and  Tom Gentile’s Fast Fortune Club where the gurus also claimed to have systems that scour the entire market for picks.
  2. Execute: When the PCX picks a stock, the next thing is to find the best option contracts on offer for it. Note that some stocks haven’t got “penny contracts” attached to them and some have up to 400 contracts. You can check the list of available weekly options on this CBOE list.
  3. Manage: When you open a position, he monitors it to alert you to exit if it starts to lose money or keep it open if it is doing well.
  4. Maximize: This step ties in with the previous one in that he lets you know when you should exit to earn maximum returns.

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Who is Alan Knuckman?

Alan Knuckman is a newsletter editor and professional options trader and analyst. He is from Chicago and, unsurprisingly, began his career as a clerk on the floor of the Chicago Board of Trade (CBOT). He has series 4 and 24 securities registration credentials.

He has worked with all aspects of the options markets since he began trading 25 years ago. He transitioned from a clerk to a floor trader, which gave him a unique perspective of how the market works. This also enabled him to learn how to trade in all market conditions.

He makes regular appearances on financial news outlets like CNN, Fox Business Network, Sky News, CNBC, and BloombergTV as a market commentator. He is the editor of Weekly Wealth Alert, Rapid Riches Reports, and Daily Double Club and also contributes to The Profit Wire.

What is The Dollar Trade Club?

The Dollar Trade Club is the advisory service you have to subscribe to if you would like to receive “penny contract” recommendations.

It is a premium subscription service that St. Paul Research publishes. St. Paul is a publishing imprint of Agora Financial.

As soon as you join The Dollar Trade Club, you will receive a copy of a free report (that changes depending on the offer you get) as well as the following:

  • A free copy of The Rapid Riches Blueprint, which has all the information you need to learn about penny contracts.
  • Real-time alerts of when you should open or close your positions.
  • Weekly email updates
  • Monthly reports

Alan may also send you the Penny Contract Primer and The Trading Masterclass, but that will depend on whether he is offering them as bonuses.

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Subscription Fee

The prices can vary depending on the presentation and the discount offers available, but I’ve seen it range between $52 and $49.

Refund Policy

The Dollar Trade Club has a 6-month, money-back guarantee.

Alan Knuckman’s Penny Contracts Conclusion

Alan has been known to hype up “penny contracts” as a way for people to mint a fortune, which is misleading, to say the least. In one presentation, he mentioned that he used weekly options to turn $100 into $1.7 million in seven months.

While it can happen to you in real life, the odds are astronomical. That being said, this tactic is frequently used by newsletter gurus as in the presentations like Jeff Yastine’s “Q Shares” and EB Tucker’s “5G Master Key” Stock that I recently reviewed.

Alan Knuckman uses “penny contracts” to advertise The Dollar Trade Club, his new options-trading advisory service that recommends weekly option trades.

Should you subscribe to this service, don’t do so expecting to earn a fortune trading your way up from “pocket change.” It is never that easy and such claims should be taken with a grain of salt.

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