How we turned $500,000 into $1.3 million in a month

TD Ameritrade winners
The winners of TD Ameritrade's 2nd Annual Collegiate Trading Competition: Zac Rankin, Chelsey Winsor, Ben Asselmeier and John Racanelli.

Zac Rankin is very thankful he suffered from insomnia earlier this year.

On nights he couldn't sleep, he started reading about the stock market.

"I was Googling stuff all day long. I would spend hours just reading about how stocks behave," the 21-year old told CNNMoney.

Rankin is a senior at Southeast Missouri State University. He's captain of the team that just won the top prize in the TD Ameritrade (AMTD) thinkorswim challenge, a stock market competition for college students.

They beat out over 475 other teams, including those from business schools and Ivy Leagues.

The contest was simple: Each team was allotted $500,000 of fake money. Whoever had the most at the end of a month won.

Rankin and his teammates ended the competition with $1.3 million -- a gain of 162%.

More risk, more possible return

"We had nothing to lose. If we end up losing all $500,000, oh well," admits Rankin. "We basically just decided to be as risky as possible."

The team was in last place after the initial week of trading. They realized they couldn't treat this like a retirement account with safe investments and a long-term focus.

They pivoted quickly to options trading, where you place bets that stocks will rise or fall.

"This was my first experience trading options," says Rankin, who watched every single online course offered by the Options Industry Council.

The winning trades

Many of the team's bets lost money, but there were two huge wins.

1. Betting the Nasdaq 100 would rise -- On October 19, the Nasdaq 100 (QQQ) index closed at 108.74. The team bet it would rise above 111. They purchased 9,000 "call" options for a mere 3 cents each. They sold them on Oct. 23 for $1.42 each. By then, the Nasdaq 100 had risen to nearly 113.

Total gain: $1,251,000

2. Betting that Qualcomm stock would tumble -- On November 2, Qualcomm (QCOM, Tech30) stock closed at $60.64 a share. The team knew that earnings were coming up soon and the stock could fall a lot if the report was bad. So they bought 2,000 "put" options betting the stock would fall below $56. They paid a mere 35 cents an option. By November 5, the stock was trading at only $51.07. The team was able to sell the options for $5.45 apiece.

Total gain: $1,020,000

The other key to their success was diverse perspectives. No one on the team is a finance major.

Rankin comes closest with a business administration focus. Ben Asselmeier specializes in computer science and graphics, John Racanell is a psychology major and Chelsey Winsor is an accounting major.

They all researched ideas and Rankin had the final say.

"Any student can participate [in the contest], regardless of major," says Nicole Sherrod, managing director of TD Ameritrade. She was an English major herself before taking an intro to investing course in college.

How to learn about investing

Rankin admits that coming up with winning investing ideas isn't easy. Even after winning the competition, he calls himself a "beginner."

"Investing is almost like getting a big school assignment. You have to keep studying and keep learning," says Rankin.

Many Millennials find investing confusing, but Rankin believes others can follow his lead. He learned almost entirely by reading articles and watching videos online until he took an investment course at school this semester.

Once he got passionate about it, he started trading ideas with his grandfather and with other enthusiasts in online forums like InvestorsHub.

Rankin's personal portfolio is still in the red from some of the stock he bought earlier this year. But he's more focused on the long-term. And that $3,500 he just won in the contest? He plans to invest it.

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