Monday's stock-market sell-off was a frightening affair that sunk 94% of the stocks listed on the New York Stock Exchange (NYSE). Every single stock
in the Standard & Poor's 500 Index
fell, and the 635-point freefall experienced by the Dow Jones Industrial Average
was its sixth-largest point drop ever.
But in the face of this bloodbath, subscribers to Shah Gilani's Capital Wave Forecast
were treated to gains of 456%, 455%, 371%, and 197% on four of their holdings.
Just how did Gilani manage to engineer four
triple-digit gains in the face of a near-market meltdown?
He predicted reversals in both the U.S. and Chinese financial markets, employed a "put" option strategy for insurance - and then watched as his predictions came true.
"If I'm going to buy insurance, I want the best insurance at this price," said Gilani, a retired hedge-fund manager who is also a respected expert on the global financial crisis. "Part of a good cost-structure analysis is timing, which is tough. So I polished my crystal ball and said: ‘If something bad were to happen, when would that be?' I decided August, and chose some lesser-expensive puts."
Gilani's plan paid off with these four winners:
- A 455.56% gain from Goldman Sachs October 2011 $85 Puts (GS111022P00085000), bought June 3 for 45 cents and sold Aug. 9 for $2.50.
- A 455.24% gain from SPY August 2011 $115 Puts (SPY110820P00115000), bought for $1.05 on June 10 and sold Aug. 8 for $5.83.
- A 371.26% gain from FXI $40 August 2011 Puts (FXI110820P00040000), bought May 10 for 87 cents and sold Aug. 8 at $4.10.
- And a 196.72% gain from QQQ August 2011 $50 Puts (QQQ110820P00050000), bought June 10 for 61 cents, and sold Aug. 8 for $1.81.
"The days of putting together a portfolio and sleeping on it are over," said Gilani. "You could wake up to its value cut in half. Vigilance is the order of the day."
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