WWE Stock Will Plunge After WrestleMania, Here's How to Profit

There's a strong chance shares of WWE stock will fall on Monday (April 3), and we've found a way for savvy investors to take advantage of this trend for a potential 88% profit...

Sunday night is WrestleMania, the biggest event of the year for World Wrestling Entertainment Inc. (NYSE: WWE). And that's an understatement. But with WrestleMania being both the creative and financial peak of WWE's year, traders are ready to exit once it ends.

Last year, more than 100,000 fans piled into AT&T Stadium in Dallas, Texas, to watch the event live, while more than 1.8 million people watched at home. Last year's event grossed an eye-popping $17 million.

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WrestleMania Is a Massive Spectacle

The WWE's streaming service that hosts the event is nearly as lucrative. The WWE Network is the only way to watch the event outside of showing up at the stadium. That means for fans to tune in, they have to pay the $9.99 per month fee to get access to the WWE Network. With an average of 1.52 million subscribers before WrestleMania last year, that amounts to $15 million in subscriptions.

And traders respond to the money-making potential of WrestleMania every single year, causing a predictable shift throughout WWE stock history. That's why we're going to show you a simple strategy to make big profits from this WWE stock trend...

The WWE Stock Trend to Follow This Week

The WWE Network debuted in January 2014. Since then, the WWE stock price has dropped every year on the day after WrestleMania by an average of 16% and as much as 22%.

That's because traders anticipate the company's growth during the run-up to the WWE's biggest event of the year. And they cash out when it's over.

Last year, WWE reported a record $199 million in revenue for Q2, with 19% of its revenue growth that quarter due to WrestleMania. And WWE grew its average subscribers by 39% in the first quarter and hit a record-high average of 1.52 million paid subscribers in Q2.

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Viewers interested in WrestleMania subscribe to the streaming service early to watch the build-up to the event. WWE Network viewers watched 21.7 million hours of shows on the network in the week leading up to WrestleMania in 2016. That was a 45% increase from 2015.

But the viewer and revenue numbers fell after WrestleMania. Revenue fell $35 million between Q2 and Q3 2016, while average paid subscribers to the WWE Network dropped to 1.41 million by Q4.

And traders know WWE's numbers will fall as the year goes on. That's why they cash out the day after WrestleMania. Check out the huge jump in trading volume on the day after WrestleMania over the past three years.

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In 2014, WWE stock dropped 20% the day after WrestleMania. That decrease was 17% the day after the 2015 WrestleMania, and 8% the day after the 2016 WrestleMania.

Those are huge one-day price collapses, and they happen on the same day every year.

While you're right to notice that those day-after WrestleMania drops are getting smaller each year, that trend is likely to reverse this year.

WWE stock is already up 22.28% on the year. Shares of WWE trade at $22.50, their highest price since the network was launched in 2014. The stock is already at Wall Street analysts' average price target for 2017 of $23. And some Wall Street analysts expect to see the share price fall to $16 a share. That's not surprising since its average 2016 share price was $18.

So WWE stock is already highly priced thanks to traders bidding the stock up ahead of WrestleMania. And that means it has more room to correct on Monday.

Here's how to play this trend and maximize your profits...

Our WWE Stock Strategy Could Bring You 88% Profits

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The simplest way to profit from this trend is to buy put options on WWE stock.

But we have a note of caution. Just because WWE stock dropped the last three years the day after WrestleMania doesn't guarantee it will this year. This strategy has some risks, but if you're confident in this trend, we'll show you how to play it.

Put options allow you to profit from a drop in a stock's price. Puts are contracts giving you the right to sell the stock at a price, called the contract's "strike price," below the stock's current value. The catch is the share price must fall below the strike price at the contract's expiration, or the option won't be profitable.

Here's how it works.

A put option contract for WWE stock with a strike price of $21 a share with an April 21 expiration date currently trades at $0.40 a share. Since options are traded in 100-share blocks, that contract will cost you $40 plus commission fees from your brokerage account. Of course, you can buy more contracts to control as many shares of the stock as you would like.

If you expect WWE stock to drop 16%, its average post-WrestleMania fall over the last three years, you can buy that $21 put contract for $0.40 a share, or $40. If WWE's share price falls 16% from $22.50 to $18.90 before the end of the contract, the contract lets you sell shares of WWE for $21. Since the stock would only be worth $18.90, you would profit $1.70 a share, or $170 per 100 shares (including the cost of the put contract). That's roughly an 8% profit.

If WWE falls 22% on Monday, which is how much it fell in 2014, then your profits will be higher. A 22% drop would leave WWE priced at $17.55. Owning a $21 put contract would allow you to profit $3.05 a share, or $305 (including the premium paid for the contract). That's another easy 15% profit.

But you don't have to wait for the contract to expire at the end of April to profit, either. In fact, because WWE stock might rally back before the contract's expiration date on April 21, it might make sense to sell the contract for a quick profit next week.

If the WWE share price falls to $21 a share on Monday, the put contract will rise from $0.40 a share to $0.75. If you sell the put contract for $0.75 a share on Monday, you would make $75 per 100 shares, or a $35 profit per 100 shares. That's a huge 87.5% profit.

And if you're feeling bolder, you can purchase the put contract at an even lower price with even bigger profit potential.

It's Simple - and Incredibly Profitable: This two-step investing strategy has uncovered more than 400 double- and triple-digit peak-gain winners. The next one's coming up soon - don't miss it. Learn more...

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