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The market seems to make less and less sense every day. Stocks have rallied by 25% over the last three weeks despite unemployment claims smashing through historic records each week. It's an unprecedented rally for the economic numbers we're seeing.
It's hard to know whether to sit on the sidelines, waiting for than next leg down, or jump in as the market makes a sharp recovery. It could go either way.
But what if you could profit from either of these scenarios with one trade? It's not as crazy as it sounds.
Money Morning Capital Wave Strategist Shah Gilani has a strategy that can do just that.
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If stocks collapse again, you'll end up owning your wish list stocks at a massive discount. And if stocks keep their momentum, you'll be adding a pile of cash to your bank account.
Here's why it works and how you can make the trade work for you…
Why This Strategy Works
Let's lay out some truths.
The stock market over the long term tends to move higher. It has a natural bias to go up because companies want to make more money. Growing earnings translates into rising prices over time.
Of course, over certain short-term periods, stocks can move down in a hurry. We saw that in February and March, when the Dow lost nearly 40% of its value.
But these short-term shakeups create long-term opportunities.
One of the simplest ways to capture these is to buy stocks in excellent companies at massive discounts. If we went back to February when Amazon.com Inc. (NASDAQ: AMZN) was trading for $2,100 a share and I told you I'd sell it to you for $1,675, you'd have taken that deal in a heartbeat.
And that's exactly the deal you could've gotten if you bought Amazon on March 23. It's up more than 30% since then.
Plus, the short-term shakeups create huge opportunities in the options market as well.
We've seen options trades explode for gains of 1,000% or more as volatility surged. If stock prices are moving rapidly, then options prices are moving even faster.
The problem options traders are finding now is that options prices are getting expensive, making it hard to find a profitable entry point.
But there is a strategy that lets you exploit both the market's long-term upward bias and high options prices in a win-win trade…