Maybe you've heard the saying, "The trend is your friend." This is especially the case with options trading. In fact, we have an options trading strategy today that's banked more than 1,000% profit for our readers in the past. And it's all because we stay on top of the trends.
It's simple. When a company is doing well, its stock price goes up and more investors want a piece of that action. Unlike the price of apples or televisions, the higher the price, the more attractive it seems to investors.
That means identifying the current trend is more than half the battle when you are investing.
Of course, that cuts both ways. When the travel industry was collapsing, Money Morning's options trading strategist, Tom Gentile, saw the bearish trend and made money betting on a travel stock to keep falling. He traded options.
Tom's play was a put option on Carnival Corp. (NYSE: CCL) cruise lines. It popped 1,781% in just three weeks, from $1.60 to $30.
A lot has changed now that we're midway through the year. But we're still eyeing the major trends in the market.
Right now, with the economy just starting to reopen, we've identified another bearish trend that is ripe for further losses. The best part is that we can take advantage of its recent bounce for even greater profit potential...
The Wall Street Journal recently published a story on "overextended" Airbnb hosts struggling to pay their mortgages. Why?
Because the travel industry has been decimated by COVID-19 keeping everyone at home. Airline traffic is down some 90% according to the Transportation Security Administration (TSA). And without airlines, destination commuter hotels are seeing an 80% drop in business.
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This is a dominating and oppressive trend throughout hospitality that could only get worse. And it's informing our options trading strategy today.
Options trading strategies are popular with investors right now, because volatility is so high. The CBOE Volatility Index daily average is double what it was last year, up to 30 from 15. This means greater swings in share price, and potentially greater gains.
With so much uncertainty looming, you don't know when you're going to get an opportunity like this again.
Here's the best options trade to play right now, using the same strategy that's already earned readers between 300% and 1,000% this year...
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We are looking for Wynn Resorts Ltd. (NYSE: WYNN) to tumble. Since March 18, the stock rallied 104.8% - a doubling of the price in what some people might call a "dead cat bounce."
The name comes from the idea that if you drop something from a high enough perch, even a dead cat will bounce. Wynn Resorts fell 76.1% from its January high, so a huge bounce since March is not too much of a surprise.
But Wynn Las Vegas, the company's flagship property, is closed. And it has been closed since March 15.
It's a bit difficult to grow revenue, let alone earnings, when the hotels are closed. In fact, the casino-hotel operator reported more than a $400 million loss for the first quarter.
That's why we are looking for Wynn stock to fall once again in the next leg of its bearish trend.
Wynn stock closed Tuesday at $78.66 per share. So we are looking at buying puts on Wynn with a $65 strike price and an expiration June 19. This option closed Tuesday at $2.50, or $250 per contract.
This stock was trading for $60 just a month ago. If it retests those levels in June, this option could pay 150% profits.
If it gets even close to its March low of $35.84, $250 could score a 1,000% gain or even more.
Action to Take: We're starting to see the dead cat bounce subside as some flagship hospitality industry locations remain closed. Wynn Resorts Ltd. (NYSE: WYNN) has caught our attention, with its main Las Vegas property still struggling. Today, we're recommending you look at put options on WYNN with a $65 strike price, expiring June 19. This has the potential to bank you 1,000%.
America's No.1 Pattern Trader is going live on camera to show readers how they can make hundreds, even thousands, of dollars in extra income.
You see, he's found a way to predict the future buying patterns of nearly every stock on the market. And with this trick, he's lining up major payday appointments left and right.
We're talking about cashing in on some of the biggest stocks on the market: Netflix, Apple, Facebook, even Amazon.
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