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Let's be blunt: Buy-and-hold investors are in deep, dark water right now, and there's no telling what's down there. They've either just taken heavy losses, or they've been knocked right out of hard-won positions it may have taken years to build.
Maybe the bull run resumes this week... maybe the bears take over for a while.
The thing is, it doesn't have to matter all that much.
Buy-and-hold investing has its place, particularly with must-own companies. But trading gives you supreme flexibility in your moneymaking endeavors; whether shares are going up or down, you can nab profits.
You don't have to have a huge risk appetite, either; there are some very conservative strategies available that can be just as successful.
So today, I want to give you a chance to get familiar with some of the strategies - and some of the smartest people recommending them right now: our experts.
They'll show you how they make their research recommendations for their subscribers, and how profitable those can be. You'll get the chance to join them, too.
So, let me turn this over to four of our top trading experts so you can hear from them directly...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Chris Johnson, Night Trader: Technical Analysis
The volatility last Thursday just underlines the point: A lot can happen in two days.
The Dow can drop 1,800 points within sight of new highs. It can gain the same amount back in another day or two; same goes for any of the major indexes.
But forget the broader market for a second - what about the individual investor? What about you?
If you're a buy-and-holder, you could can grind out a 3%, 5%, maybe 10% gain - particularly in this Fed-supported, "irrationally exuberant" market.
But you need the markets to keep going up and up to get that kind of performance. And as we saw on Thursday, it's all too easy for stocks to fall out of bed at a time like this. In that situation, buy-and-hold investors have two choices - they can sell at any price they can get and take the loss, or, if they've set trailing stops like I always recommend, they can escape with most of their profits and all of their principal intact.
Options traders, on the other hand, can bank big, fast profits when stocks are going up and, as Andrew Keene will show you in a minute, when they come back down. They can leverage single-digit moves in stocks and, with options, take down triple-digit profits.
I'll show you how.
On June 2, First-Third Bancorp (NASDAQ: FITB) opened at $20.21. I'd been watching the charts. The signal came when the stock broke above the $20 level for two days, then retraced below, and then broke back above the same price. My technical analysis showed the stock was poised for a jump higher.
I sent out an alert: Call options on the stock for just $1.25, or 125 to control 100 shares. So, my readers could have bought a call option on the stock for just $1.25, or $125 for control over 100 shares.
My technical analysis proved to be right on the money; FITB opened the next day a couple cents higher, around $21.31.
On June 4, just two days after my Night Trader subscribers got my alert, FITB climbed to $22.72, 12% higher than just two days prior.
And that call option paid off; readers who were playing along could've sold the position for $1.90, a 52% profit in just about 48 hours.
That's profit potential you just can't get anymore from buy-and-hold investing. And, from a risk management perspective, it's safety you can't get their either. Options traders with the benefit of technical analysis can get out, take the money and run, before traditional investors get their sell order filled.
Andrew Keene, 1450 Club: Bearish Trades
The COVID-19 pandemic has absolutely flattened the airline industry; it's been one of the hardest hit.
But that gave my 1450 Club Members a shot at a 103% gain on American Airlines Group Inc. (NYSE: AAL).
It's all about uncertainty - in the markets, the economy, even day-to-day life. When uncertainty is running wild, the last thing you want to do is lock yourself into something long term. You want to make quick, short-term moves, and when you do that, you can get exposure to profits when stocks slide.
My proprietary S.C.A.N. system picked up an unusual signal in AAL shares, particularly the $11 put.
Put options give you the right, but not the obligation, to sell or short-sell the underlying stock or ETF at a predetermined strike price at or before the option expires. They increase in value as the asset underlying loses value.
In simpler terms, put options set you up to make money when the stock goes down, and AAL was entering a perfect setup - and a nice price, too, at just $0.35 per contract. That's 35 bucks to control 100 shares. See, a put allows you to profit while the stock goes down. It was the perfect setup at the ideal price - costing just $0.35 per contract.
I set a profit target of 100%, sent an alert to club Members, and - bang! Anyone who was following along got the chance to pocket 103% profits in less than 24 hours on stock that sank like a stone. I sent one of my "Net Worth Boosted" notes to ring the register.
D.R. Barton, Jr., The Dark Edge Project: Playing the Strongest Stocks
The past few months have been unprecedented - and, let's face it, scary - for everyone. The securities I trade have changed - they continue to do so - but my overall approach to trading hasn't: Stay the course, go with the "flow" of the market. Or, as they used to say back when I was starting out, "Don't fight the tape; the trend is your friend."
That said, I'm an optimistic guy by nature, and I've got to stay true to that. So, I find that most of the time, it's possible to stay bullish by zeroing in on the strongest stocks - whatever those might be - and trading those.
And the results of remaining bullish have been very lucrative...
Last week alone, with the help of hidden "dark pool" data to find the strongest stocks in the market, I gave Dark Edge Project subscribers the opportunity to cash in profits of...
- 100% on WORK
- 100% on TMUS
- 100% on KHC
- 100% on MU
And they didn't have to hold those positions for months or years like stock or bond investors would typically have to. In fact, those four gains were secured after as little as six trading days!
Playing the "up" stocks in a down market can be extremely rewarding; I'm here to tell you. You can learn how to subscribe and get all my Dark Edge Project research right here.
Tom Gentile, Weekly Cash Clock: Weekly Options
Since weekly options - "weeklies," as the pros call 'em - started trading, they've become the most widely traded of any options class. They average 25% of any option available on the S&P 500.
And there's a good reason for that. When trading weeklies, you can capture the kind of profits that'd take those buy-and-hold investors decades to make - in one week or less.
Weeklies offer expirations at market every Friday. Because of their short time frame, they're much more sensitive to the underlying security's price movement. In plain English, that means they have juicier profit potential.
Here's an example...
On June 8, 2020, video game company Activision Blizzard Inc. (NASDAQ: ATVI) opened around $68. And according to my channel collision indicator, the stock was set to rise from there...
The support lines of the short-term (green) and long-term (pink) channels had collided near support at $78, providing a strong pivot point for a bounce - and a fast double.
So, I recommended my Weekly Cash Clock readers purchase a weekly option on the stock for just $1.79, or $179 for control over 100 shares. And just two days later, ATVI had risen to trade around $73 - allowing readers to sell their weekly option for $3.58.
They could have turned a 7% gain in the stock into a 100% profit, doubling their money in just 48 hours thanks to weeklies.
And you could be next. I send readers a new weekly option recommendation every week! Click here to learn how you can receive the next one.
The Bottom Line
As you can see, options are a diverse, versatile moneymaking tool that can be used by just about anyone, at any skill level. Whether you've got an aggressive approach or a conservative one, whether you're after monthly income or big, short-term windfalls, there's something in options trading for everyone.
They're a fantastic way to play the current market conditions - where no one is sure whether the bulls will start running again or markets will retest March lows.
No matter your outlook, no matter where the market's going next, we think adding options to your moneymaking toolkit is a win-win.