I'll come right out and say it: I've always dreaded and hated grocery shopping. Even during the best of times, before "social distancing" and "quarantine" were a way of life, I just couldn't stand it; I avoided it whenever I could.
Once the COVID-19 pandemic hit, and trips out - to mostly empty shelves - became a roll of the dice with my health... fuggetabouddit.
Looks like I'm in good company: Retail sales tanked more than 16% in April as the pandemic took hold. By May, they swung back and rebounded more than 17%, but even that was around 6% lower than May 2019.
Here's the thing, though... The massive, wholesale move to online shopping has led to forecasts of 18% growth in e-commerce.
When you think about it, that growth is no mystery. Except for filling up my tank (which I'm not doing often these days), I'm doing just about all my shopping online. Instacart, Amazon, eBay - name it, and I've probably bought there recently.
Hundreds of millions of other consumers have, too. It's created an extremely bullish setup for the entire e-commerce segment.
And I don't think that boom is over, not by a long shot. That means there's plenty of time left for "smart money" moves in this space...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Trade Your Way to Booming E-Commerce Profits
We're seeing coronavirus spread like wildfire in places that were spared during the late winter and spring. Seven U.S. states just recorded their highest COVID-19 hospitalizations since the pandemic exploded. And the Centers for Disease Control (CDC) is warning that infections could skyrocket once the summer is over.
First things first: Make sure you and yours are as safe as can be. Then, you'll be in a good spot to boost your bottom line with these picks.
Go ahead and trade the "leader of the pack." Hands down, Amazon.com Inc. (NASDAQ: AMZN) is the "biggest and baddest" dog in the e-commerce pack. With a market cap of $1.38 trillion, Amazon accounts for 38.7% of the entire e-commerce space. It's light years ahead of No. 2 player, Walmart Inc. (NYSE: WMT) - a distant second that rules just 5.3% of the segment.
Stats aside, all you have to do is look at the following stock chart to know the most valuable company in the United States is red-hot, jam-packed with profit potential.
Amazon dropped in sympathy with the rest of the market correction after COVID-19 burst on the scene, but investors sensed the mammoth opportunity there and came to their senses fast. It quickly gained footing and rose an impressive 71% over the next three months, setting a number of all-time highs in the process.
Now, the simplest thing would be to just buy the stock. But there's a catch. As I write this, AMZN is trading at $2,764 per share. One-hundred shares would cost you $276,400 - the price of a house in a huge chunk of the country.
If you've been reading me for a while, you'll know I never want to spend more than $500 on one trade. That's not just my preference; it's one of my top rules of trading.
That's why I always recommend flipping the stock instead of buying it. This lets you trade the stock for a lot less money without sacrificing your profit potential - and you can do it with options.
For example, you can buy an AMZN Aug. 21, 2020 $2,780 call for $149, or a total of $14,900 for control over 100 shares.
Still too pricey? The discounts don't end there. You can also buy a call spread.
By selling a higher strike call against your lower strike call, your total cost in the trade is reduced dramatically, as shown below:
This reduces your total investment to just $900 for control over 100 shares with a potential $1,100 profit - that's over 100%! And here's the best part: You only need AMZN to be at or above $2,800 on Aug. 21 to double your money. If, and I think it's very possible, AMZN continues its meteoric run, that'll happen way sooner.
You can trade the entire e-commerce segment, too. It's easy.
The ProShares Online Retail ETF (NYSE: ONLN) is an exchange-traded fund (ETF) that tracks the online retail sector. At $52, it's currently trading at a fraction of the price of Amazon.
As you can see in the chart below, it contains the biggest names in the industry. Unsurprisingly, AMZN is the heaviest-weighed stock in the index.
As a result, the chart of ONLN is virtually identical to that of Amazon.
Given the high correlation with Amazon, you could choose to buy ONLN instead... for a lot less money. Also, as an ETF, it's diversified across numerous ecommerce stocks, providing additional protection in the event that Amazon corrects for any reason.
There's yet another way to cash in on the e-commerce explosion. It's actually one of my favorite ways, but it's still kind of under the radar...
Not Many Investors Know About This Move
I'm talking about e-commerce "microcurrencies."
One of the things holding e-commerce back is payment processing - the "middleman." But operators can cut that middleman out by adopting microcurrencies.
Microcurrencies are basically tiny coins that help businesses do their jobs more efficiently.
These coins used to be more attuned to the needs of small businesses and investors. But that's all about to change; big corporations, like the ones inside the massive ecommerce industry, are getting ready to pour billions into this market.
It's all thanks to an event set to take place by July 30. With big institutions sinking so much money into microcurrency, demand is shooting sky-high.
That means now is the time to stake your claim and grab your share of the supply. You can click here to learn how to reserve your share of the profits...
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About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.