By MONEY MORNING STAFF REPORTS, Money Morning • July 16, 2020
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Dear Red Alert Reader,
Has this ever happened to you? You liked a stock and just knew it was going up. You bought some call options to make an even bigger payday on your pick. Then the stock surges, just as predicted. And you barely made any money.
That's a routine problem many options traders face, especially those taking advantage of fee-free platforms like Robinhood. If you're just getting your feet wet, it's tempting to treat options trading just like stock trading.
But there's more to making money on options than finding a stock you like and buying any old calls.
That's why we're here to help.
The coronavirus pandemic, recession, and resulting whipsaw market movements have made 2020 a trader's paradise. There are opportunities left and right.
But being right on the direction of a stock is half the battle. You need to know which options to buy too to maximize your gains. Options are going to be more expensive if other traders are thinking the same thing as you. If you have to overpay for an option contract, then your upside is limited by your initial price.
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One way around this is to use credit spreads to lower your cost and risk.
Another way is to find options other traders haven't keyed into yet.
That's where Money Morning Special Contributor Andrew Keene comes in. His proprietary research tools help him uncover the exact options contracts the smart money on Wall Street are buying before the public catches on.
That lets his subscribers get in on fairly priced options before they pop higher, making quick paydays in the process.
And he's revealing one such trade to Money Morning readers today.
It seems to be an unlikely target because the stock has been falling since 2015. Even the market's February-March plunge and recovery are mere blips on its bearish chart.
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But all that may be about to change. The company is turning the coronavirus pandemic into an opportunity, and investors will reap the rewards from this strategy in a matter of months.
Here's your opportunity to make a simple options trade – one easy enough to do on Robinhood or WeBull – at a dirt-cheap price, all before it explodes higher.
The Best Options Trade on Robinhood Today
The company is Walgreens Boots Alliance Inc. (NYSE: WBA), and it is best known for its drug store chain.
That's positioned it perfectly to be a key cog in the coronavirus pandemic response by offering drive-through COVID-19 testing. That might seem like a knee-jerk response to the virus, but it's actually part of the company's long-term strategy to be a healthcare provider.
Walgreens just announced last week that it would be pairing with primary care provider VillageMD to open 500 to 700 clinics in Walgreens stores across the country over the next five years.
Walgreens and CVS Health Corp. (NYSE: CVS) have been in a race to become the "one-stop shop" for treatment centers – specifically for patients with hard-to-manage chronic conditions. And, as has been the case in many industries, Amazon.com Inc. (NASDAQ: AMZN) has gotten a toe hold here, too.
But with Walgreens' latest move, it looks to have moved into first place. And it's giving it a leg up in what could be a huge potential profit opportunity.
However, there is still a fair amount of risk in implementing this solution, especially from the competitive point of view. That is why the best strategy is to "get some skin in the game" but not risk too much money to do it. For this, we are looking at an inexpensive call option that is out of the money.
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The stock is currently trading near $40.30 per share, but if Andrew is right, it could jump to $50 within two or three months. Don't forget that Walgreen Boots traded at $62.25 last November and above $53 before the market started its decline in February.
That's why the WBA Sept. 18, 2020 $52.50 call, currently priced at $0.12, could be a big winner.
The options contract, controlling 100 shares of the stock, would cost just $12. That's about two cups of designer coffee from your favorite barista.
But this contract could be worth $48 if WBA rises to $50 a share by September. That's a 480% gain.
Now, you may ask why the strike price of the option is above Andrew's target price for the stock. The answer is that we are keeping the cost of the trade very low and plan to cash it in before the option expires.
While other traders are chasing gains in overhyped – and overpriced – options trades, you're getting in early on this under-the-radar trade.
And if you want more trades from Andrew, check this out…
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Investors in today's economic climate need every advantage they can get, and I don't think I've ever seen a strategy more powerful than this.
Click here for the full story and the next three plays he has his eye on.
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