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Dear Red Alert Reader,
Most investors tend to think small when they trade. What is this company's earnings report going to look like? Is that stock going to rally this week? Aren't these stocks due for a correction?
There's nothing wrong with trading this way, but there are many more opportunities out there. And beginners and pros alike can make even more money trading options by looking at broader trends.
That's exactly what we're going to show you today because one trend is fueling the best options trade on Robinhood now.
You see, one of the big trends options traders are overlooking is all the spending governments are doing to support their economies thanks to the pandemic. But even that is not thinking big enough. Governments have been printing and spending money like crazy since the last crisis - the financial crisis of 2008. Just look at the Federal Reserve. Its balance sheet was over $4 trillion before the pandemic started. Now it's over $7 trillion thanks to the massive financial response.
So much money chasing the same goods and services usually brings the value of the dollar down. But since everyone was doing it, the dollar actually gained relative to other currencies.
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That now seems to be coming to an end.
The U.S. dollar has been declining steadily since March. It's no wonder that investors are starting to pile into safe-haven investments, like gold and silver. And Money Morning Quantitative Specialist Chris Johnson is tapping into this larger trend with his latest options trade.
But just because Chris' research has uncovered a more advanced trend doesn't mean the options trade has to be complicated. This option is easy to buy on free platforms like Robinhood and WeBull.
Here's how using a bit of research can help you tap into even more profitable options trades, including the exact trade you can make today.
The Best Options to Buy on Robinhood Right Now
Chris has been positioning his portfolio to take advantage of the more defensive posture now apparent in the market, from owning gold mining stocks to hedging against the U.S. dollar. But now he is looking at silver as the next big mover.
Silver, much like gold, is a precious metal and a store of value in turbulent times. However, it also has many industrial uses, making its demand profile even stronger, especially as the economy recovers from the effects of the coronavirus. And its lower price per ounce as compared to gold puts it in reach of every investor.
Combine that with the Fed's promise to keep the liquidity firehoses flowing at full capacity, and that puts silver in the spotlight.
Investors can easily own silver through the iShares Silver Trust ETF (NYSEArca: SLV) and participate in this bullish trend. But there's an even better way to profit.
Over the past few weeks, silver has soared in price, breaking out to the upside through the $18 per share level that served as "resistance" over the past year. Resistance is simply a price at which traders believe the stock has hit its short-term high, so they begin selling. Since the breakout just last week, SLV jumped to $22.72, but rather than look at this as being "too high," look at it in context.
Whereas gold is fast approaching its record high set in 2011, a key resistance level, silver is actually still trading at about half its 2011 peak levels. That means it is only getting started in its bull market, and it could get an even bigger push as traders move away from gold.
To take advantage of this potential move, Chris recommends buying to open the SLV Jan. 15, 2021 $20 calls (SLV210115C00020000). They're trading for $4.10 an option right now, but Chris recommends waiting for a dip below $3.25. Of course, if you're confident in this move or are willing to sacrifice a bit of upside, you can go ahead and buy today.
SLV is already up 35% in the last month, and we don't see it slowing down anytime soon, especially with Congress potentially spending another trillion dollars this month on stimulus. If SLV reaches $33 (where it traded in 2012) by the end of September, you could be looking at a 275% gain from Chris' recommended price.
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