The Sports “Drought” Is Giving Us a Once-in-a-Lifetime Profit Setup Right Now

Back in January, as last season's NFL playoffs were underway, sports teams at the college and pro levels all over the United States were looking forward to projected 2020 revenues in excess of $75 billion.

Of course, that was two months before the novel coronavirus pandemic exploded and put a hold on nearly everything, nearly everywhere.

Overseas, the 2020 Tokyo Olympics have been postponed. That's unprecedented in peacetime; it hasn't happened since the 1940 Tokyo games were rescheduled then ultimately cancelled. Japanese government and corporations are out at least ¥630 billion ($5.9 billion) in revenue.

Here in the United States, the Big 10 and PAC-12 conferences in the NCAA have cancelled their 2020 football seasons; it's probably just a matter of time before other conferences follow suit.

Major League Baseball is playing a half-as-long season in empty stadiums, with crowd noise piped in and cardboard cutouts of fans in the stands.

The NBA has even gone so far as to create its own "bubble," as in players and staff are in strict quarantine with no outside contact for the season.

Even the NFL, which is the biggest league by revenue in the United States (bringing in an average of $13 billion a year), hasn't announced any official plans for a season that, by my watch, should be well into preseason games and ready to start the official season in just a week or two from today.

The projections that looked encouraging in January 2020 have basically evaporated. Profits that were almost guaranteed, by fans buying jerseys, $10 hot dogs, and $20 beers, are nowhere in sight.

So this is unprecedented, alright. Certainly in my lifetime, probably yours, too - if you're younger than 102.

There's something else unprecedented about it, as well: the potential for gains.

History has shown that when enough people want something they're not able to easily get, truly explosive profits follow the second folks can finally get it.

And when savvy investors like us take advantage of such an opportunity at the right time, we can be sure to grab a hefty share of those profits...

The Biggest Pent-Up Demand Scenario in a Century

Personally, I'd like nothing more than to be sitting in Yankee Stadium, watching Judge hit a walk-off homer right now.

And you know? I really don't think I'm the only one.

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A sports "drought" this severe and widespread means people all over the place are, basically, desperate for sports.

American fans have taken to betting on the Turkish Basketball Super League, for Pete's sake. They're betting on the NFL 2020 season start date instead of actual football games.

According to what one online sportsbook told The New York Times, the "Yankees and Dodgers are already 4-1 to win the 2020 World Series; no other team is less than 10-1."

There are tons of other "hints," but that right there has me completely convinced that, yes, there's some serious pent-up demand here.

And just like any other pent-up demand scenario, once the coronavirus is contained - likely sometime in early 2021 - there will be a deafening whooshing sound as sports come back and money is poured back into this multibillion-dollar industry.

Stocks and sectors across the entire market will benefit from it, too.

I'm talking about media companies like Walt Disney Co. (NYSE: DIS) - it owns the ESPN network. I'm talking about AT&T Inc. (NYSE: T), which owns sports broadcaster Warner Media. Both are cheap now, and they should skyrocket pretty much the second sports go back to a regular schedule.

Sports betting company Draftkings Inc. (NASDAQ: DKNG) will be another beneficiary as the amount of content to bet on returns. Plus, brand awareness and sales will increase for apparel companies like Under Armour Inc. (NYSE: UAA).

In fact, Under Armour is the perfect place to start...

Get Ready to Shoot a Rebound Now

This Baltimore-based apparel company hit all-time highs back on Sept. 17, 2015, when the stock traded for $52.05. More recently, at the bottom of the March 2020 crash, UAA dropped to a low of $7.15 - a price it hadn't traded at since 2010.

Take a look at the stock's projection below.

Once UAA breaks above the brown line - its 200-day moving average - traders can expect it to return to prior highs as shown by the graph above.

If you're looking for a long-term play, then purchasing the stock outright would be a great move.

The same could be said about most of the other stocks I already mentioned. With the exception of Draftkings, as it's currently off all 52-week highs.

Buying UAA shares now and holding them until signs of normality return to sports packs a lot of return potential.

So the upside in these stocks is pretty incredible, but there's more...

"Downside" Profits Could Be Even Bigger with Trading

There's even more money to be made as these stocks head lower - a very real possibility, given what's probably going to be the impending cancellation of NCAA sports.

Buying puts is the way to go here.

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A put option gives you the right to sell the underlying stock for a set price, and the option increases in value should the stock drop.

Here are some simple rules to remember when you get into these trades:

  • Buy out-of-the-money (OTM) puts, two strikes below the current stock price.
  • Use options with a 60- to 90-day expiration window.

For example, if you expected, say, Disney's stock to take a dip, you could buy a DIS Oct. 16, 2020 $125 put for $3.15 (or $315 for 100 contracts). Should DIS shares drop in the fall, this option will increase in value.

This option will expire on Oct. 16, 2020, so be ready to exit by then.

If you have a longer time horizon for the drop... simply buy more time. You can trade DIS stock with long-term equity anticipation securities (LEAPS) that expire as late as June 2022.

Put options profit if the underlying stock goes down - giving you unlimited profit to the downside. If the stock goes up, the risk is limited to the cost of the option.

The bottom line is, folks who see this unique pent-up demand opportunity for what it is, and get in position for short- and long-term profits, will have plenty of gains on their hands.

Speaking of which...

I've Got More to Show You

I'd like to share the secret behind some of my biggest trade recommendations to date.

In this next video, I use a special tool to collect four separate paydays in under a minute from mega-cap companies like Apple, Netflix, Facebook, and even Amazon.

It's easy to learn how to use - all it takes is a few mouse clicks, and you could potentially be hundreds, even thousands richer in weeks. Check this out here...

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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.

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