I hope everyone had a fabulous, restful holiday... and I hope everyone's ready to start 2022 by ringing the register.
We're going to take a slightly different tack today in the stocks we're looking at.
Normally, we look under the radar for big profits, but sometimes there are big profits to be had by looking at stocks that are in the news, but making unexpected trades no one else is looking at.
The two stocks I'm thinking of are a biotech with a breakthrough Alzheimer's drug and a U.S. semiconductor firm.
Both of these stocks have been in the news lately, and lots of eyeballs are watching them, but I'm betting very few of those folks are making these moves - besides, once I've laid out the tickers and trades I'll fill you in on details on a profit opportunity that's a little more "just between us"...
The Smart Way to Double Your Stake with Two "Hot" Stocks
Last week, a story broke in The Korea Economic Daily that Samsung Group is in discussions to purchase Biogen Inc. (NASDAQ: BIIB) for more than $42 billion.
The news sent BIIB shares soaring 12.52% in Wednesday's trading. By Thursday morning, though, shares dropped more than 6% after Samsung Biologics called a media report that it was about to buy the U.S. company "not true."
The thing is, it doesn't really matter what's happening between Biogen and Samsung. Maybe Samsung is buying Biogen and the denial is a coy smokescreen. Maybe the story is "not true." Either way, it doesn't matter.
What does matter is that the recent volatility is creating an interesting trade setup.
After pulling back as much as 52.98% from June 7, 2021, to Dec. 3, 2021, shares of BIIB looked like they were finally forming a base between $230 and $240 before Wednesday's news.
If additional news stories lend credibility to Wednesday's Samsung acquisition rumor, shares of BIIB will likely jump back up to $260 or more.
If that doesn't happen, well, the stock was already forming a convincing base, and we could see a move higher, anyway. Biogen's new Aduhelm (aducanumab) Alzheimer's treatment is controversial, for reasons we won't get into here, but it has real "blockbuster" potential that hasn't been priced in yet.
So here's what to do: If shares of BIIB pull back to $230 by Jan. 14, 2022, I like buying the BIIB April 14, 2022 $230 call and the BIIB April 14, 2022 $235 call - a call spread - for $2.25 or less. Plan on exiting the BIIB call spread for a 100% profit or if shares of Biogen close below $220.
Next up, I'm watching Micron Technology Inc. (MU). On Thursday morning, shares of the Boise, Idaho-based semiconductor manufacturer lost nearly 3% in early trading after the company warned a day earlier that strict COVID-19 curbs in the Chinese city of Xi'an could disrupt its chip manufacturing unit in the area.
In a statement, the company said it is working with local government officials to identify solutions that will enable it to minimize the impact of the situation, and that it is tapping its global supply chain, "including our subcontractor partners, to help service our customers for these DRAM products."
At the end of the day, disruptions in the global supply chain have meant demand for the company's DRAM chips is very high. Any slowdown in production will likely only increase demand.
And as they taught us in Capitalism 101, higher demand usually means higher prices.
In the long run, that's good news for Micron, and it's creating a good trade set up.
If shares of MU pull back to $91 by Jan. 14, 2022, I like buying another call spread, of MU April 14, 2022 $92.5 calls and MU April 14, 2022 $95 calls for $1.10 or less. Plan on exiting the trade for a 100% profit or of shares of MU close below $87.35.
That's what you need to do. Now that those trades are ready, let's get back under the radar...
You Won't Read About This Investment in the Times
Everyone knows about IPOs. They're everywhere - Rivian, Airbnb, and Robinhood all made huge waves in the news. But what's far, far less commonly known is an investment I like to call "pre-IPO rights." They're not stocks - the profit potential can be far greater - and they can cost much less than shares, too, often just a buck or so. Right now, I'm looking at pre-IPO rights in a cryptocurrency outfit. These rights are going for around $0.70 at the moment, but I've seen forecasts that show them potentially hitting $7 over the next year. That'd be $100 in, $1,000 out. I've got details for you here...
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.