I have a confession to make…
I’ve told you that my trading profits have helped me buy my dream home on the ski slopes of Colorado, but that’s not completely true.
It’s actually my wife’s dream home.
Personally, I’d rather be spending my weekends on the beach with my colleagues down in South Florida. (But you know what they say: “happy wife, happy life!”)
Outside of skiing, there is one thing my wife and I truly enjoy doing out there on the slopes.
Especially from the bottom of a slope.
You have professionals who have the right equipment, who’ve trained for months, and who know the trails like the back of their hand. You can spot them way up at the top gliding left and right with ease, and I sit there wondering how they make it look so simple.
And then there’s the guy who shows up with no helmet, ragged equipment and completely out of control. You can see him at the top of the mountain too … flying down the hill, falling, rolling, chasing his skis, crawling, crying, and then repeating the entire cycle until he shows up at the bottom, covered in snow, looking for a hot cup of coffee … or worse, the ER.
Fact is, skiing is a risky sport IF you show up unprepared and ill-equipped.
But with the right preparation, the right equipment and a few days of training … you can be on your way to a safe, enjoyable experience.
I bring this up because, as I told you yesterday, my Peak Velocity strategy involves using a specific tool to make money in the markets.
That tool I use is options.
Many people I’ve talked with over the years seem to believe options are only for those with lots of money; that they are complicated; and that they are “risky.”
Maybe you are one of them.
But I can assure you, while all of these statements are true, none of these statements have to be true. (Just like skiing can be risky and dangerous, but it doesn’t have to be that way!)
Fact is, anyone can invest in options no matter their age, income or investment pedigree. And while some option strategies are indeed complicated, the ones we will be using are simple to use … no more complicated than buying and selling a stock like IBM.
And as far as risk … the risk can be mitigated if you have the right strategy and trading plan in place. Which, as you can imagine, is what I’ve been working on for the last 12 years as a full-time trader.
Just like skiing, using options can be perfectly safe if you take the right steps to protect yourself.
However, if you are new to options, or ever had a bad experience trading options, keep on reading…
Because over the next few minutes, I am going to show you how options in my Peak Velocity strategy can help you collect 100%, 200%, even 500% or more in 60 days or less…
And the best part is, we will be using a strategy four times safer than even investing in an S&P 500 Index fund.
Like I said earlier, many investors get skittish around options because of all the misinformation that’s out there, but the reality is … if you’ve ever purchased a house, you have probably used on option.
You see, when you buy a house, you put a little bit of money down to lock in a contract on the house. The contract states that you have the right to buy the house for a specific price at a specific time in the future.
For this example, let’s just say you sign a contract to buy a house for $100,000 in 60 days from now, and you give a “good faith” deposit of $2,000 to lock in that contract.
Now let’s say that a survey is completed, and it’s found that Albert Einstein once lived there. Now the value of the house is actually much higher than $100,000, as it is now a historic landmark.
Let’s say it is really worth $500,000.
So, that $2,000 deposit is now worth about $400,000.
(Some real estate experts do this all the time. They use “assignable contracts” … they would take that contract and then sell it for $400,000 … never even having to buy the house!)
On the other hand, let’s say the survey reveals that the house was actually built on a landfill. The value of the house is only $50,000. Thankfully, you never invested the full $100,000. You will only lose out on the $2,000 deposit.
That’s a benefit of “options.”
You stand to make tens of thousands, even hundreds of thousands in profit, while only risking $2,000.
So, a contract on a house gives you the right to buy a house for a specific price at a specific time in the future.
Options on stocks are really no different.
An option is a contract that gives you the right to buy (or sell) a company’s stock for a specific price at a specific time in the future.
(Read that again if you need to! It’s important!)
Let me give you an example … such as the Hasbro trade my in house beta-testers had the chance to get in on for 465% gains.
My strategy showed me that Hasbro was about to enter Peak Velocity on January 13. So, my beta testers could have bought 100 shares of Hasbro at $83 for a total investment of $8,300.
By February 9, Hasbro rallied to $97. So, if my beta testers bought the stock, they could have made a $1,400 gain (a 16.87% profit).
Here’s the math…
Not bad for holding the stock for about three weeks.
But, if they chose to buy the option like I recommended, they could have done 26 times better.
The options were selling at just $2.25 each.
So, they could have spent just $225 to control those 100 shares instead of spending $8,300. That’s risking $8,225 less in the trade.
Over the next 26 days, while the stock rose from $83 to $97, the value of the option went from $2.25 up to $12.71.
Instead of making a 16.87% gain, my beta testers had the chance to make a 464.89% gain!
Here’s the math…
Now, of course, my beta testers can invest as much as they would like.
Let’s say they still wanted to allocate about $8,300 to the trade. That would have allowed them to purchase 3,600 options.
Here’s the math.
So, while risking roughly the same amount of money…
Return Instead of a Mere $1,400…
A 26-Fold Increase!!!
Less risk, bigger reward … that’s a ratio I love, and I am sure you do too!
Now, of course, nothing in the market is guaranteed, and this is one of the top gains I uncovered, but the opportunity here is clear.
Options give you the opportunity to collect up to 10 times, 20 times, even close to 30 times the profits of simply buying stocks.
And this is only one advantage of options.
The other big advantage of options is that you can never lose more than your initial investment.
You see, most leveraged trading strategies like futures give you the same upside potential as options, but they have unlimited risk.
But with options, your risk is limited to how much you decide to invest.
And you still get UNLIMITED profit potential.
In fact, with my Peak Velocity strategy, I do everything in my power to make sure we limit losses. If a stock moves 20% against us, we stop out!
So, you get the potential to collect gains as high as 100%, 200%, even 400% or more … all in 60 days or less…
With limited risk.
You can’t get better odds than that.
Plus, options give us another powerful advantage in the markets … you can even make money in a market crash.
As you probably recall, there was a big market crash back in 2008.
A crash that sent the S&P 500 falling by over 40% and wiped out over $9 trillion in global wealth.
But here’s the thing…
My historical analysis shows that by the end of 2007, my Peak Velocity strategy would have already signaled that there was danger ahead, and by December 27, 2017, the system would have had me in full bear-market mode.
But here’s the best part: Since my strategy uses options, you wouldn’t have had to sit on the sidelines waiting for the crash to end.
Instead, I could have flipped my code so that we could have turned the crash into a remarkable profit opportunity…
On Tuesday, I will show you how, according to my historical analysis, you could have made 240% on Goldman Sachs, 357% on Morgan Stanley, 431% on Humana, 670% on NMP Resources and even a rare 1,269% on Citigroup.
In sum, instead of seeing up to 40% of your wealth wiped away in a little more than a year due to the crash, we could have flipped my code to make money as stocks went down.
Why Doesn’t Everybody Use Them?
Remember, with stocks, you only have to get one thing right … the direction of the stock.
With options, you have to get two things right — the direction of the stock and when the stock will go in that direction.
And that’s where most people fall short … the “WHEN”!
Like I mentioned a few days ago, most investors are looking for “value” stocks, which is fine, but it’s notoriously hard to time when a value stock is going to cause the stock PRICE to rise. You don’t want to use options with value stocks, and that’s the mistake most people make.
But my Peak Velocity strategy focuses on momentum stocks.
So, we only buy stocks that are already going up and that are entering Peak Velocity.
This means we already know which way the stock is headed — it’s heading up — and we already know when — it’s going up right now.
But while all these benefits are great, if my time as a nuclear missile architect has taught me anything, it’s that there’s never enough fail-safes in a critical system.
Which is why I made sure that my Peak Velocity strategy scored high on the Sharpe ratio and the Z-score. I mentioned this a few days ago, but here is a quick recap:
- The Z-score was 99.999999999744%. That means there is a 99.99% probability that this strategy is correctly identifying Peak Velocity trades … stocks that are going up.
- The annualized Sharpe ratio was 1.45. This is incredible, considering that the S&P 500 is 0.35 and Warren Buffett’s Berkshire Hathaway was 0.74 from 2007 to 2011 … this tells me that the Peak Velocity strategy is four times safer than a buy-and-hold strategy, and four times safer than if you had bought shares of Berkshire Hathaway.
On Tuesday, at 1 p.m., I will be revealing everything you need to know about my code and how you can take full advantage of my Peak Velocity trading strategy.
All my colleagues … James Davidson, Ted Bauman, Paul Mampilly, Jeff L. Yastine and Chad Shoop … agree that this strategy has one of the best risk/reward ratios they’ve ever seen.
Make sure you set aside one hour of time to watch the presentation in full.
All you have to do is go to www.PeakVelocityWebinar about 10 minutes before the presentation starts, and at the top of the hour, I will jump into the details!
In the meantime, if you haven’t read all of my articles yet, it’s important that you do so. I linked to them below:
- The Secret to Fast Money
- Profits, “Z-Scores” and Sharpe Ratios
- Make Big Money By Keeping It Simple
- The Biggest Mistake Traders Make
- The Anatomy of a Great Trader
Jeff Yastine and I decided to do an interview with our beta testers so that they can tell you in person how successful my Peak Velocity strategy has been for them.
Look to get the details tomorrow!
Michael J. Carr, CMT
Founder of the Peak Velocity Strategy