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The Smart Profits Report
The Smart Profits Report: Issue #100
Wednesday, April 07, 2004
The Smart Profits Report: Become Smarter than 98% of Investors…
By Karim Rahemtulla
Chairman, Mt. Vernon Research
Welcome to the first issue of The Smart Profits Report!
This world of options may be new to you, but give it a few weeks and it will be old hat. You’ll know more about options than 98% of the investing public. As a bonus you’ll also get inside information on investing in commodities and futures from some of the best minds in the business.
And you’ll be poised to profit. Options have very strong leverages, and that means you can make substantial gains very quickly. Not long ago, for instance, Alexander Green, Investment Director of The Oxford Club, recommended a “put” option on a fundamentally weak company, Sealed Air (SEE-VE), for $1.20 when the price of the stock was $33.50.
It didn’t take long for the company’s problems to come to light, and over the next two weeks the stock declined. The crowning event came when a legal ruling broadsided Sealed Air. The stock dropped 41% in one day.
We exited the position when the stock bellied at $18. We sold the “put” option for $8.80… nine days after the initial purchase… for a 633% profit.
How exactly did this work? You’ll find out as we begin our exploration of the power options can bring to your trading portfolio.
Smart Profits Strategies Let You Choose Your Risk Level
What the smartest options traders do is directly related to what we all do as regular stock investors. We look for stocks that go up… and we look for stocks that go down. You’ll learn how to spot the rising stars as well the emerging losers - and how to make money from both. You’ll learn how to buy and sell, take advantage of key trading plays, and end up in the top 2% of all investors when it comes to potential returns.
I have learned and now use options strategies that are not only deemed safe enough for an IRA account, but have proven more consistently profitable than you might imagine. Last year, one of those strategies (covered calls) was profitable 88% of the time.
For comparison, in an average year, only 40 to 60% of the stocks listed on U.S. exchanges post net gains.
Even a conservative investor can routinely make money in the options market. Sure, there was a time when I didn’t believe this myself. I used to have a negative view about options, especially after seeing “gamblers” fritter away their cash. But once I started harvesting regular gains from options, I changed my mind. And that’s because…
It Took a Smart Profits Strategy to Show Me the Money
Seven years ago I met a man - I’ll call him Herb - while researching a company in his industry. Herb was an accomplished investor. He sat me down in his office, along with his chief trader, and showed me how he was making money hand-over-fist in the markets… without undue risk.
I expected savvy stock investing and in-depth industry analysis from Herb. He was known to be a bright and successful guy. I was astounded when I learned how he and his chief trader REALLY earned their livings… by using their in-depth understanding of stocks to buy profitable options. Herb’s winning “investment strategies” were all options based.
It opened my eyes, and I decided to try a modified version of the strategy they showed me on my own. It proved so powerful that at one point I had more than 80% of my portfolio invested in the system - and I am not one to go overboard on any wild idea.
Over the past five years, I’ve had a winning percentage of close to 80%, and last year alone I managed to win 86% of the time.
In all, my trading goal - no matter what options play I’ll recommend - is simple: the lowest possible risk for regular, good returns. And in the coming letters, you’ll get all the nuts and bolts to know exactly how to take advantage of the market… to know if you’re timing badly… investing with the wrong (or no) strategy… not covering the spreads… or even if you have a questionable broker.
In all, I’ll show you how to avoid the pitfalls of options investing AND make extraordinary returns on your own. You’ll be in the top 2% of investors - the ones who are able to make options work for them.
Good trading,
Karim Rahemtulla
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Today’s Smart Profits Crib Sheet
- If you’re unsure about a “contract price,” a “short position,” “spread” or any other concept of options trading, just visit our Smart Profits Glossary.
- For more in-depth background on trading options, check out the book Understanding Options: Your Best Chance at 633% or More in Just Days. For more information or to order a copy call 888.384.8339 or 410.230.1200, or visit http://www.oxfordclub.com/Bookstore/Options.html
Related Articles:
- How to Use Puts and Calls: For Systematic Short-Term Profits
- Uncovered Options: A Win-Win Trade that “Puts” You In the “Bookie’s” Seat
- Covered Call Strategy: The “Big Daddy” of Options
