With the Dow finally eclipsing 20,000, there’s certainly cause for celebration on Wall Street.
However, it’s undeniable that the current bull market rally is a bit long in the tooth after eight years of seemingly nonstop gains.
Valuations are stretched in the equity market, with the forward price-to-earnings ratio of the S&P 500 as a whole sitting above 18. And while bonds traditionally have offered security, they also offer a measly rate of return even after the latest Fed rate increase — just 2.5% on 10-year U.S. Treasury notes as of this writing.
In an environment like this, when stocks and bonds seem a bit overvalued and risky, you may not think you have a lot of options.
But options, in fact, are the best thing at your disposal right now.
That’s because investing in options — particularly longer-term options known as LEAPS — gives you unrivaled flexibility along with tremendous profit potential. After all, a good options contract is tremendously cost-efficient and allows you to make a huge amount of money with minimal up-front investment.
And when used correctly, you can protect yourself; it’s much easier to unwind a well-intentioned options trade than to sell a poor performing stock into a downdraft.
At 24/7 Trader, we’ve hand-picked 12 high-octane options trades that have tremendous risk-to-reward potential right now. For those who just want to own common shares, there are plenty of trades on this list that will deliver 50% or 100% if these ideas pan out…
… but for options traders, the long-term options on these companies could see 2x, 3x or even 4x returns in some cases!
That’s the power of options, particularly savvy trades that are priced right and under the radar of most investors who are just trading common stocks right now.
So what options trades have the most potential? Take a look for yourself:
Trade #1 – WisdomTree (WETF) Jan 2018 $15 Calls
WisdomTree Investments, Inc. (NASDAQ:WETF) is one of the largest exchange-traded fund companies that specializes in dollar-hedged ETFs. As a result, it is highly correlated to the U.S. dollar.
The U.S. dollar should continue to be strong in 2017 thanks to nationalist rhetoric out of both the White House and Congress, as well as another interest rate hike in December. Thus, WisdomTree is one the best ways to trade a rising dollar.
Institutional ownership also is strong in this stock, with hedge fund legend Michael Steinhardt owning almost 10% of WETF.
WisdomTree was as high as $21 a little over a year ago, and the stock could trade back to that price by the end of 2017. This would mean more than a double for the stock and an even bigger win for the Jan 2018 $15 calls.
Trade #2 – Credit Suisse (CS) Jan 2018 $20 Calls
Under the pro-business policies of a Republican Congress and President Donald Trump, a popular theme for 2017 is bank stocks. But don’t overlook European financials, which are very cheap right now.
One of the best international fund managers, David Herro of Harris Associates, believes that Credit Suisse Group AG (NYSE:CS) should trade at 1.5 times book value. That would be $30 a share, almost a double from its current share price! It’s all about the company restructuring to transform itself into more of a wealth management company rather than an investment bank, and you can be sure that easier regulations in the U.S. will allow this European bank to grow here as well as overseas.
So why buy options instead of common shares? Because a double for the stock would mean a triple or more for the Jan 2018 $20 calls, that’s why.
Trade #3 – Deutsche Bank (DB) Jan 2019 $30 Calls
Yes, that’s right — these are calls for January 2019, two years from now. And here’s why:
As of this writing, Deutsche Bank AG (NYSE:DB) has a tangible book value of around $40 a share. This means investors have two years for DB to turn itself around to just trade back to its tangible book value of $40!
This is a top trade idea of many hedge fund managers, including Mark Yusko of Morgan Creek Capital. Like Credit Suisse, Deutsche Bank has been deeply discounted thanks to an overreaction to the Brexit vote and trouble in the eurozone.
This is why LEAPS are such a powerful way to invest. Nowhere else can you get that kind of buying power.
If this turnaround happens, DB stock would roughly double… but the $30 calls would be a grand slam to quadruple your money!
That’s the power of trading options instead of just trading stocks.
Trade #4 – SPDR Oil & Gas ETF (XOP) Jan 2018 $50 Calls
The best trades are often the most simple, and that’s exactly what you have with these LEAPS on the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA:XOP).
Two of the best energy hedge fund managers in the world, Andy Hall and Pierre Andurand, have both predicted oil will trade to $80 after OPEC agreed to cut production. Many investors have subsequently piled into the United States Oil Fund LP ETF (NYSEARCA:USO) as a result, but USO does not track the price of crude oil well because it is tied to the futures market and not directly to today’s price per barrel.
XOP actually holds oil and gas production companies, and correlates extremely well to the price of oil. If oil trades back to $75 to $80, XOP should be worth at least $60 or almost a 50% return from its current share price.
Of course, if that happens, the Jan 2018 $50 calls would be a home run, doubling the potential return to supercharge gains for savvy options investors.
Again, this is proof positive how trading options can unlock bigger profits than just trading stocks alone.
Trade #5 – Twitter (TWTR) Jan 2018 $20 Calls
Many investors believe Twitter Inc (NYSE:TWTR) will be acquired. However, why suffer the volatility in common shares, particularly when a buyout is not imminent?
Japan’s SoftBank Group (OTCMKTS:SFTBF) and its billionaire founder Masayoshi Son have pledged to invest $50 billion is U.S. companies, and is the likeliest buyer. Moreover, Softbank has a war chest of $100 billion in cash in through a joint venture investment fund with Saudi Arabia. That means it could easily afford to buy Twitter for a 50%-plus premium, or at least $26 a share.
That may sound like a tall order, but Twitter and its shareholders would likely only sell for $26 a share given all the acquisition chatter that has come to naught at lower prices — and, of course, since that was its initial IPO price and an important psychological number.
The second largest shareholder of Twitter is Saudi Prince Al-Waleed bin Talal, a partner and friend of Masayoshi Son, so you can be sure this is all connected behind the scenes.
Playing the options is a great way to get in on that action without the risk of common TWTR stock. Anyone who has been stuck long in a troublesome stock knows how hard it can be to exit common shares, so trading options shrewdly in a pick like Twitter allows you to to reduce your risk.
Trade #6 – Perrigo (PRGO) Jan 2018 $100 Calls
Perrigo Company (NYSE:PRGO) is a manufacturer of “private label” and store-branded over-the-counter medications. And while a much different business than Twitter, the situation is quite similar.
One of the top activist hedge funds in the world, Starboard Value, is trying to force Perrigo to sell itself or one its units to generate more shareholder value. Specifically, Starboard is pushing to sell the Tysabri arm of PRGO which could fetch up to $3 billion in cash.
If this happens, the stock could pop as much as 40% to 50%. Beyond that, Perrigo would fill back its gap at $120 to $125 a share and result in a big bullish trend that catches investors’ attention.
That would result in a huge return for the Jan 2018 $100 calls, far above the gains for common shares.
Trade #7 – FireEye (FEYE) Jan 2018 $15 Calls
Amid constant hacking concerns for corporate America and the U.S. government, cybersecurity will be a hot topic for some time. And hot topics always lead to big M&A targets, particularly among private equity firms.
Private equity is sitting on record cash right now, and FireEye Inc (NASDAQ:FEYE) has constantly been mentioned by the big players in the space. FireEye could easily be worth at least $30 a share when you bake in a buyout premium, which would be a more than 100% return from its current share price.
Furthermore, famed short seller Andrew Left believes cybersecurity stocks will be a top sector in 2017 — proving that the bears could get squeezed out big-time.
This would mean be a nice win for the stock, and for the the Jan 2018 $15 calls on FEYE it would be a homerun.
Trade #8 – Fitbit (FIT) Jan 2018 $10 Calls
Once again, with private equity funds sitting on record cash and unusual bullish options activity, Fitbit Inc (NYSE:FIT) is a top M&A candidate.
With almost $5 in cash per share, zero debt and a ridiculously low enterprise-value-to-sales ratio of 0.42, (or 42 cents per every $1 of revenue), Fitbit could easily be worth around 1x EV/sales … or $17 a share.
That’s more than 100% higher than its current share price! That would be a powerful gain for FIT stock, and an even bigger home run for the Jan 2018 $10 calls on this consumer tech play.
Keep in mind, of course, that Fitbit’s IPO priced at $20 a share. That means this deal may not happen quickly, so it may give you more peace of mind to hold the longer-dated options instead of sitting in common shares while you wait. As with Twitter, a good options strategy can reduce your risk here.
Trade #9 – Chesapeake Energy (CHK) Jan 2018 $9 Calls
With cold weather on the way, natural gas prices are set to explode this winter. And Chesapeake Energy Corporation (NYSE:CHK) is simply the cheapest way to play a spike in natural gas.
Moreover, famed value investor Mason Hawkins of Southeastern Asset Management owns more than 10% of Chesapeake. If natural gas trades back to $4.50 — a price many top energy analysts are predicting — then CHK would be worth $14 a share. After all, that’s the price Chesapeake traded the last time natural gas was $4.50.
If CHK reaches $14, that would be a doubler for common shareholders … but an even bigger bounty for the CHK Jan 2018 $9 calls.
Once again, this shows a good options trade can supercharge your returns in a way that common stock simply can’t compete with.
Trade #10 – GoPro (GPRO) Jan 2018 $10 Calls
Like some of the other names on this list, GoPro Inc (NASDAQ:GPRO) is an attractive takeover candidate to both private equity and technology companies.
But GPRO has more than just acquisition hopes. GoPro has seen unusual bullish options activity by the “smart money,” which could be a sign that shares can power higher across 2017 even if a takeover is not imminent.
At its current share price, GoPro has just a $1.3 billion market cap, zero debt and almost $2 in cash per share along with valuable intellectual property and technology. Therefore, even at a takeover premium of $2 billion, or $14 a share, GoPro still would be cheap.
A takeover at $14 would be a nice 40% gain or so in common shares … but a triple for the Jan 2018 $10 calls!
Trade #11 – Long CF Industries (CF) Jan 2018 $40 Calls
Agriculture is a huge theme in 2017 for low-risk investors, as price inflation has started to creep up for some crops and as investors look for stable companies that haven’t been overbought in the recent rally.
Agricultural chemicals giant CF Industries Holdings (NYSE:CF) fits the bill with a recession-proof business, since farmers will always need to increase their yields and consumers will always eat regardless of the macro environment.
CF is a top agricultural stock that one top hedge fund manager — John Burbank of Passport Capital — said could be worth at least $60 a share. That would be almost a double from its current share price, but if that happens in a year, the Jan 2018 $40 calls would have 3x or 4x upside for options traders!
Trade #12 – Long General Motors (GM) Jan 2018 $40 Calls
General Motors Company (NYSE:GM) is one of the best value stocks around, with a 4% dividend yield and forward price-to-earnings ratio of 6. But it also could be one of the fastest-moving momentum stocks of 2017!
Top billionaire value investor David Einhorn of Greenlight Capital recently said, “we have dramatically increased our GM position” in anticipation of huge gains this year.
And more importantly, General Motors has $11 per share, or almost a third of its market capitalization, in cash to buy back its stock and weather any short-term problems as you wait for those gains.
GM is worth at least $50 to $55 a share by next year based on buying pressure and share repurchases, which would mean a huge return for shareholders and a possible triple in GM’s Jan 2018 $40 calls.
These 12 Trades Are Only the Beginning!
As you can see in many of these examples, using options the right way can turn a good investing strategy into an amazing one, doubling or even tripling your potential gain!
But for many investors, making the leap from stocks to options can be intimidating … so they simply miss out on profits that are rightfully theirs.
That’s where Ken Trester and Power Options Weekly come in.
With Ken’s decades of experience, accessible advice and regular updates, you can be sure that…
- You’ll know the best price to execute the best options plays — and NEVER overpay!
- You’ll know the expected price volatility for all trades — a key to option pricing!
- You’ll know your probability of profiting — and know in ADVANCE!
- You’ll know your strike price for exiting each trade — in ADVANCE!
You can take a big step forward with the trades above, but to truly make a quantum leap in your investing career you need to deploy options ALL THE TIME, and with pricing controls to ensure you maximize your potential. This will supercharge your returns, limit your risk and open new opportunities that other investing strategies simply cannot offer.
Best of all, as a new subscriber, you’ll have full access to a special options training guide, “Simple Strategies for Big Profits with Options.” That way, you’ll have all the information you need to get started earning big profits and understanding the right and wrong way to trade
5 Best Trades Out of 255 Million Options
To get the latest options opportunity, you need to act NOW. That’s because Ken personally reviews and selects the trades on Thursday …
… then applies his own proprietary filter before issuing his 5 Power Trades every Friday morning during pre-market hours.
Only the Top 5 make it through — out of 255 million actively traded options!
Of course, with such a selective screen, these trades don’t last forever. So getting the very latest info is crucial.
Just as important — his Surveillance System sets targets for getting out of your positions. We always want to hit home runs; however, the key to making money in options trading is to protect your profits.
When we have profits on the board, the risk/reward picture is fully evaluated by the Power Options Weekly team of experts and editors to determine whether we should capture those gains for instant gratification or whether it’s better to wait until a target is hit. When a trade has significant profits of 50% or higher, all the factors are reviewed to decide if it’s the ideal time to take your profits off the table. You’ll never go wrong by taking profits early. So, we’ve got you covered there too.
And if that’s not enough? As a special “thank you” for your interest, Ken is offering an exclusive 4-for-1 offer — giving you 15 Power Options Weekly trades on the house.
Starting this coming Friday, Ken will send you his 5 strongest, most profit-packed Power Options Buys every week. Straight to your inbox.
If history repeats, you should be on your way to converting your trades into $1,210 … $1,640 … or even $9,570 of Power Options Weekly profits.
Good deal? You bet it is!
