You've heard it before - markets can stay irrational longer than you can stay solvent. Typically you see these types of blow-off moves that defy your wildest rationales when speculation has become rampant and investors have become complacent.
In that there is opportunity ... before and after the blow-off.
Ok, you may be saying, "Yeah. Sure. Tell me something I don't know." To which I say, "Ok, here is something you don't know ...
"You don't know when that blow-off move is going to start ... or stop. Only in hindsight can you correctly identify a blow-off move. I am no different - I don't have a crystal ball."
There is a way, however, to approach these types of market moves. There is a way to keep your risk in check while giving yourself the exposure and the opportunity to earn big by catching a blow-off move.
That way is with options.
If you hold core positions in FX or futures or ETFs or stocks, it's not easy abandoning something you believe in even when it's going against you ... or when you think it might; it's not easy leaving profits exposed when your greedy conscience shouts for MORE.
I watched JR the other day handling one of his profitable long commodity positions, choosing to hold on through a correction, even when he correctly anticipated some significant downside ahead. As markets settle this week, it appears he made the right decision in holding.
But I see an opportunity in tricky situations like that ... and I want to bring you that opportunity ...
We run a handful of newsletters that serve the ends of the speculative spectrum: eitherhigh-risk/high-return or moderate-risk/moderate-return.
And now we want to fill in the gap; limited-risk and high-return; more good and less bad.
The way to do that is with options.
Options have a lot of moving parts. That means traders can get very creative. But many options strategies are unnecessarily complex, especially since there are very simple strategies that are very effective.
Those simply strategies are all I need.
Buying calls and puts - that's it. Rarely will I ever recommend spreads or straddles or strangles, so get those expectations out of your head right now. And I will never suggest writing options either. Is there something inherently wrong with these strategies? No - not if you have the time to develop them and balance them properly with the rest of your portfolio. As I see it, that's just not feasible in a newsletter format built solely around profit.
My goal is to help you earn high speculative returns. I do that by harnessing the basic power of options. Here is a quick comparison to help explain the limited-risk/high-returnmix I mentioned earlier:
High Return: Options vs. Stocks. Investing in stocks is straightforward - either you are making money or losing money on your shares. Investors like the simplicity. Options are similar in that way but different in that they offer extra buying power - leverage. In other words, options allow you to capture most of the underlying price move for a much smaller cost than buying the underlying shares. This means you can multiply your money far more quickly using options.
Limited Risk: Options vs. FX. The spot foreign exchange market is notorious for its leverage, i.e. you can control a large amount of currency with a very small amount of margin. But since leverage cuts both ways (you can lose as fast as you win), some traders are leery to jump in on a market that could quickly wipe them out in the absence of prudent money management techniques. Options offer leverage, but the risk with options is limited to the initial cost of the position - you cannot lose any more than you put down on the trade.*
If you're underwhelmed with stocks but intimidated by FX, I suggest options.