Market Report: Special Tricks for Prospering in a Volatile Market
When you have an extremely volatile market, you need a strategy specifically designed to make you money no matter which direction the markets move.
That’s the topic of today’s message.
When the Dow is trading up 100 points on Tuesday… and then down 150 points on Wednesday (which is exactly what happened yesterday and today), you need a strategy that shows you exactly how to position yourself for up and down markets. That way, you’re making money no matter what happens.
The way to accomplish this is using a series of carefully selected call and put options. In my view, owning a series of calls and puts is, by far, the smartest way to trade. I consider it this “big secret” for prospering in volatile market conditions, yet only 1 in 100 investors truly understands how to do it.
As a prime example of this strategy in action, take my recent trade on Apple Computer (AAPL:NASDAQ):
On August 30, I alerted my Bottarelli Research members that Apple had established a strong support point right at its 50-day moving average (noted by the blue line in the chart above). This was an indication that Apple would quickly move higher, so I recommended the Apple September 140 Calls (APV IH) for $4.60. Three days later, Apple moved up $10 and these calls gained 85%!
And here’s the beautiful thing… When you apply this simultaneous call/put strategy, you don’t need to rely on a bull market to make money. For example, take my recent trade on Bear Sterns Companies (BSC:NYSE):
On July 24, I recommended the BSC August 130 Puts (BSC TF) for $5.12. Two days later, BSC had fallen over $8 and these puts gained an amazing 58.20%!
So, as you can see, the combination of upside calls and downside puts helps you make money no matter which direction the market is moving.
Looking ahead, I’ve listed three “strong” and three “weak” sectors below.
Strong Sectors:
Major Aerospace & Defense
Nasdaq-listed Technology
Major Integrated Oil & Gas
Weak Sectors:
Money Center Banks & Financials
Manufactured Housing
Major Retail
Using a combination of one- to three-month calls on stocks within the strong sectors and one- to three-month puts on the stocks within the weak sectors could help you prosper in a volatile market.
Bryan
