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phil
July 2nd, 2016 at 9:26 am

Damn, I should charge much more for our morning newsletter:

Faithful Thursday – G20 Will Fix Everything, Right? | Phil's Stock World

We had a Live Trading Webinar yesterday where I demonstrated futures trading techniques and, in less than 30 minutes, we made $320 in profits (replay available here) – don't you wish school was always like that?  This morning we're long on Natural Gas (/NG) at the $1.79 mark and don't forget the Natural Gas ETF (UNG) is our Trade of the Year and I just did a PowerPoint on that at the NY Trader's Expo on Monday, which was essentially similar to our Trade of the Year notes we went over on Money Talk on Feb 10th.  

If all goes well, our Trade of the Year will make $40,500 on a $9,500 investment with the worst case being you own 5,000 shares of UNG at $8.95 ($44,750), so it's a 90% return on risk (if you believe the Natural Gas ETF can go to zero).  UNG is currently $6.51, so the trade is still makeable (we have an aggressive upside target) but this may be the last time as the first US export shipment of natural gas left the port yesterday. 

On Tuesday (because we pay attention and we knew this would happen), we added Cheniere Energy (LNG) as a Top Trade Alert and yesterday it blasted 10% higher but it's only just getting started (and of course we leveraged it with options) and you can hear the CEO discuss their operations here.  

Keep in mind this is our 2016 Trade of the Year(UNG, not LNG) and our Institutional Clients andPremium Members are already long on this trade and usually you do not have a chance to get our prices by the time we're into February but, on UNG – it's actually LOWER than where we got in and that's a huge potential opportunity but, of course, consult your financial adviser to make sure it's a good fit for your portfolio.  

The other trade we had lined up was Ford (F) and that stock was $11.40 at the time and now $12.08 but just yesterday we reiterated that trade (slightly modified) as another Top Trade Alert and you can see the original trade idea on the same link as the UNG trade, even if you are too cheap to pay $2 a day for a Membership.  Our logic is you can put your $750 to work on this trade and, next year, you can afford a Premium Membership!  

We've been doing Trades of the Year (always live on TV) since 2011 and our average return on cash is over 400% and the UNG trade tops out at 429% as it was a tough year to call.  Our 2015 Trade was Apple (AAPL) once again and that trade is still in progress as it was:

• Buy 20 AAPL Jan 2017 $90/120 bull call spreads for $13.50 ($27,000) 
• Sell 20 AAPL Jan 2017 $85 puts for $9.50 ($19,000)

That one had a net outlay of just $8,000 in cash and, if successful (AAPL over $120 by Jan), it will return $60,000 for a $52,000 profit (650% on cash).  Currently the spread is down at $10.85 ($21,700) but the short puts are now $6.10 ($12,200) so it's net $9,500 and still up $1,500 (18%) even though AAPL has been a real disappointment this year.  It should be noted that we got out of this trade last year, when AAPL hit $130 far ahead of schedule but now that trade is getting interesting again (we already added a 2018 variation for our Members).  

I cannot emphasize this point enough for you guys – you don't need to trade every day or every week or even every month – you just need to find a few really good trading opportunities and then, for the rest of the year, just make sure they are on track and add hedges when you get worried.  That's how you can make good profits AND enjoy the ride.  That's the point I'm trying to get across with our Trade of the Year ideas – 2015 was AAPL again and now UNG so we haven't missed one yet.  

If you make more money day-trading or moving in and out of dozens of stocks then great but, if not, consider making a few anchor trades that drive your portfolio – things you are very, very sure of – and then the rest can be just things you play with at 1/10th the stress level! 

I just made a call on LABU as our Trade of the 2nd Half of the Year and I've never done that before.  UNG is so far in the money that it's over but that's not why I made the call on LABU – I made the call on LABU because I feel more than 90% certain we can conservatively construct a trade that makes 9,500% on cash ($50 to $5,000) if all goes well AND I don't mind the downside at all (owning LABU for the long-term at net $23.05).  



Submitted on 2016/06/29 at 11:42 am

You're very welcome Jabob. 

All we want to do is stay even through uncertainty.  It's much easier to make money when we're certain and sit out the uncertain times rather than forcing guesses.

I do think LABU should be our trade of 2016.5.  It's mainly down because of VRX and fear of Hillary and, as I said, so many cool things being discovered.  In the OOP, we have the old contracts that are essentially a Sept $20/36 bull call spread (2.5 of them) with LABU at $27.50.  

As a new trade on LABU, I like selling the Dec $20 puts for $4.35 and buying the $25 ($7.50)/40 ($2.75) bull call spread for $4.75 so net 0.40 on the $15 spread that's $2.50 in the money to start.  Do 10 of those and your worst case is $20,000 worth of LABU vs maybe making $15,000 if IBB can punch up 15% after falling 30% since Dec, so a 50% recovery to $290 would do it.



After all, it's not like VRX is going much lower



Submitted on 2016/06/30 at 10:57 am (OOP) 

LABU – Because of the reverse-split, we are stuck with these but LABU is my Trade of the Year and a Half for 2016 so let's not miss the fun and we can sell 5 Dec $23 puts for $4.70 ($2,350) and buy 10 Dec $25 ($8.90)/30 ($6.50) bull call spreads for $2.40 ($2,400) and that's net $50 on $5,000 worth of spreads with a 9,500% upside potential gain on cash! 

Submitted on 2016/06/30 at 1:10 pm (STP)

10 LABU Dec $23 puts short for $4.70 ($4,750) and buy 25 Dec $25 ($8.90)/30 ($6.50) bull call spreads for $2.40 ($6,000). 

In the STP, we risk owning $23,000 of LABU and we spend $1,250 in cash with a potential return, at $30, of $12,500 (10x).  

In a trade like this, we don't think LABU (an ETF) is going to go BK so our "risk" isn't really $23,000 and we KNOW VRX is what killed them this year and it can't kill them again because it's dead so, unless we think the whole sector is a scam (it's priced like it is), then the actual risk is very low at this discount.  That means that, even in a $100K portfolio, I don't mind "risking" owning $23,000 worth of LABU because I very much doubt I'll lose more than $10,000 – even in a major disaster (and, of course, we can stop out).   Meanwhile, this trade can add 10% to our portfolio by December if LABU simply holds $30! 

So those are the factors that went into making our first ever Trade of the 2nd Half of the year.  I don't go looking for these things, we don't force great trades – they present themselves  if you let them.