Trade Aptitude

Today’s Best S&P Futures Turning Points: Nothing tradeable today.  

Thursday’s results: This strategy is on hold. 

The World Index: (+100/-100) rises from -43 to -36 with the Western world the most Bearish.   

Catalysts: Import/Export Prices @ Fed’s Mester @ 8:30. UofM Consumer Sentiment @ 10:00. Fed’s Mester @ 13:15, Goolsbee @ 14:00.  

Quick Tip: Position Trading

If you’re too busy to trade short term, or simply don’t prefer that style, buy-and-hold is probably how you’re invested. You can potentially improve your results by treating those positions as trades, hence the name Position Trading. 

The stock market is an excellent source of position trade ideas. The selection is second to none. The returns over time can be incredible. The capital efficiency is not great though. You can do better by substituting options for stocks. 

I’m surprised by how many people I talk to don’t realize that you can buy options on stocks with long term expiration dates. One year, 18 months, two years. They’re called LEAPS (Long-Term Equity Anticipation Securities). You’ll give up the dividend benefit (if any) but you’ll get great leverage and capital utilization. 

Here's an example. My long-term viewpoint on Nvidia (NVDA) is bullish (big surprise!). I can buy 100 shares today at $130, investing $13,000. The LEAPs expiring one year from now will require a $2,800 investment. If the stock goes up $10, the stock buyer would earn a 7% return. The LEAP buyer would earn 17%+. If you’re experienced with options strategies you can also sell Call options against the long Leap position, just like you can if you owned the stock. 

Your challenge now becomes which stocks to buy for the long haul. You are unlikely to do any better than the candidates this “Smart Money” stock picker turns up almost daily. 

Trade Fearlessly,

Mike Siewruk

P.S.  Feel free to pass this along to your trading buddies. Share in the wealth!