Stock options provide unlimited opportunities for tailored profits as well as hedges against downturns.
And in last Thursday’s issue of Traders Daily Direction, we outlined a defensive hedge for your own stock portfolio using an efficient and lower cost option strategy that you can put into your toolbox for when it might be needed.
We’ve also provided numerous strategies for using options to leverage up at lower capital costs for buying into surge stocks.
To get the full rundown on how to use options for trading gains with less capital and less risk, please download and read our special report: How to 10X Your Stock Surge Gains.
This special report works really well to get you prepped to use options for this week’s surge stocks on our Watch List.
For the full Watch List for this week, click here.
The Wolf of Washington
Now, today, we’re presenting an interesting master class on options trading from someone that you might not think of as a stock option trading guru.
But she sure does a lot of option trading – often with the appearance of guidance from true insider knowledge of companies and the markets.
I call her the Wolf of Washington.
Source: Twitter @unusual_whales
You see, Nancy Pelosi is more than just the Speaker of the US House of Representatives.
She is also a heck of a trader.
A Master of the Markets
In fact, Pelosi and her husband have been making millions with stock options.
The two of them have been amassing a fortune exceeding one hundred million dollars largely via their privately held company, Financial Leasing Services.
What’s interesting to me is not that a politician is making a killing in the market… That’s nothing new.
Government has always been a great source of wealth. The US government of course is the single largest component of the US economy as measured by the nation’s GDP (gross domestic product).
The hand of government is always there – either as a helping hand or one ready to swat down a company or an industry.
And as the Speaker of the US House of Representatives, Nancy Pelosi is number two in line for the US presidency.
This puts her in one of the driver’s seats for the US government and the biggest part of the US economy.
Options for Profits
What’s interesting is the unique trading strategy the couple is using.
Pelosi is required to disclose her financial activity as a member of the US House of Representatives.
Take a look at her recent trades…
Source: fd.house.gov
Amazon (AMZN) call options with a strike price of $3,000.
Not only are they deep in the money, but they don’t expire for 13 months.
She did the same thing with NVIDIA (NVDA) and Apple (AAPL).
AAPL was trading for $127. Pelosi bought the $100 calls. Again, 13 months from expiration.
I have to applaud the creativity of these trades.
Instead of betting on short-term moves, Pelosi is essentially just using options as a way to get free leverage.
Take the AAPL trade, for example.
As of Monday’s close, AAPL stock was $148.99.
The June 17th 2022 $100 calls Pelosi owns are going for $51.35.
That’s only about $2.00 above their intrinsic value.
In other words, they’re paying just $2.00 per share to get 3X leverage for a full year.
But it gets better…
To get the biggest gain possible, they appear to time their option buys when the S&P 500 Volatility Index (VIX) is low.
As I’ve discussed before, options are cheaper when volatility is low.
This is the VIX from May to June.
By waiting until the VIX was low, they paid even less for their option “leverage.”
If leverage scares you, it shouldn’t. (Most people buy houses with 20% down. That’s 5:1 leverage.)
2X leverage on a market-leading stock is no riskier.
Plus, you don’t have to pay property tax and insurance on shares of Alphabet (GOOGL).
There is no “right” way to invest. There are hundreds of ways to skin the cat.
I like waiting for breakouts in small stocks and holding for the shortest time possible.
Pelosi prefers 2X-3X leverage on mega-cap tech stocks and staying in all year.
Your approach may be something different altogether.
But as long as you are controlling risk and growing your assets, you can’t go wrong.
So again, to learn more about using this sort of strategy and more – download and read our special report: How to 10X Your Stock Surge Gains.
One Last Thing
Thank you for reading and subscribing to Traders Daily Direction. We hope that you’ve been cashing in on so many of the surging stocks that we’ve been presenting each and every week in the Watch List.
All of the stocks that we present are vetted by our proprietary Stock Surge Indicator (SSI) system.
To get the full rundown on how this works, check out our special report: The Magic of the Stock Surge Indicator.
We have taken the SSI system to the next level with our new Stealth Trades research service.
Stealth Trades provides an expanded collection of stocks to buy that are surging. It also provides stock option alternatives for more efficient trades with a bit of leverage for bigger gains in shorter order.
In addition, we provide a live coaching session each and every Monday morning that details the markets and each recommended stock and option trade.
If you’ve made a dime from the stocks inside Traders Daily Direction, you owe it to yourself to try Stealth Trades.
For a special offer and further information on Stealth Trades, click here.
And if you have any questions, please call our team at 888-483-5161.
