Goldman Sachs, like them or not has the best research on the street, and they have published some very insightful studies and research pieces on options trading over the last 10 years. After reading literally thousands of research reports from Goldman Sachs on options, as well as working for a former Goldman Sachs Partner at a hedge fund, I have discovered some simple, yet rarely used techniques that could greatly improve your options trading.
1) Catalyst- The underlying theme of any research piece from Goldman Sachs on Equities or Options is that you must have a catalyst to invest. When you are trading options, especially when you are buying call options you not only have to know what the catalyst is, but also the exact date of when the catalyst will occur.
2) The Options Must be Cheap – Simply put the volatility of the stock’s options must be lower than its historical average or near its one year low.
3) Mean Reversion – Stocks that offer the most liquid options to trade are usually large cap stocks, (S&P 500 stocks) and these stocks are traded best using mean reversion. Meaning your odds are much higher for success when you buy a call option on a S&P 500 stock that is not only underperforming the S&P 500 but is also selling near its 52 week low.
Finding a call option that fits all of the above criteria is not easy, that is why good option trades are hard to find.
Right now though there is a stock, that has a huge catalyst occurring in September of this year, and the stock is not only underperforming the S&P 500 but is near its 52 week low as well. More importantly the call options on the stock are dirt cheap.
Today I can buy an in the money call option on this brand name multi-billion dollar market cap stock for just $2, and even better the option doesn’t expire until four months from now.
This brand name stock is also controlled by one of the world’s best billion dollar activist hedge funds (they own almost 6% of the company) and this billion dollar activist hedge fund is looking to replace the company’s board and ceo at their annual meeting in September, which is the catalyst that could reprice the stock 10% to 20% higher by October.
If this stock goes up 10% by October the call options could triple, if the stock goes up 20% by October the call options could return more than 500%
I know this fund well, my subscribers actually piggybacked one of this activist fund’s stock and options picks to a combined 200% gain last year.
This stocks is right at support and the call options will not stay this cheap for long, to get the name of the stock, the exact call option to buy, the name of the activist fund and the catalyst all you have to do is sign up for The Billionaires Portfolio and I will email you the options play immediately.
This Call Option which costs only $200 could not only pay for your subscription to The Billionaires Portfolio plus put hundreds of extra dollars in your pocket, but it gives you access to our portfolio of 20 stocks owned by the world’s best billionaire investors and hedge funds, all of which could double or triple by the end of the year.
Plus as a member to Billionairesportfolio.com you will get weekly updates on the economy and the stock market mailed to your inbox, by a top hedge fund trader and economist with a combined 30 plus years of experience in the hedge fund industry.
President of The Billionaires Portfolio