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.
Did you realize that Warren Buffett returned 81% a year from 1980 to 2003?
Buffett accomplished this amazing feat by using a strategy called “takeover speculation.” He bet big, and with leverage, on stocks he thought had a very high likelihood of being acquired.
The average person on the street thinks Warren Buffett is a safe value investor who holds stocks forever. This is only partially true. The other half of his portfolio, and the part of his strategy that has juiced the biggest returns for him, was takeover speculation, where he used significant leverage and options to produce 80+% annualized for 24-years.
Buffett said in a New York Times interview that he made the greatest returns ever in his portfolio employing this takeover speculation strategy.
But Buffett ran into a problem. He became too big. He had to stop using this strategy because the assets he was managing, which in 2003 reached $50 billion, were too big to successfully execute it.
He said in a BusinessWeek article that he guaranteed he could make at least 50% a year if he were managing smaller assets. And he can back it up. We have documented proof from Berkshire Hathaway letters, and from an academic paper on Buffett, which showed that he produced an 81% annualized return over a 24-year stretch.
For those who are interested in what 81% annualized compounds to over 24-years, here are some scenarios:
1) A $1,000 account compounded at 81% for 24-years would turn into $1 billion.
2) A $10,000 account compounded at 81% for 24-years would turn into $15.2 billion.
3) A $20,000 account compounded at 81% for 24-years would turn into $30.2 billion.
Interestingly enough, Buffett’s strategy of takeover speculation is exactly the strategy we use at the Billionairesportfolio.com, and trust me it works.
We had two stocks in our portfolio acquired for a 65% and 82% premium in one day, and better yet we own a handful of stocks in our portfolio that we think could easily double on a a takeover. Takeover speculation works great in a sideways stock market like today, and its an absolute return strategy that does not depend on the stock market to make money.
Do not miss out on your chance to own stocks that could double overnight on a takeover, sign up today for The Billionaires Portfolio.
Will Meade
President of The Billionaires Portfolio
Biotech stock Therapeutics MD (TXMD) was up 32.5% today. Friedman Billings Ramsey raised their price target for the stock to an incredible $34.
TXMD now trades at $5.47 — the FBR price target would mean a 600% return.
TXMD is owned by the billion dollar biotech hedge fund RA Capital Management. RA is the best in the business of biotech investing, and owns more than 6% of TXMD.
RA is one of our favorite hedge funds to piggyback. Its a billion dollar biotech focused hedge fund run by Peter Kolchinsky, a PHD from Harvard. The fund has one of the best track records in the world, averaging 41% a year since 2002.
Our subscribers are currently up more than 160% on a biotech stock that we followed RA Capital Management into.
Learn more about RA Capital, their portfolio and our Billionaires Portfolio, where we piggyback the best ideas from the biggest, most influential investors.
Carl Icahn is 80 years old and still puts every penny of his money in the stock market.
Icahn who has the greatest track record in the history of investing destroying even Warren Buffett has averaged 27% a year for 52 years. To put this in perspective if you would have invested $1000 dollars with Carl Icahn 52 years ago you would be worth almost $230 million dollars today!
If you would have invested $10,000 dollars with Carl Icahn 52 years ago you would now be worth more $2.3 Billion Dollars!
But you,like most investors, are not worth a rounding error on that sum of money.
Why?
Because you invest like the herd. You panic and sell stocks on any bad news. You buy stocks when they have already broken out or are at new highs.
You diversify or deworsify by putting your money in negative return assets like gold and treasuries.
Your only 30,40,50 even 60 years old and you invest like the world is going to end, like its 2008 again, don’t you?
Yet Icahn who is almost 80 and has a lot more to lose than you, invests almost 100% of his $25 billion dollar plus net worth in stocks. Icahn doesn’t worry about 2008. Heck he lost 34% of his money in 2008. But he never stopped buying stocks, and 6 years later he is up more than 300% …he quadrupled his net worth. Did You?
No, you listened to herd-like advice from unsophisticated-uneducated brokers-advisors who charge you high fees for 6% annual returns, that’s 21 percentage points less than what 80 year old Icahn returns every year.
You also sell stocks too quickly, and you never let your profits run. Icahn holds stocks for two or three years even when he is down 50% or more on one of his positions.
You never buy dips or buy more of a stock when it goes down. Do you? Icahn does, and he is worth $25 billion.
So stop investing like the herd, invest like a billionaire, heck start investing like Icahn.
We follow every single move Icahn makes. Icahn has already made my subscribers rich from piggybacking his stock and options trades. So what are you waiting for! Sign up today
Billionairesportfolio.com is the only website that allows investors to piggyback the trades of the world greatest billionaire investors.
EveryWare Global (EVRY) popped more than 22% today after the company reached a deal with its labor workers that will help the company reduce its future operating costs.
Most importantly, the company last week saved itself from bankruptcy by reaching an agreement with its lenders that will allow it to stay in business for at least the remainder of the year.
Two months ago the stock traded for $.67 cents. It is now up nearly 500% from that level.
EVRY is owned by the billionaire activist hedge fund The Clinton Group. The Clinton Group, one of the top small cap activist hedge funds in the world, owns almost 16% of the company. We are very familiar with The Clinton Group at BillionairesPortfolio.com. We followed them into one of their biggest positions last year. That gave us a 60% return in less than 4 months.
Make no mistake, the influence of the Clinton Group is a driving factor behind the positive financial development in this stock. And that has led to it’s sharp recovery. For shareholders, this is the benefit of having a powerful shareholder on your side, constantly working to create value in a stock.
To learn more about co-investing with, and piggybacking the best ideas of, the world’s top billionaire investors join us.
The billionaire investor best known for breaking the Bank of England is excerpting his influence again. George Soros, the father of central bank activism is ramping up some shareholder activism — against Penn Virginia (PVA). The Soros family office, Soros Fund Management, disclosed a nearly 10% stake in PVA in its March filing. Last week they wrote a letter to PVA management complaining that they are destroying shareholder value, and they are pushing the company to sell itself. Soros Fund Management is the largest shareholder and they are shaking things up at PVA.
The stock is up more than 13% since Wednesday of last week.
We have 20 stocks in our Billionaire’s Portfolio that are all under the influence of powerful investors — all of which are pushing to unlock value for us. Join us!
Carl Icahn disclosed a 9.4% stake in Family Dollars stores on June 6. The stock gapped up more than 16% on the news. Today Icahn is beginning to rattle the cage at FDO. He’s demanding a sale of the company to drive shareholder value. We’ve followed Icahn on four stocks in our premium service, The Billionaires Portfolio. Icahn’s continued investing success can be attributed to one important talent: He’s a change-maker.
When we follow him, we can be assured that he has a plan for change and that he will fight to make it happen. Plus, when we follow Icahn, we get an added bonus that few, if any, other big time investors summon: Because of his great success, his campaigns tend to attract other influential investors to join in – stacking the odds even more favorably for shareholders.
Here’s a look at the Icahn effect on FDO thus far:
We have 20 stocks in our Billionaire’s Portfolio that are all have the potential to be taken out for huge premiums. Join us!
Yesterday, Idenix Pharmaceuticals (IDIX) was acquired by Merck for a 229% premium. That’s one of the biggest one day moves ever for a stock listed on the New York Stock Exchange. Billionaire and top hedge fund manager, Seth Klarman of the Baupost Group, made over $1 billion on his investment in Idenix, in one day.
How did he do it?
Klarman owned 35.4% of Idenix (almost 54 million shares). He paid around $300 million for his original stake, which is now worth $1.3 billion.
It’s very common in the hedge fund world for investors like Klarman to take such large positions in a single company. They spend a lot of money on talent and research, sometimes tens of millions of dollars, in an effort to uncover the investment opportunities that offer the potential to make multiples on their investment. When they find good candidates, like Idenix, they tend to bet big.
We have 20 stocks in our Billionaire’s Portfolio that are all have the potential to be taken out for huge premiums. Join us!
We were featured in Barron’s over the weekend! Excerpts below, with a link to the piece.
“The trick is to focus on the activist subset, says William Meade, co-founder of Billionaire’s Portfolio (billionairesportfolio.com). It usually takes big fund managers months to build positions and a year or more for their activist proposals to play out. Billionaire’s Portfolio, launched in August 2012, follows along, spreading a hypothetical $20,000 across 20 stocks held by the likes of Carl Icahn of Icahn Enterprises and Starwood Value’s Jeffrey Smith.
Meade follows about two dozen whales whom he describes as “true activists with a track record of taking a 5% position in a company and influencing change.” While many institutional purchases don’t show up on an SEC form for months, trades by 5% owners have to be reported within 10 business days. That usually bumps up share prices, but then they settle down.
For $297 a quarter, Meade alerts Billionaire’s Portfolio subscribers to entry and exit points through e-mail and on a private blog that details the rationale for every recommendation. Meade and aptly named co-founder Bryan Rich mirror those trades a day later in a $100,000 real portfolio they share. They buy on dips so subscribers realize about the same average share cost as activists. Positions adjust when activists do.
Meade only buys Russell 2000 issues he considers “undervalued.” But that assessment has less to do with price/earnings ratios and future cash flows than the — often, overtly stated — plans of activists to “unlock value.” “I only buy when there is an event or an influential investor positioned to reprice the stock,” he explains.”
“Meade’s backtesting shows that, whether their initiatives succeed or fail, his activists usually make money — a 31% annualized return over the past 12-years compared to the S&P 500’s 6.1%.”
Carl Icahn, the world’s greatest investor, is on pace to become the world’s richest man. And he has had a lot to say about Apple’s stock in the past week.
On Wednesday, he tweeted the following: “As we said at conference yesterday, we continue to believe $AAPL remains meaningfully undervalued. Many analysts fail to understand company” and “agree completely with $AAPL’s increased buyback and extremely pleased with results. Believe we’ll also be happy when we see new products.”
Remember, I am the man that called the bottom in Apple in the summer of 2013. I was profiled on CNN/Money saying Apple had bottomed around $400. I was the first and only person in the investment community to become bullish on Apple during this time.
I am more bullish than ever on Apple now. The 7-to-1 stock split will drop the cost of the stock to $80 from $547. That means every parent will now be able buy their kids Apple stock as a birthday gift, every small investor who couldn’t afford Apple at $550, will now be able to buy 5 shares of Apple at $80. This is guaranteed built in demand that will come into Apple’s stock when it splits in June of this year.
How do you profit from it? Well, I am quite confident that Apple will go up 20% or more by June of this year. And there is a trade that I am eyeing on Apple which has the potential to make 500% or more if I am right. It’s a low cost trade, one that will only cost you $690 but has the potential to make $3000 or more.
Remember, the world’s greatest investor, Carl Icahn, a man who has averaged 27.6% a year for 52-years (the greatest single track record of any investor, including old man Buffett) has also told you Apple is extremely undervalued. Icahn is so good, if you would have given him $10,000 when he first started his fund 52 years-ago you would now have an amazing $2.5 billion. So even if you don’t listen to me, listen to Icahn.
To get the specifics of this incredible “Apple Stock-Split Trade” all you have to do is subscribe today to our premium research service, The Billionaires Portfolio.
The Billionaires Portfolio is chock full of what hedge funds call “asymmetrical trades.” These are trades that have limited downside but huge upside potential. All of the stocks in our Billionaires Portfolio are not just undervalued, but they all have an influential billionaire hedge fund that is working with the company to create instant shareholder value and positive returns for the stock.
Will Meade
President of The Billionaires Portfolio
