I'll be the first to admit...
My style of trading isn't for everyone. Just for those with the desire to make money.
But it's a style―above all else―that's working... even in today's market. After all, it's the numbers that tell the tale. And our numbers speak volumes.
In fact, my team of traders and I have plowed through 4 different sectors, amassing huge gains in every one of them for our readers (many of whom had little to zero prior options trading experience).
But these profits are only getting started.
Because the next falling knife... the next shoe to drop... is in a sector no one's talking about (yet):
EDUCATION. No Sucker Left Behind.
By now you know that the government plans on using stimulus funds to "help retool education" in the U.S, according to Education Secretary Arne Duncan.
Of course that comes as good news.
But there's another side to this story...
You see, as President Obama urges an end to government subsidies for student loan providers, a number of education top stocks are just beginning to swan dive into falling knife patterns.
Putting the kabash on these subsidies, according to Duncan, could save the U.S. billions every year. The only roadblock is congressional approval... but this one looks imminent.
Here's an excerpt from a recent New York Times editorial...
"The [new administration's] budget rightly calls for phasing out the wasteful and all-too-corruptible portion of the student program that relies on private lenders. And it calls for expanding the less-expensive and more-efficient program that allows students to borrow directly from the federal government. That means doing away with the Federal Family Education Loan Program, under which private lenders receive unnecessary subsidies to make risk-free student loans that are guaranteed by taxpayers."
A number of top stocks are going to get battered by this.
Suffice it to say, my team and I already have 3-plus months of analysis into which companies will fall the hardest.
And we're targeting top 3 stocks, specifically. The one that's really got us wide eyed is getting ready to fall off the cliff...
I'm talking about a sector whose stocks market could drain dry. Freefall. Long investors who aren't paying attention will suffer large percentage losses.
Fortunately, you'll be on the other side of the trade, profiting every step of the way.
As I mentioned above, the Options Trading Pit track record speaks for itself. So far―in just seven months―we've gutted 4 sectors for profits... scoring both puts and calls with impeccable timing.
More on our education profit plays below, but first I want to show you how we got here...
Options Trading Pit Scorched Sector # 1: The Casino Industry
No surprises here. Vegas has become a ghost town... bumrushed by recession and dampened discretionary spending.
We knew we had a good bet against Vegas. One company's earnings were suffering, badly... and the same was true of its competitors.
The best stock was Wynn Resorts.
Suddenly, though, there was Jim Cramer on the tube, giving positive coverage to Wynn. The bulls lined up to buy right away.
Too bad they were home watching that night.
Fact is, Wynn was no longer a Vegas crown jewel. It was struggling just like every other Vegas casino... smarting from thin crowds and dampened discretionary spending. Its competitor MGM Mirage had its price targets slashed because of it.
We traded Wynn. A simple put option, triggered the morning of February 3, 2009.
And between a Susquehanna downgrade and MGM Mirage news, Wynn resorts fell about $8 to $10 a share from recent highs of $31. But we weren't done. My team and I looked for further downside as we went into earnings.
Ultimately, ratings and price targets were lowered on Wynn after Q4 earnings wildly missed analyst estimates with a loss of $1.49 per share vs. expectations for a 44 cent profit. They even warned that Vegas remains "difficult as visitors continue to spend less and some cancel trips."
Options Trading Pit members would bank gains of 22% and 30% in just 10 days.
Options Trading Pit Scorched Sector # 2: Residential Real Estate & Finance
It was February 2007 when my team and I called the top of the housing market, buying puts on the most-exposed companies wrapped up in the lending market. Soon after my readers got on board, signs of credit deterioration began showing up in the results of banks... as borrowers began falling behind in payments. (Foreclosures had already jumped 35% in December 2006.)
And for the fifth straight month more than 100,000 properties entered foreclosure. It wouldn't be long before mortgage resets and delinquencies piled up, leaving us where we are today.
My readers took home 4,500%-plus gains from housing's plight, including 44% and 48% gains in Fannie Mae and Freddie Mac, 60% on Masco Corporation, 70% on American Express put options in a day (plus 86% on the same put option in six days), and a whole slew of others.
Options Trading Pit Scorched Sector # 3: The U.S. Treasury
That's right―the U.S. Treasury... home of the trusted "flight to safety" T bond.
Not so fast.
Treasuries, you see, are today's biggest bubble. They may not have had the characteristics of the Internet, energy or housing bubbles, but the unbelievable rally in U.S. Treasury bonds was just as doomed as commodities and housing top stocks.
After all, a correction has long been overdue, after nervous investors drove the three-month Treasury bill rate to negative territory for the first time since 1929. All of this creating an over-inflated bubble set for failure.
Our trade went down like this: On January 5, with the Treasury bubble imploding, we bought put options on a skyrocketing Treasury trade, and call options on an Short Treasury trade.
And we were spot on...
Just 21 days into the position, we exited half of the call for 34% and half of the put for 38%... but we were careful not to exit the entire position. We chose to safely lock in these gains, as the bubble had only just begun to lose air.
OTP readers are still profiting from these trades. Plus we see further downside for the Treasuries, and will continue to pounce on every profit opportunity presented to us.
Options Trading Pit Scorched Sector # 4:Commercial Real Estate
Never catch a falling knife.
In what's mirroring the residential real estate meltdown, the commercial market's bottom is just now starting to drop out.
Delinquencies are beginning to rise. The meltdowns at some of the biggest commercial REITs could be another blow to a financial system teetering on the brink of disaster.
Trust me, the Fed's shaking nervously over the prospect of a commercial real estate sector deteriorating sharply in the months ahead. That's because a large number of commercial real estate mortgages will come due at a time when:
Banks likely will still be facing balance sheet constraints,
The ability to securitize commercial real estate mortgages may remain severely restricted, and
Vacancy rates in commercial properties could well be climbing.
Worse, vacancies in commercial properties are skyrocketing. Millions of square feet of commercial real estate is currently under construction, and ready to flood the market. And about $171 billion in loans backed by offices, shopping centers, hotels and other buildings are coming due this year, according to Union Tribune. Experts are fearful there may not be enough "credit capacity in the system to refinance them."
Things are bad... and they'll only get worse before we see sustainable improvement.
The Options Trading Pit play: We bought put options on a few commercial real estate companies (in falling knife patterns) that were doomed for failure.
Only 6 days into the two positions, we closed 50% positions on each of them for 30% and 38% gains.
But we like to let our readers do the talking. Here's what some recently richer readers like T.G. (who took a 49% gain in just a week) emailed me to say:
"Did great. 35 to 50% gain in a week or two - wonderful! Excellent job. Keep it up..." - D.G.
"I am a new subscriber and have traded two recommendations and both have 50% in less then 7 days. I hope you can keep this batting record up." - J.H.
"The service seems to be working better for me than a few others I have used. Keep up the good work." - K.H.
"I did 49%, 50% and 33% respectively (in a week). Good stuff!" - P.T.
"Many thanks for the advice! Bought PRURW at 4.74 sold for 7.01 = 47.9% gain! Similarly, bought EQRPD at 3.5 and sold for 4.70 = 34.3% gain...all in 8 days!" - G.B.
Education: My New Blockbuster Hit List
You see, despite the blind optimism on education top stocks you're already seeing on CNBC and the like, this sector's set for a proper plunging.
Now I'm not talking about the entire education sector, which now looks to be getting a shot in the arm via stimulus funding.
Rather, I'm referring to companies operating in the shadows of the student loan industry. Companies operating profitably only because of U.S. government subsidies. But not for long.
We're preparing a full analysis of the companies we're targeting for maximum gains... which we'll publish within the next 7 days.
But you can get a head start on these profits―before these companies get exposed―by becoming an Options Trading Pit member today.
By doing so, you'll be joining one of the world's fastest-growing independent trading advisories, the Options Trading Pit. Our readers aren't just protecting themselves from the market's seemingly endless bombshells... they're making money hand over fist.
At this count―only seven months from the launch of Options Trading Pit, we're sitting pretty.
42 wins out of 52 trades... 57% average gains... and an average hold time of just 10 days.
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