Date:
Mon, January 28, 2008 11:20:51 AMFrom:
Schaeffer's Investment Research
Subject:
The secret behind the number 24
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GO AHEAD AND ASKSo what’s the significance behind the number "24"? It has nothing to do with Kiefer Sutherland, covert government agencies or counterterrorism. It’s about where the CBOE Volatility Index, or VIX, is hovering today. As you might know, the VIX measures the expectation of volatility in the market. A higher number corresponds with more volatility - and more fear - among investors. That’s why some call the VIX "the Fear Index." Today, the VIX is currently about double what it was a year ago. You see, after YEARS of being compressed and generally hovering at levels between 10 and 14, the VIX finally started climbing in the summer of 2007. And overall, it’s stayed much higher ever since. In fact, lately it’s been hovering around 24 or even higher. And that’s a good thing for options traders. A really good thing. INCREASED VOLATILITY = LARGER PROFITSWhy? Because increased volatility means equity prices fluctuate more, which can lead to bigger profits. As a recent quote in Bloomberg News put it, "The options market thrives on fear...When there’s more fear, there’s more opportunity." It’s one of the reasons that we experienced the busiest week EVER for options trading in the second week of January, with 93.8 million contracts changing hands, according to the Options Clearing Corporation. It’s also the reason big investors like Wells Fargo & Co. nearly doubled their use of options for clients last year, according to Bloomberg News.
Our Leverage Series subscribers have taken advantage of the increased market volatility to bring in these 4 triple-digit winners since the clock struck midnight on December 31:
...On Top of These 5 Big Winners in December:
...After These 2 Big Winners in November:
HOW TO PUT YOUR PORTFOLIO IN THE MONEY TODAYNow I won’t kid you. We’ve had some losing trades along the way. That’s unavoidable in trading – don’t believe anyone who tells you otherwise. But our Leverage Series subscribers have made these gains using a trading strategy that minimizes their risk – a lot. You see, the beauty of my Leverage Series is that all of our trade recommendations are conservative, in-the-money options. You win with in-the-money options by closing big winning trades and keeping losing trades small. This strategy works, and it works well. And it’s a really good compromise for the options trader who is not too aggressive, but wants to retain the advantages of the lower risk and theoretically unlimited profit potential of options. In fact, using this strategy, Leverage Series has delivered a return of +44.6% in the last 12 months. Compare that to the -1.0% return of the S&P 500 Index in the same time frame, and you can see for yourself why Leverage Series has become the portfolio tool of choice for so many traders. Keep reading...in a minute I’ll walk you through a couple of recent trades so you can see just how subscribers are profiting from this amazing strategy. Act now to take advantage of market volatility today!Save $600 and get 12 months of trading ABSOLUTELY FREE! Pay only $195 and get started today. HOW WE CAN HELP YOU PROFIT IN 2008Leverage Series subscribers get the benefit of my proprietary trading method called Expectational Analysis®, or the X-Factor®. My traders and I use this method to search out profitable opportunities where investor sentiment runs counter to fundamental and technical trends. Using this method, we have developed proprietary filters and indicators that help us uncover great contrarian investment opportunities. Like our +223.1% GAIN on Terra Industries, where we saw strong technicals but also strong pessimism toward the stock. It was a contrarian investment opportunity that "fertilized" the portfolios of many of our Leverage Series subscribers: A LOOK AT TERRATerra Industries ranks among the leading North American producers of nitrogen fertilizers and as the top U.S. producer of methanol. Through seven nitrogen plants, the company produces ammonia, urea, urea ammonium nitrate solution, and ammonium nitrate. THE SECTOR WAS STRONG – AND SO WAS THE STOCK’S PERFORMANCEAt the time of our recommendation, the agricultural chemicals sector had been one of the strongest sectors in the equities market in 2007. And TRA had far outperformed the overall market in 2007, gaining more than 225% while the S&P 500 Index (SPX) had gained just over 2.1% in the same time frame. When we made our recommendation, TRA had pulled back and consolidated near its 20-day moving average, which had provided support during the year’s rally numerous times. BUT INVESTORS WERE PESSIMISTICDespite the stock’s strong price action, short interest was more than 19% of the stock’s float at the time of our recommendation. Furthermore, we had seen an increase in short interest of nearly 13% in the prior month. We believed that a short-covering rally could push the shares even higher. And even as the stock was trading near all-time highs, we saw increases in bearish option activity. When we recommended the equity to subscribers, there were significantly more puts traded on the stock than calls, and this ratio had steadily increased since the previous month. Meanwhile, 3 of the 5 analysts following the stock rated it a "hold." We knew that any upgrades and/or additional coverage could help the stock continue to reach new highs. WE TOLD SUBSCRIBERS TO BUYThis combination of irrational pessimism in the face of positive performance is just what a contrarian looks for. So on December 18, we recommended that our Leverage Series subscribers buy the Terra Industries January 2008 40 call. At the time, the stock was sitting at $38.75. By January 2, Terra Industries stock had climbed to around $47. We recommended that our Leverage Series subscribers close out their positions for +223.1% GAINS. THE RESULT: +223.1% GAINS IN JUST 15 DAYSIn the same time frame, the stock made +21.3% gains. Now a +21.3% gain in 15 days isn’t bad. But the options gained more than 10 TIMES MORE than the stock gained. IT TAKES A LOT OF FERTILIZER FOR YOUR PORTFOLIO TO GROW FASTJust to make the difference in profits even clearer, let’s do a little math. If you'd invested $2,280 to buy 10 options contracts (controlling 100 shares) on Terra Industries back in December, you would have pocketed a tidy $5,087 in profits. If you had spent $3,875 to purchase 100 shares of the stock, you’d be looking at around $825 in profits. That’s quite a difference. Which one would you rather have: +223.1% gains or +21.3% gains? $5,087 in profits or $825 in profits? I know which I’d choose.
WHEN THE PROFITS HAVE TO BE THERE - FASTThere are a lot of great benefits to trading options. But one of the best is that you can easily make money when stocks are going down rather than up. Particularly when you see the contrarian set-up of strong investor optimism in the face of weak technical performance. That’s just what happened with our put option trade on FedEx. SHARE PRICES WERE WEAKIn the fall of 2007, we noted that shares of the transportation giant had been very weak, losing more than 13% in the prior year. On November 16, FDX gapped down after the company guided lower for the quarter and fiscal year thanks to higher fuel costs. BUT INVESTORS WERE OPTIMISTICEven after the poor price action and weakening fundamental picture, we still saw signs of unreasonable optimism towards FDX, suggesting the shares could continue to weaken. In fact, the option speculators were very optimistic, trading far more calls than puts on the stock. And there wasn’t a single "sell" rating out of the 16 analysts covering the shares, leaving the door wide open for downgrades down the road. So, on December 11, we told subscribers to buy the FedEx January 2008 110 put. The stock was trading at 99.75. WE DELIVERED GAINS OF +115.2% - IN JUST 30 DAYS!On January 10, the stock plunged, and we closed out the final portion of our FedEx put for average gains of 115.2% - in just 30 days! COMPARE THE EXPENSESNow we’ve already talked about how you can get much bigger gains on an option trade versus a stock trade. The bottom line is that the cost of an option trade is much, much less compared to the cost of a stock trade. Look at it this way: To buy 2 FedEx January 110 puts (giving you control of 200 shares) would’ve cost you $1,077 x 2 or $2,154. To buy 200 shares of FedEx stock would’ve cost you $99.75 x 200 = $19,950, or 9 times more. NOW COMPARE THE GAINSAnd, as I already mentioned, the gains from an option trade can be much higher than the gains (or losses) from a stock trade. Take a look at the math on this trade: If you had bought 200 shares of FedEx stock, your shares would have lost -9.9%. Instead of the $19,950 you started with, you’d now have about $17,976. Ouch. If you bought 2 FedEx January 110 puts, your options increased +115.2%. So, instead of the $2,154 you started with, you’d have more than doubled your investment and netted $2,480 in profits. THE ADVANTAGES OF BUYING A PUTBuying a put is a secret weapon that options traders use to profit in a down market. A put offers a unique way to trade volatility successfully. The 3 Advantages of Buying a Put:
Click here to join Leverage Series now and take advantage
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WE WALK YOU THROUGH THE TRADING PROCESSOnce we identify a trading opportunity, we send you an email with detailed instructions on how to enter the trade. We also tell you why you should buy. Because we know you’re an intelligent trader, we don’t expect you to blindly follow our trading recommendations. We’ll follow up that same day with another email giving you all the reasoning and analysis behind the trade. You can see for yourself why we feel the trade has potential! Then, we tell you when to sell. When it’s time to get out, you’ll receive detailed close-out instructions. It’s that easy. Plus, when you join Leverage Series by midnight TOMORROW, we’ll give you 12 FREE MONTHS of hot in-the-money option trades. Just join for one year for only $195 (a savings of $600 off the regular price) and get your second year absolutely free! Join Leverage Series today. |
TRUST MY 30 YEARS OF INVESTING EXPERTISE
With my Leverage Series, your subscription is backed by my amazing reputation for profiting well from market timing.
- Since 1984, I’ve been tracked by Timer Digest. My market timing has consistently been ranked among the top 10 out of more than 100 analysts. And I’m currently ranked #2 for gold market timing over the past 10 years.
- I was invited to be one of 5 esteemed market panelists for USA TODAY's 8th Annual "Investment Roundtable." My stock picks had an average gain of +59% for the year.
- I'm also a 3-time Wall Street Journal Stock Picking Contest Winner.
- I received the prestigious Traders’ Library 2004 Trader’s Hall of Fame Award, given each year to an individual who has made significant contributions to the field of trading.
- Aaron Task of TheStreet.com named me Guru of the Year in 2003 and has called my opinions on the market "insightful," "interesting" and "imaginative."
- I’m also a CNBC Market Maven and regularly appear on CNN, The Nightly Business Report, Bloomberg Television and Fox News Channel. And my views on the stock market and the economy are regularly quoted in The Wall Street Journal, The New York Times, BusinessWeek, Investor’s Business Daily, and USA Today.
Here’s your chance to put our experience to work for your
portfolio!
Join Leverage Series today.
WHERE LEVERAGE REALLY COUNTS
Stocks can boost your portfolio when prices go up (but not down – unless you’re shorting), but options are where the REAL PROFITS ARE!
When you subscribe to LEVERAGE SERIES, you’ll receive:
- TARGET PROFITS OF +100% OR HIGHER ON EVERY TRADE - You’ll see plenty of double-digit and triple-digit winners.
- INCREASED PROFIT OPPORTUNITY AND REDUCED RISK - This service recommends ONLY in-the-money options that have intrinsic value, a more conservative options trading strategy.
- AN AVERAGE OF 2 REAL-TIME RECOMMENDATIONS A MONTH - We’ll recommend calls on stocks we think will go up and puts on stocks we think will go down. You can make money in any kind of market.
- DETAILED COMMENTARY outlining why we believe the recommended option could produce profits for you of +100% or higher.
- SHORT HOLDING PERIODS - Achieve your profits quickly! You'll typically hold trades from just a few weeks to a couple of months.
- FREE TRADING HANDBOOK - Provides everything you need to successfully trade the Leverage Series, including our specific money-management guidelines!
As a Schaeffer’s Leverage Series subscriber, you’ll get all this and more!
Until midnight TOMORROW, you can join my Leverage Series for 1 year for only $195! That’s a $600 savings off the regular price of $795!
Plus, order now and you’ll also get an extra YEAR of trades absolutely FREE!
That’s 24 full months of hot, in-the-money option trades – a $1,590 value - and you pay only $195!
At this price, you can make back the cost of your subscription AND add profits to your portfolio with just one winning trade. Every winner after that goes straight to the bottom line.
So, join Leverage Series today and put in-the-money options to work for you.
THIS CUSTOMER IS CERTAINLY GLAD HE FOUND US:
"Boy am I glad I found you guys. Your information is first rate and I am making money on your option recommendations. Please keep up the good work."
- R. Gerber, California
AND THIS CUSTOMER SAYS WE’RE WELL WORTH THE MONEY:
"I have been a subscriber of Schaeffer's Alert Services and Bulletin Services since 1998. This is by far the best service you can get for the money spent. The best part of Schaeffer's services is that they have the Alert services for every trading style."
- A. Panjwani, Illinois
Join Leverage Series now, and join these happy subscribers!
Discover how to pile up the wins in your portfolio – fast!
You can also call 1-800-448-2080 between 8:30 a.m. and 5:30 p.m. ET for more information.
But, you must hurry - this special offer ends TOMORROW at midnight.
Sincerely yours,
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Bernie Schaeffer
Chairman & CEO
Schaeffer's Investment Research
5151 Pfeiffer Road, Suite 250
Cincinnati, Ohio 45242
service@sir-inc.com
www.SchaeffersResearch.com
1-800-448-2080 International 1-513-589-3800


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