A Triple-Digit Winner With Twitter
It’s been an exciting week in The War Room. Bryan cranked out a triple-digit blowout winner on Twitter (NYSE: TWTR). And that was accompanied by a stunner from War Room member Russell H., who made the right call on PayPal and brought us another triple-digit winner!
“TWTR strangle debit $3.11, -118%, nice trade.” – Richard T.
“TWTR PUT in @ $1.49 out at $6.25. PYPL Call in @ $1.04 out at $5.94. I am done for the day.” – Charlie F.
“Bryan, Thanks for the great play on TWTR!! Made for a great morning. Up 116%.” – Rick R.
“PYPL – Got in at around $3 yesterday, just closed out for a $23,000 gain. Hit the lottery.” Thomas W.
These were overnight winners that made members thousands of dollars.
I want to point out that, in The War Room, you have access to a ton of great information, trades and traders on a daily basis.
There is no other place I know of where you can log in and get a bunch of new trading ideas every day. We love our members, and they love the atmosphere of interacting with like-minded investors, all shooting for the same goal day after day…
A profitable thrill ride!
So back to earnings season…
We are in full swing right now, as half of the S&P 500 companies have already reported and there are many more to come. So far, more than 70% have beaten earnings estimates, and in a bull market, that can send shares soaring.
There’s always danger lurking.
You see, it’s not just the earnings that matter.
Oftentimes, it’s the after-earnings conference call where management gives a detailed breakdown of what the quarter or year ahead looks like. Whether you like it or not, Wall Street focuses on what’s to come more than on what has just happened.
It’s a tough game!
To counter this, we use a trading strategy called a strangle. When you use a strangle, you are buying a put option and a call option on the same stock but with two different strike prices. You are betting that there will be a significant move in one direction that will cover your cost.
For example, on Twitter, Bryan issued a strangle to buy the $39.50 calls and the $38 puts for around $3. The goal here was for members to get more than $3 for selling both sides of the position.
Twitter reported its numbers, and the stock crashed by 20% and dropped to almost $31 per share.
The call options were worthless…
But the put options traded for more than $7 per contract.
The net result was a triple-digit winner despite one side of the play being worth nothing.
Action Plan: The Twitter trade is just one example of a great strangle play executed perfectly.
We are currently in the thick of earnings season, and you don’t want to miss the upcoming strangles that will be issued in The War Room! For plays like this one and many more, join me in The War Room today!
About Karim Rahemtulla
With more than 20 years of experience, Karim has mastered the subtle art of options trading. What we admire about him is his ability to score huge gains while minimizing the massive amount of risk that often comes with options. Beyond his expertise in options trading, he is also the author of the best-selling book Where in the World Should I Invest? He publishes weekly about smart speculation in his latest free e-letter, Trade of the Day.