Facebook
Twitter
A few weeks ago, I told you how subscribers to my real-money $100k Portfolio and I earned an impressive 130% profit in Netflix (NASDAQ: NFLX). And we did so in just 13 months!
Today, I want to tell you how I used a simple strategy to more than double those profits. You may not be an aggressive investor, and neither am I. But if you’re looking for an easy way to multiply your gains, you might be interested in learning more about this investment strategy.
Let me show you exactly how I used this strategy to double my profits…
Double the Profits on Netflix
I personally raked in big gains by simply buying 100 shares of Netflix in my $100k Portfolio real-money investment account. Loyal subscribers also had an opportunity to invest in Netflix before I bought the stock myself.
While the 130% gains are nothing to scoff at, some investors – including me – made considerably more money from this stock in recent months. And just as importantly, we did so in eight short months.
After buying my 100 shares of Netflix at $71, the stock quickly jumped as high as $130. But a mixed earnings report sent the shares quickly back to the $70s.
I alerted my $100k Portfolio subscribers in July, telling them that the drop in Netflix shares created an amazing opportunity to buy more stock on the cheap.
Now trading in the mid-$70s, Netflix shares are once again quite attractive. The growing streaming video business is currently generating revenues at an annualized rate of $2 billion.
When great companies are selling at a discount, it's time to buy more. In my opinion, buying Netflix below $80 a share is one of the best investments available to investors today. It appears to be one of the better values that I've seen in a while.
I had already bought 100 shares of Netflix. And I easily could have just bought another 100 shares of the stock.
However, my colleague Andy Crowder suggested that I use a compelling strategy for increasing my investment. He told me that using a single strategy could multiply my profits if the stock rose.
Andy has personally used this investment strategy time and again to capture big gains. I figured I should follow his advice and give it a try…
Multiply Your Gains with One Simple Strategy
Andy suggested that I use a simple investment strategy to leverage my capital.
If I just bought another 100 shares at $77, it would have cost me $7,700. But using this unique investment strategy, I was able to get the same exposure for a cost of just $2,075.
As you may have suspected, the investment strategy that I’m describing involves stock options.
Now before you tune out, I want you to know that I personally have very little experience using options. In fact, this is one of just a handful of options trades that I’ve ever placed.
I’m telling you this because I want you to know how simple this really is. You may have been incorrectly taught that options are risky securities to be used by speculators. You’ve been told that this is a great way to lose your shirt in the market. And you may think the trading pros will eat you for lunch if you dip your toe into options.
Let me tell you about an options strategy that individual investors – just like me and you – can use to leverage capital and make bigger profits.
It’s called LEAPS, which stands for Long-Term Equity AnticiPation Securities. These are simply stock options that have a long-term expiration date.
One call option contract gives the owner the right to purchase 100 shares at a pre-determined price (also called the “strike price”) for a specific period of time.
When I told Andy that I was thinking of buying more Netflix, he suggested using a LEAPS option instead. By doing so, I would be able to participate in future Netflix moves for just one-third of the capital.
Put another way, I could have bought 300 shares using three Netflix LEAPS for the same cost as simply owning 100 shares outright.
And so in May – with Netflix trading at $77 – I bought one options contract on Netflix. My contract gave me the right to buy 100 shares of Netflix anytime before January 2014 – a full 19 months – at a fixed price of $85 per share. No matter how high the stock price went, I had the right to buy 100 shares for $85 apiece.
In exchange for this right to buy Netflix stock, I paid just below $20.75 per share.
As you now know, this trade worked exactly as expected. Netflix shares started rising late last year and in January catapulted as high as $197.
With Netflix shares trading far above the $85 strike price, I cashed in my option for more than $79. My $2,075 investment was now worth $7,975.
And my profits stood at an astounding 284% in just eight months.
Use This Same Strategy with “The Next Netflix”
I don’t tell you this story to brag.
Instead, I wanted to share this so that you might consider – just for a minute – whether you could use this type of wealth-building strategy in your investment portfolio.
I call companies like Netflix “Game Changers.” I use this term to describe the way in which a company can disrupt an industry, challenge the status quo, and create products that wow consumers.
I recently recommended that my $100k Portfolio subscribers buy shares of another “Game Changer.” Like Netflix, this company is poised for rapid growth and disruptive change.
This company is taking on one of the biggest opportunities today. Simply put, they’re literally building a new highway across America. This new highway already connects San Francisco to Los Angeles and Boston to Washington DC.
Their innovation could change the face of the transportation industry, topple industry giants and improve the way of life for every American.
I’m encouraging my subscribers to buy shares of this Game Changer today. And I’ve already bought shares in my personal investment account (after recommending it to my subscribers).
If you find this investment compelling, you can invest and buy just a few shares of stock. Or you could consider using a LEAPS strategy to leverage your capital and achieve outsized gains. There are multiple ways to invest in this company.
What matters most is that you won’t want to miss out on this opportunity.
I recently prepared a presentation titled There’s a New Highway Being Built Across America that discusses this Game Changing investment. I urge you to take a minute to learn more about this company that is changing the future of transportation in America.
Click here to watch my presentation immediately. I personally believe that this investment could be the next Netflix. Let me show you why, and explain how you can learn more about this amazing company.
Full Disclosure: Ian Wyatt’s $100k Portfolio is an investment newsletter with a real-money portfolio. In that account and a personal account, I owned shares of Netflix. I recently sold a portion of my position and took profits from the stock. I continue to own shares of the company. Transactions were made according to the guidelines of our Trading Compliance Policy.