The Superleverage Power of Call Options

Avengers Endgame poster

Avengers Endgame Chinese Poster h/t Disney/Marvel

Disney June $115 call

Options Hotline, March – April, 2019

The Superleverage Power of my method was on display this week, as Options Hotline subscribers multiplied their money with our call recommendation on shares of Walt Disney Co.

On Friday, DIS soared like Captain Marvel going full binary.  Following the unveiling of its streaming service, DIS rose 11% from the previous day.  This action helped shares reach our $130 per share price objective (see 03-10-19 Options Hotline and 04-12-19 Options Hotline Alert).

Our recommended DIS June $115 call, triggered 03-11-19 at $4.50, with DIS at $114, traded 04-12-19 at $17.00, with DIS at $130.  That’s +278% in a month, on a 14% move in the underlying shares, with an always known and strictly limited risk!

We’re always seeking to stay a step ahead of the crowd.  Here’s what it looks like on my daily candlestick chart for Disney:

Disney price chart

My daily candlestick chart for Disney, h/t stockcharts.com

So Sarnoff, what is Superleverage?

You grasp that speculators make their fortunes from changing prices. Chances are, you are also familiar with the benefits of leverage.  Leverage is an important tool for speculators.

Leverage involves using OPM (Other People’s Money) to try to make more money than you can with your own.  Using OPM may augment rewards when you are right, but it may also greatly accelerate the risk of additional losses when you are wrong.

If leverage can be applied with an always known and strictly limited risk, it takes on a more sensible aspect.  It becomes…

Superleverage, the art of profiting from changing prices, with limited risk AT ALL TIMES, without ever getting a margin call, asked to put up additional funds, or forced to liquidate your position.

The instruments of Superleverage are exchange traded put and call options.

Buyers of puts and calls are the ONLY ONES who possess the full profit power of Superleverage.

Option buyers have several advantages:  You don’t need to be a financial wizard or have large sums of money to participate. Only as an option buyer do you have all the benefit of using OPM when right, without the concomitant costs and risks when wrong. Total risk is ALWAYS known and limited to your cost of taking a position (making your bet).

While the option buyer has an always known and strictly limited risk, you will be well-served to remember that the risk is still extremely high, as it should be for the opportunity to earn unlimited gains…it’s the full amount of your bet, but not one cent more.

I can’t guarantee that all my recommendations will become multipliers.  But I do promise to do my best each week to find option winners for my great subscribers.

Let me know if you have any questions.  My email never sleeps.

Enjoy a super day!

Best regards,

Steve

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