Dear Fellow Trader:
I have been arguing for 18 months that there’s just one trade that you need to make….
It’s a little something I call the “Warren Buffett Buy Zone.”
This chart shows where Buffett’s company, Berkshire Hathaway Inc. Class A (BRK.A), has bought Occidental Petroleum Corp. (NYSE: OXY) over the last 18 months. And as you can see, it’s consistently in the $56.00 to $60.00 range when he buys.
Well… two days ago, Buffett bought more than $500 million in Occidental stock.
And it’s setting up for an incredible trade that I’m releasing Friday at Executive Payouts Unlimited.
So… I want you to learn why it’s become my favorite trade of the last two years.
Understanding Put Spreads
The purpose of a market is to sell.
So, when we talk about trading options, we want to sell them — not buy them. That’s because we can see ahead of time the odds of success when we sell options, and Out of the Money (OTM) options typically favor the seller by a wide margin.
What I’m going to do tomorrow at Executive Payouts Unlimited is sell a put about 10% lower than today’s price for Occidental stock. It will be lower than the level at which Buffett has been buying the stock. Then, I will buy a put to cover my position.
Instead of needing $5,500 in margin, I’ll only need about $220 in margin.
And on top of this, the probability of profit on my trade will be above 80%.
I don’t believe in buying calls with a low possibility of return.
Instead, I focus on high probability trades that can consistently beat the returns of the S&P 500.
In fact, we’ve had 18 trades since we launched this service. There are five open trades right now, and our win rate is 85%.
Tomorrow, we go right back in with our favorite stock to trade — OXY. And I’ll be releasing a trade with a February expiration in the morning along with my commentary on the market.
I’m a firm believer that when you find a trade that consistently works, you trade it until it breaks. And OXY has been the gift that keeps giving for the last 18 months.
Thank you, Uncle Warren.
Meanwhile
Over at Tactical Wealth Investor, I’ll be releasing my latest pick tomorrow as well. I’ve been a little behind because of my daughter’s birthday and my bout with the flu. But this pick is also a Buffett surprise…
We’ll tap into a closed-end fund that allows investors to buy Berkshire Hathaway stock for 80 cents on the dollar. You’ll be able to own the same portfolio as Buffett, but you’ll also get access to a dividend — something that Berkshire doesn’t pay. So, if you’re interested in a value portfolio and you don’t want to trade options, check out Tactical Wealth Investor.
Our most recent picks in Teekay Tankers Ltd (NYSE: TNK), Blue Owl Capital Corp. (NYSE: OBDC) and Flaherty & Crumrine Total Return Fund Inc. (NYSE: FLC) have been on an incredible run. TNK is up 18% since we bought it three months ago, and OBDC and FLC are up 8.5% and 11%, respectively, and pay monster dividends.
Tomorrow’s pick is a forever stock that can help you sleep well at night.
Chat soon,
Garrett Baldwin
*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
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And, no, I’m not talking about trading stocks… selling options… nothing like that.
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Market Momentum is GREEN
Markets continue to run higher as we received positive news from the Federal Reserve and the U.S. economy looks like it will avoid a recession next year. Of course that’s all subject to change, but we continue to ride the rally into the new year.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
