A Simple Strategy to Magnify Your Gains on Pot Stocks
- Stock market volatility and investor sentiment put a dent in the cannabis sector.
- This creates a buying opportunity at better prices.
- Magnify your gains in the marijuana sector with options trading.
Cannabis stocks, or “pot” stocks, ripped higher in the first quarter of 2019.
In less than three months, Aurora Cannabis Inc. gained 96% and Canopy Growth Corp. gained 83%.
If you think you missed out, think again…
After months of declines and volatility, some of the best pot stocks are a great buy again.
You could make double digits with these stocks in the coming months.
Or you could make triple digits in less time with something slightly different!
For years, I’ve been using a strategy to make big money in the market from natural resources, commodities and basic materials stocks.
My strategy works well for the marijuana industry too.
With the right pot stocks, this strategy creates an opportunity to make more money when this industry skyrockets.
Last time we saw a setup like the one I’ll show you today, one trade could have made you more than 400% in less than three months!
Applying a Triple-Digit-Gains Strategy to Pot Stocks
The strategy trades call options and put options.
Options are considered derivatives, which means their price is derived from the price of an underlying stock, exchange-traded fund or futures contract.
Calls gain value when the underlying stock rises. Puts gain value when the stock falls.
Not only do options let you trade the market in both directions, they also let you magnify the gains that are possible from simply trading shares.
Let me show you — check out this chart of Cronos Group Inc.
Cronos’ 36% decline from March through May was deeper than expected, but not out of the ordinary.
It was deep enough to shake out a lot of investors — but we know better.
My analysis says the worst of the volatility has passed.
Declines like this offer smart investors great prices to buy in.
When investors get excited again, marijuana stocks will jump by double digits in the months to come.
The last time shares of Cronos dropped more than 30%, the stock rocketed higher in the next two months.
Even if you just caught the middle of that run, you could have made roughly 80% … on just the shares!
If you purchased call options, that gain could have been 444%!
That’s how I am positioning right now … for monster gains when the next run-up in pot stocks begins.
Your Next Step to Pot Stock Profits
For years, I’ve used an options-buying strategy like this to help guide readers to double- and triple-digit profits from short-term, emotion-driven price cycles.
Next week, I’ll begin unveiling the system Matt Badiali and I have been beta testing for over a year.
It can help you grab big gains on short-term moves in cannabis, gold, oil, solar, steel, chemicals and agriculture stocks.
In the meantime, you can trade pot stocks with options.
Buying and selling calls and puts is a lot like buying and selling stocks. All you need is approval from your broker to trade options in your account.
If you’re looking for a broker, the list below provides details for three options-trading firms to consider.
Feel free to use any broker that you like. If you’re a visual trader, check out the tastyworks platform. We do have a paid marketing relationship with them, and we have heard great feedback.
Stay tuned. Of course, these are just our suggestions. Some brokers are better at certain things than others — and keep in mind, it’s not uncommon for people to use more than one to suit their needs. Always remember to do your due diligence.
Senior Analyst, Banyan Hill Publishing
P.S. I recorded a YouTube video with my colleague Anthony Planas, Banyan Hill’s expert on pot stock investing. We discussed where each of us sees opportunity in pot stocks. Check out the video below for his insights — and a trading strategy I’m excited to share with you very soon.
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