Chad Shoop’s 1 Volatility-Beating Tip
Chad Shoop brings his Pure Income readers market-beating trades every week.
Those gains don’t always come from the top earners in the S&P 500 Index. Nor do they require you to time the ups and downs of a particular sector.
In a volatile market, even the best-performing stocks can fall to portfolio-wiping losses. And this can happen whether it’s trading up, down or sideways.
Chad doesn’t recommend chasing the top performers all the time. His reasoning — if you find a stock you trust, you should stick with it to realize your profits. This sentiment is true no matter where the markets turn.
You just might need to buy some insurance to protect your position.
And there’s no better way to insure profits on a stock you own than by taking out protective put options.
Chad’s Pure Income readers are familiar with this approach already.
He just wrote about protective puts in his latest Winning Investor Daily article.
Chad designed his trading system with this strategy in mind. Think of it as an insurance policy against the chaos of the stock market.
We asked him to explain why this strategy has proven so effective for his readers:
I hate the idea of chasing stocks. Chasing winning stocks can lead to disappointment in a volatile market. Volatile markets are great for adding exposure on the dips for long-term positions, but trying to time the ups and downs will create a lot of whipsawing in your portfolio.
Whipsawing is when you jump in expecting a stock to continue higher, only to see it fall quickly. You end up buying high and selling low. That should be exactly the opposite of what you are trying to do.
Stay patient. Use volatile markets as a time to add to stocks you like. You can add protective puts to extend the time value and profitability of a trade that’s underwater. Don’t worry about timing the tops and bottoms of volatile markets.
From January through March, Chad’s readers bought stocks in Synchrony Financial, Intel and Boyd Gaming. He recommended adding protective puts on these trades, and they netted modest gains from their positions instead of the losses they were facing.
And with these gains behind them, Chad expects higher returns throughout 2019.
If you’re interested in hearing more from Chad and our other experts, check out their Twitter feeds!
Chad recently tweeted an article to his followers featuring his recommendation for the worst stock to trade during the 10-year-old bull market. You can check out the post here.
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As always, our experts keep a close eye on the markets to make sure they can offer the best trading advice.
Read on to see the topics that they’re following this week.
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