A key principle behind my options service, Power Options, is one of the most important and powerful in all of finance.
Unfortunately, very few understand it, and that’s why they never become rich. Those who do understand it, on the other hand, can make a lot of money.
The principle I’m talking about is the principle of leverage. You probably remember the concept from high school physics. We use levers — like a car jack or a crowbar — to multiply our output of force from a relatively small input by many times.
This principle also applies in the stock market. By putting up a little amount of money, you can control — and see potential gains from — a large amount of money.
Throughout history, entrepreneurs and financiers have used leverage to scale their ideas beyond what was possible with their initial access to capital.
Case in point, Facebook (FB) CEO Mark Zuckerberg.
Today he’s one of the richest people in the world, but he didn’t make all his money just by investing in his company the traditional way. If he tried to grow Facebook using only his own capital, it would have taken decades to grow the company to where it was only a few years in.
But by taking on money from outside investors, Zuckerberg was able to grow his business at an incredible pace, and leverage his initial stake to enormous heights. He controlled — and benefitted from — a huge investment through a much smaller initial stake.
Leverage took him from a college kid starting a business in his dorm room to being a billionaire in just a few years.
Hedge fund manager John Paulson did the same thing to make the greatest trade of all time.
He borrowed money from banks and used it to make leveraged bets on the housing market in 2007, and walked away with a whopping $20 billion.
This idea of using leverage to make big gains is what motivated me to launch Power Options. I wanted to bring the technique of the richest folks on Wall Street to help the average investor.
I also realized that the key to a successful options trade hinges on picking the right stock, based on superior fundamentals. Most investors get caught up in “hunting” for the perfect option at the perfect price. But they fail to consider the most important element to the entire equation: the underlying stock.
So, I use my proprietary system to scour more than 5,000 stocks per week and pinpoint those with growing sales and earnings that are sure to move higher over the next year or two. Once I’ve found the right stock, I do a second deep dive to find the safest, most lucrative long-term equity anticipation securities, known as LEAPS, to leverage the potential gains from my fundamentally superior stocks.
Take NICE Ltd. (NICE), for example. The stock saw a 107% gain in a little over two years, but using LEAPS options, investors could have seen back-tested gains of 233% in only six months.
Or the South American technology services company Globant S.A. (GLOB). The stock gained 127% in the year-and-a-half, but using LEAPS, investors could have turned it into back-tested gains of 624%.
The bottom line is that leverage is truly a powerful principle, particularly when applied to my LEAPS strategy at Power Options.
And we couldn’t be trading LEAPS at a better time. The reality is October is a seasonally strong month for the market, thanks in part to the third-quarter earnings season, which will begin next week. According to FactSet, for the third quarter, earnings are expected to grow 27.6% year-over-year and sales are expected to increase 14.9% year-over-year.
This earnings growth isn’t anything to sneeze at, but I anticipate that the fundamentally superior stocks we trade LEAPS calls on will do even better. Two of my Power Options companies are expected to report quadruple-digit year-over-year earnings growth, six are expected to report triple-digit year-over-year earnings growth and seven are expected to post at least 50% year-over-year earnings growth.
Needless to say, I expect my companies to post wave-after-wave of positive earnings results, which, in turn, should dropkick and drive the stocks (and my LEAPS trades) higher.
So, if you’re looking to leverage your gains, now is a great time to do so. Many of my trades remain under their buy limits, but I don’t expect them to stay down for long after their most-recent earnings reports are released.
If you’re interested, click here now. Once you do, you’ll receive my special report, The Power Options Portfolio: Six Hypergrowth LEAPS Trades for 2021, which is a great place to start building your options portfolio.
The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below: