I have not written about this type of thing here often. But I’m doing it today. And can continue to if subscibers like the concept. So let me know what you think.
What is it? Technically, what the pros call a “convexity’ options trade.
And while I’m a pro for 40 years now, I prefer to teach trading and investing in English, not financial “Greek” so to speak. So, below, in plain English, is a little trade I made this morning.
Not because I am certain it will work. But because I judged it to be very much in line with my normal agenda: looking for highly-favorable return/risk tradeoffs. That’s what the ROAR Score is all about.
In this recent Barchart article, I described one recent trade of this nature, which turned out to be a 20x profit. Even on a 3-digit dollar trade, that’s noticeable to me!
Nn a market where I’m finding it increasingly difficult to do other than “take 5%” (5-year US Treasuries yield that now), the question is how to boost that return beyond the 5% I can get for just saying “yes.”
This is one type of trade I’m increasingly looking to do. I’m happy to share more of these with paid subscribers, if enough people want to see them, likely through the weekly live show we do every Tuesday at 4pm ET.
Here’s my latest convexity trade. Or, for those of us who prefer plan language, the investing version of a “lottery ticket.” Though in my estimation, its odds are more like those a favorite at the race track. 3/2 or 2/1 odds, so to speak.
The chart that prompted me to say “worth taking a big shot, with small $ amount”: