It’s been a rough start for financial markets in 2022. What many traditional investment experts had predicted to happen for quite some time finally has. Absurdly valued businesses, yet to earn their first dollar, have had the wind knocked out of their sails. Fortunately, when this began the economy was strong and unemployment was at a record low. With lots of cash in our pockets, most of us were also no longer drowning in credit card debt.
Fast forward and we’re finally starting to see some signs of inflation leveling. We’re not completely out of the woods just yet as the war continues to rage, now over 100 days and still causing major issues for the energy and food industries. However, as the S&P 500 nears 4,200, we’re at a point where rock-solid businesses with true earnings that got their asses kicked for less than valid reasons may be the first out of the gate for a rebound. We’re truly at a rare point in the history of our financial markets where millionaires and even billionaires will be made. Tesla and Ford are two of my specific picks for a variety of reasons, and I’m going all-in for these stocks to spike starting with Tesla, whom experts like ARK’s Cathie Wood make a case for the stock to reach $4,600 in 2026. https://ark-invest.com/articles/analyst-research/arks-tesla-model/. That, along with the recent up and down behavior which I’m detailing below make Tesla prIme for another potentially massive move straight north.
On November 4th, 2021 Tesla was $1,229 per share before dropping below $900 on December 20th. That’s a $329 drop in just 46 days. On January 3rd, 2022 Tesla shared reached $1,199 before dropping on February 23rd to $764. In just 51 days, a $435 drop. Then on April 4, 2022 Tesla was $1,144 per share before plummeting to $626 on May 24. That’s a $518 point drop in just 50 days. This is the roller coaster that either ruins or builds investment portfolios depending on how one trades.
The financial tool of choice for this rebound is stock options, specifically CALLs where, instead of purchasing stock in a company, one buys the right to buy the stock for pennies on the dollar if the stock reaches a much higher price. Staged for milestones, such as quarterly earnings and production results being announced, your first trade should fill your piggy bank with, as they say in Las Vegas, the house’s money. Trade only what you can afford to lose, and after your first win (Yes, we’re also visualizing here) pay yourself back and then turn right around an go ALL-IN on trade #2. Then, rinse and repeat for trade #3 and beyond.
EXAMPLE: Tesla CALLs strike price $1,100 by mid-summer 2022. For trade #2, CALLs for TSLA to reach $1,400 in the fall with some of the gains. Trade #3, CALLs strike price $1,800 by late January 2023. If Tesla spikes as it did on more than one occasion in the past couple of years then an initial $1,000 could reach into the millions. Should Tesla reach $4,600 in 2026 and by continuing with CALLs and LEAPs over a few years then one could actually become a billionaire using this strategy. Do the math, I kid you not!
With the wins from Tesla CALLs, put away a big chunk of your winnings to reward yourself as well as to pay your taxes due. With the rest, bet the same way, but this time on Ford. Ford options are substantially less expensive as is the stock price. I’d start with late summer spikes to around $20 per share. Then $25 by year-end and over $40 by mid-year 2023.
If you reach for the stars using this philosophy (whether you choose Tesla, Ford, or your own picks) you truly could be surfing the best money waves of this century as strong businesses get back to stock valuations which they absolutely deserve.
RISK – Trading options may result in potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the options markets. Do NOT trade with money you can’t afford to lose.