Isn’t it nice to be making money?
Today's Financial News - Posted August 10, 2009
The markets may be down, but that does not mean we are complaining. We are using our “perma-profit” strategy to make money no matter what happens.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Wouldn’t it be nice to be sitting on a pile of profits today. Sure, the markets are down, the headlines are far from appetizing and just about everybody is asking when the bottom will fall out once again, but even when all the major indices are in the red, somebody is making money.
Today, it just so happens the folks over at TFN Strategic Trader are the ones watching their portfolio grow. Thanks to a unique trading strategy we are sitting on double-digit gains when everybody else is worried about what tomorrow may bring.
The action comes straight from one of my favorite trading positions, YRC Worldwide (NYSE:YRCW). Just as any Econ101 graduate would expect, shares of the trucking company got hammered by a long-lasting and deep recession.
The company’s management team, led by CEO William Zollars, did everything it could to cut costs, from buy-leaseback agreements to slashing wages. But when one of the nation’s strongest unions represents your employees, cutting can be downright hard business.
It has been a tough battle, but I have to give credit to the union for making the right move. I don’t do it often.
Earlier this year, most workers took a 10% cut in pay in exchange for an ownership position in the company. In was a bold move, but they got a strong investment in return.
With that fact in recent memory, the markets had a tough time discounting yet another agreement for wage reductions. After all, the latest offer did not give much in return. But on Friday we got the official word that the 58.5% of the voting union members voted in favor of a 5% wage reduction. It was enough to hush the whispers of bankruptcy, at least for now.
The union made a good move. The shares of the company they own surged on the news. So far today, YRC Worldwide is up by over 20%. And that’s on top of another 20% move on Friday.
Needless to say, TFN Strategic Trader subscribers are sitting on some sizeable gains. Want to join them?
Getting exciting
I must admit, I am extremely happy to see today’s downturn, not necessarily for the boost to several of our short positions, but for the increased volatility. As the CBOE Volatility Index (VIX) climbs, our portfolio will continue to increase in value.
Remember, the higher the volatility, the higher options prices will go.
In a week with little in the way of “swayable” economic data on the table, volatility is going to continue to climb. As traders debate the merits of the recent surge in equities prices, the markets will move in bigger and bigger steps.
With Congress on vacation, earnings season winding down and so many investors moving into a wait-and-see mode, I expect plenty of red this week.
Fortunately, it will not be a long-term trend. Instead, it will give investors the opportunity they have been looking for to add to their positions.
The options market is looking especially appealing. As the VIX climbs, sellers will gain the edge. That gives us an opportunity to take on some unique trading strategies.
TFN Strategic Trader subscribers already have a couple of covered call plays in their portfolio. Both are performing very well. This may be the week we may make another similar move.
While many investors would like to see the equities market climb day after day after day, we know it will never happen. Options investors embrace the volatility and use it to their advantage.
Now is the time you follow them. The market is filled with opportunities.
Next Article: TFN eNews 08/10/2009: And you thought we were done?
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