27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE:SPY) total return over the last 12 months is 55.8%. But there is no question some big-name stocks performed better than others along the way.
Roku’s Huge Run: One company that has been a spectacular investment in the last year has been streaming video leader Roku Inc (NASDAQ:ROKU).
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In recent years, Roku has expanded beyond over-the-top streaming devices and has launched the Roku TV operating system and the free ad-supported Roku Channel. Roku is expanding its content and advertising businesses. In March, Roku acquired the Advanced Video Advertising (AVA) business of Nielsen Holdings PLC (NYSE:NLSN). Later in the month, Roku acquired the “This Old House” business, including the show’s library of more than 1,500 episodes.
Fortunately for Roku investors, the COVID-19 pandemic in 2020 was actually very good for Roku’s business. While other companies were dealing with economic shutdowns, people around the world who were sheltering in place had little to do for entertainment other than stream movies and TV shows.
In fact, in 2019 Roku reported a 52-cent EPS loss on $1.12 billion in revenue. In 2020, those numbers jumped to an EPS loss of just 23 cents on $1.77 billion in revenue.
At the beginning of 2020, Roku shares were trading at around $136. By the beginning of March, the stock was down to $115, after news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
Roku bottomed at $58.22 during the pandemic-driven March sell-off. Fortunately for Roku investors, the dip did not last long.
By September, Roku shares were back at new all-time highs above $170 and the rally was just getting started.
Related Link: If You Invested $1,000 In Apple Stock One Year Ago, Here's How Much You'd Have Now
Roku In 2021, Beyond: The stock ultimately peaked at $486.72 in February 2021 before pulling back to around $375. Traders may be taking profits in the stock, after its huge run in the past year. Or they may simply see 2020 pandemic comps setting Roku up for some lackluster growth numbers in coming quarters.
Still, Roku investors who bought one year ago and held on have generated a big return on their investment. In fact, $1,000 in Roku stock bought on April 8, 2020, would be worth about $4,253 today.
Looking ahead, analysts are expecting more upside for Roku in the next 12 months. The average price target among the 24 analysts covering the stock is $500, suggesting 33.5% downside from current levels.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.