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 high-flying tech companies, stay-at-home plays and “meme” stocks have made a killing in the market in the past year. But you didn’t have to be a stock-picking genius to generate some historically good returns since Sept. 9, 2020.
Even investors who took a conservative, diversified approach to the market in the past year have made a tremendous return on their investment at this point.
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In 2019, the SPDR S&P 500 ETF Trust (NYSE:SPY) generated an extremely strong 31.2% total return, but the ARK Innovation ETF (NASDAQ:ARKK) topped it with a 35.5% total return. During the 2020 pandemic, many high-growth stay-at-home stocks soared, and ARK CEO and chief investment officer Cathie Wood became extremely popular among the new wave of young retail traders.
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Pandemic Sell-Off: The ARKK fund started 2020 on a high note, rising from around $50.64 to start the year to a pre-pandemic high of $60.73 in mid-February. Unfortunately, over the next several weeks the bottom completely fell out of the market thanks to the COVID-19 pandemic.
The ARKK ETF plummeted as low as $33 on March 18, 2020, and the S&P 500 bottomed just five days later. At the time, investors had no idea March 23 would mark the end of the shortest bear market in U.S. history at just 33 days in duration.
By April 14, the ARKK was back above $50. By May 19, the fund was back at new all-time highs, but the rally certainly didn’t stop there. The combination of Federal Reserve interest rate cuts, unprecedented government stimulus measures, a virus mortality rate that was much better than initially feared and a handful of extremely effective vaccines sent growth stock prices skyrocketing well above pre-pandemic levels.
Charging Into 2021: Two brief tech stock sell-offs in September and October of 2020 were mere bumps in the road for the ARKK in the march to all-time highs of $159.70 in February 2021. Unfortunately, while the broad market rally has continued on to new all-time highs, several of ARKK’s top holdings have suffered significant pullbacks, and the ARKK fund has drifted back down to $124.92.
Investors who bought the ARKK fund a year ago and held on to today have now lagged the total return of the SPY in that time, but they have still made a solid return on their investment. In fact, $1,000 in the ARKK ETF bought on Sept. 2, 2020, would be worth about $1,294 today, assuming reinvested dividends.
Looking ahead, Wood is still betting on high-growth tech stocks to outperform the market in the next year. Top ARKK holdings currently include Tesla Inc (NASDAQ:TSLA), Teladoc Health Inc (NYSE:TDOC) and Roku Inc (NASDAQ:ROKU).
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.