27% profits every 20 days?
This is what Nic Chahine averages with his options 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.
Jon Najarian is a trader, analyst and co-founder of optionMONSTER. After a short time as a linebacker for the Chicago Bears, Jon left football to start his financial career at the Chicago Board Options Exchange. This is Jon's second conversation with Benzinga's Alex Schiff.
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Uncertainty has gripped the market since the economy's nascent recovery began to appear in jeopardy. Is the market still without direction? Are there be any sure fire trigger signs investors need to see before they enter the market?
If we see gridlock going into the election, and the more likely we're going to see gridlock, the more likely we are going to see a significant rally. Part of the reason is that there are all these billions thrown into the stimulus - some of it has been withheld and some of it has quite frankly not been spent very smartly.
Nonetheless, I think the reasons that businesses are not hiring is that they're constantly under assault for the first two years of the new administration and they're surprised how quickly things have changed in terms of regulations and oversight. I think a lot of companies have elected to pull back their horns and not do a natural progression of recovery.
In our last conversation we talked about financial regulation reform. You had some mixed feelings on the plans being thrown around. Now that it's been passed, what do you think of the bill?
I think they're fixing things that weren't a problem, which is somewhat worrisome. The things that brought us to the brink in 2008-2009 were primarily over the counter leverage that isn't collatoralized properly and there is almost nothing that addresses that in this bill.
Given that there are 600 trillion dollars of those contracts out there, bringing a couple hundred billion onto exchanges is great for the CME group (NASDAQ: CME), probably great for the CBOE (NASDAQ: CBOE), the NYSE, NASDAQ and the IntercontinentalExchange (NYSE: ICE), but it isn't really fixing the problem which is uncollatoralized risk that was over the counter - meaning you had the full responsibility of your contraparty.
Last time we also spoke it was just before the Invest Like A Monster conference. How did that go? Anything interesting happen that you'd like to talk about?
Sure, there were. We have another one coming on September 10th & 11th, 2010. One of the things we spoke of was BP - that was June 25th & 26th. BP (NYSE: BP) was trading at the $27 level, the lowest level in years. Sometimes the odds are so in your favor to take a bet - you just can't resist. The volatilities were over 120% - this was not normal. It was long before they plugged the well.
That was a few months ago. Are there any stocks that have the potential for that kind of growth today?
On a percentage basis, I think that Cisco (NASDAQ: CSCO) is going to do very well. They got sold down to 21, and knock on wood I bought it post earnings. I think the issue for Cisco is not that tech is dead. The issue is people pushed their orders to the next quarter and only bought the absolute minimum. The same is occurring virtually everywhere in the economy, and that is partially why we are seeing such anemic GDP.
I think the fact that they may have gridlock going forward from labor day to the election, those two months, September and October could be very profitable months for trading for the long side.
On Fast Money you chose TJX Companies (NYSE: TJX) as your stock pick for today's trading today. Why is that?
We had a reasonable bullish read on a number of retailers - that was the one that Fast Money let me use as a final pick. I like it, I think they do everything right. If you're someone who just wants growth and decent dividends and steadiness, then you focus on Walmart (NYSE: WMT) and Target (NYSE: TGT) - both of which are dancing back and forth across the unchanged line on the year. But if you want a little more out perform than you buy Costco (NASDAQ: COST) or TJ Max on any dips because they're just great companies that are very well run. TJ Max is selling remnants from other retailers.
What else should our listeners be watching?
In full disclosure, I am long the TBT (NYSE: TBT) which is the double short bond contract. I think we are going to see a significant pullback. If I'm right about the fall being good for investors in stocks, then I think likewise that those animal spirits will draw people out of bonds. There is nothing wrong with bonds, but I think they are overvalued at this point.
27% profits every 20 days?
This is what Nic Chahine averages with his options 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.
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