2019 was a great year for the Mintz family as we closed out the year happy and healthy. My Cabot Options Trader subscribers are similarly happy as their 2019 returns have been very healthy.
Here are just two of the many subscriber emails I received in December celebrating another banner year:
“I’ve learned a ton with Options Trader and it has helped me convert $30k to $75k along the way!”
“I wanted to take a minute out of my day and thank you for your help and guidance over the past almost two years now. I appreciate you being willing to answer all of my questions.
I have more than doubled my money in this short time, which is very impressive!”
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These emails warm my heart as I love opening investors’ eyes to the amazing profits that can be made trading options. In fact, because of the success of Cabot Options Trader and Cabot Options Trader Pro (for the more advanced options trader) we had to take the extraordinary step of closing these two services to new subscribers as my recommendations, and the buying power of my subscribers, was moving the market in stocks I was recommending.
However, while we closed the Cabot Options Traders to new subscribers, we launched Cabot Profit Booster in December. Profit Booster’s strategy is to combine the great stock picks of Mike Cintolo, Chief Analyst of our Cabot Top Ten Trader growth stock advisory, with my Covered Call options trade ideas to create yields of 3% to 15% every month, while at the same time reducing risk. (If you are interested in making the leap into the world of options and want to learn more about Cabot Profit Booster, click here.)
And while we have had another spectacular year, not all of my trade recommendations have been winners. Here is a breakdown of some of my winners and losers, and what I’ve learned from these trades:
Cabot Options Trader 2019 Winners
In January, as the market was starting to recover from its brutal late-2018 sell-off, Cabot Options Traders bought call options in Zscaler (ZS) and Starbucks (SBUX) as those two stocks had held up remarkably well when the indexes were under intense pressure. Also, at the same time as these stocks were showing relative strength, hedge fund and institutional traders were aggressively buying calls. Here were our trades and results:
January 4 – Bought Zscaler (ZS) May 44 Calls for $5.60 – Closed position for $19.50, or a profit of 248%
January 31 – Bought Starbucks (SBUX) June 50 Calls for $3.275 – Closed position for $14.40, or a profit of 339%
And in the middle of 2019, Microsoft (MSFT) and Sea Limited (SE) also showed signs of relative strength and aggressive call buying when the market was mostly chopping around. This brought us into these two stocks via call buys as well.
March 12 – Bought Microsoft (MSFT) October 115 Calls for $7.31 – Closed position for $20.29, or a profit of 177%
May 3 - Bought Sea (SE) August 26 calls for $2.30 – Closed position for $9.25, or a profit of 302%
Cabot Options Trader 2019 Losers
While those four trades worked spectacularly well, and there were many more like them, twice last year I got myself in trouble by playing a breakout that wasn’t quite ready. Here are the details of these failed trades:
In March, marijuana stocks were seemingly on the verge of a major breakout, and Cronos Group (CRON) was one of that sector’s leaders. Cabot Options Traders bought calls in CRON and quickly sold half of our position for a profit of 25%. Unfortunately, CRON and the entire sector VERY quickly cooled off and we were forced to sell the second half of this position for a loss of 84%.
Similarly, in July the Metals & Mining ETF (XME) looked on the verge of a breakout and I recommended a buy of the January 29 Calls for $1.63. I loved the risk/reward in this trade as the most we could possibly lose if the breakout failed was $163 per call purchased. Unfortunately, this trade never worked as the sector again fell, and we lost $107 per call purchased. This loss was hardly crippling given the many winners of 2019, but I still wasn’t thrilled by my bad timing.
So what are my year-in-review takeaways from these trades?
Playing stocks and sectors that are on the verge, but haven’t yet broken out, can prove to be challenging.
Conversely, buying stocks with relative strength, combined with bullish option activity, worked spectacularly well in ZS, SBUX, MSFT and SE earlier in the year, and more recently in Target (TGT), salesforce.com (CRM), Blackstone (BX) and Taiwan Semiconductor (TSM), all of which Cabot Options Traders currently own, with profits between 50% and 200%. Therefore, this combination of bullish signals will continue to be my recipe for further big profits in 2020.
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