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| How to Play GameStop and AMC Entertainment Holdings for Pennies on the Dollar | Karim Rahemtulla, Head Fundamental Tactician, Monument Traders Alliance | | Learn how you can make money on a stock no matter which way it's moving. |
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| | I know, you're excited...
You see massive gains daily in GameStop (NYSE: GME) and AMC Entertainment Holdings (NYSE: AMC). We talk about these stocks all the time in The War Room, and our members have been making money from them as well!
Just check out what War Room member Bebe L. had to say about AMC this morning...
"AMC June 4 26C in at $2.65 yesterday, out today at $12. Thanks, WR!"
You see, how I feel personally about GameStop and AMC doesn't really matter. Both are overvalued based on their current business models, trading a whopping 20 to 50 times their multiple of sales!
What matters is making money from whatever is moving. That's what traders do, and that's the skill brought to War Room members by Bryan, George and myself.
So on to GameStop and AMC...
Maybe you don't have $260 a share to spend on GameStop or even $35 a share for AMC (the prices as of this writing), but you want to get in the game... up or down. Yes, some people prefer to bet against these names.
This is where the options market serves a dual purpose:
- It lets you play these names for a fraction of the price of owning the actual shares.
- It limits your losses in case they turn south in a hurry.
The last time GameStop ran higher, it dropped from more than $450 to under $50 in the span of weeks - that's painful if you owned the option but not nearly as painful as if you had owned the stock!
Both GameStop and AMC offer LEAPS, or Long-Term Equity Anticipation Securities. These can be used a number of ways. But today, I'm going to share two ways you can play it...
The first is with a straight play betting up or down. For GameStop and AMC, the long-term options can be bought for less than half the price of the shares using the current price as the strike price and going out to 2023. If you want a shorter horizon, it will cost even less.
It's cheaper, but still not cheap!
The second way to play the options market is with a spread trade. With a spread, you are buying an option and selling another one against it, thus reducing your cost. Granted, you would be limiting your upside to the actual spread.
For example, let's say the GameStop options expiring in 2023 are selling for $120 for the $260 strike. That's a hefty amount! I would not buy these unless I thought GameStop was going higher - much, much higher.
Let's use the old high of $450 as the target. I could sell the $450 options for around $90. That would bring my cost down to anywhere between $20 and $30 depending on the fill, and it is manageable for a $260 stock. The spread would be $190, or $450 minus $260. This would bring my cost to about $30 for a 6-to-1 return potential.
And if you want to bet on the shares of either company tanking, use the same spread strategy but use a vertical put spread instead of a vertical call spread. That's the kind of bet we would make in The War Room.
Action Plan: While others are betting the farm making crazy bets that could destroy them financially, we take much less risk and maybe make even more! If you want to be part of the group that knows how to trade ANY stock in real time with proven strategies... click here!
Yours in smart speculation, | | Karim Rahemtulla, Head Fundamental Tactician Monument Traders Alliance | | Recent War Room Winners |
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SPCE | | 5/27/2021 | | 29.43% | F | | 5/27/2021 | | 16.82% | SPCE | | 5/27/2021 | | 14.29% | WHR | | 5/27/2021 | | 13.27% | CHWY | | 5/27/2021 | | 11.24% | Biggest War Room Winners | BG | | 5/26/2020 | | 320.00% | DIS | | 10/13/2020 | | 198.81% | FDX | | 9/18/2019 | | 188.49% | NUGT | | 8/17/2020 | | 179.31% | FSLR | | 10/28/2020 | | 160.15% | Fastest War Room Winners | LMND | | (4 minutes) 12/7/2020 | | 36.67% | ROKU | | (4 minutes) 9/10/2019 | | 53.62% | MCD | | (5 minutes) 1/8/2020 | | 24.39% | OKTA | | (5 minutes) 1/6/2020 | | 27.50% | RGR | | (8 minutes) 1/6/2021 | | 73.33% | WMT | | (Fastest double) 1 hour, 20 minutes 7/7/2020 | | 121.12% |
| | WAR Room Testimonials | | | | Lance R. May 28, 2021, 9:43 a.m. CRM, in yesterday at $6.50 out at $14.05, 116% thanks KR & BB for mentioning CRM earnings last night! My first $1,000+ profit. I'm psyched! | | |
| | | | Arech May 28, 2021, 9:55 a.m. Just sold my SPCE contracts for a +158% gain, from $2,85 to $7,4. That is great. Tks BB. | | |
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