[Case Study] How I Raked In $26K On LK and SBUX

by | Feb 29, 2020

The coronavirus has triggered the fastest market correction from a record high in history… and many market participants are having a hard time surviving amidst this bloodbath. Global stocks have lost a whopping $6 trillion in value as the coronavirus continues to spread…

And it’s become increasingly difficult to find plays out there for some. Today, I want to show you how you can position yourself for profits, despite the overwhelming pressure on stocks.

Of course, if you’re already in positions, I think it would be helpful to plan accordingly and have stop-losses in place… at least that’s what I would do.

For the most part, it’s a traders’ market… so I’m on the hunt for alpha and returns — so far, it’s been working out extremely well for me. Since I’ve got back in the saddle after the RagingBull Traders Summit, I was able to spot 2 massive winners in two coffee stocks.

How did I do it?

 

Catalyst Trades Are Rocking In This Environment

 

Of course, there’s a lot of risk on the table… and I’ve found that many stocks are not respecting their key levels. So instead of solely focusing on chart patterns, I find event-driven trading is far superior to generate alpha right now.

When it comes to hunting down explosive opportunities, I turn to the options market, as well as news catalysts. I want to show you how it all works with two winners that I found in two coffee stocks.

The first trade I noticed was in Starbucks (SBUX).

 

 

The stock got destroyed after coronavirus fears grew… and broke below a key support level in violent fashion. Typically, when I see such violent moves, it’s a signal that the weak hands are being shaken out… and it’s time to go on the hunt and look for catalysts.

Well, on Thursday — SBUX announced it reopened about 85% of their stores in China… and all the news outlets were loving the story.

 

 

So what did I do?

I turned to the options market because that’s where I can find some of the best risk-reward opportunities.

 

 

Since this was a high-conviction setup, I wasn’t afraid to sweep some options… and I figured I could lock in a 100 – 200% winner real quick.

Guess what?

In less than 2 hours… those options exploded, and I locked in a 100% winner — that was good for a $14K winner!

 

 

And many of my clients were able to take part in the action as well

 

 

The thing is… that wasn’t the only triple-digit winner I spotted amidst the market correction. There was another coffee stock in play with multiple catalysts on the table.

The “Starbucks of China”, Luckin Coffee (LK) was my next play. It was the same idea, there was news in the stock and it could cause LK to pop. Remember, in this environment, I’m not really looking for swing trades… just short-term trades.

 

 

So LK could’ve got pulled higher from the market forces… after all, the buy the dippers were probably waiting to pile in. However, there was a company specific catalyst on the table as well.

You see, LK was being added to the MSCI Index yesterday. In other words, funds would be purchasing shares of LK to take into account those changes… it’s what’s known as the “rebalance”. 

Typically, on the day this happens, traders who catch wind of this news pile into the stock in anticipation of demand picking up. That’s exactly what I expected in LK. However, rather than buying shares… I looked to the options. 

I figured if my thesis was right, those call options could move 100 – 200% (pretty similar to the SBUX trade from the other day).

Guess what happened?

LK made the move and those options exploded!

 

 

On just those 2 trades, I was able to lock in $26K! Now, if you’re struggling to find explosive opportunities in the market right now… don’t beat yourself up. Take some time out of your busy schedule and check out my shocking new eBook Dollar Option Trader.

In it, you’ll find everything you need to know about my strategy and how I’m able to consistently spot massive winners in the market.

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