This trading “wizard” just handed his readers 16 straight gains on bitcoin…
The longest trade lasted for 32 days.
A $1,000 starting investment would have turned into $3,060 – a cumulative gain of 206%.
And it happened during one of the worst bear markets in the cryptocurrency’s history.
How did he do it? And how can you harness the same strategy in your portfolio?
I’ll explain in today’s dispatch.
But first, you should know who I’m talking about… and why I call him a wizard.
His name is Larry Benedict…
He’s one of America’s most prolific moneymakers.
As longtime readers will recall, Jack Schwager featured him in his 2012 book Hedge Fund Market Wizards.
It looked at the best hedge fund managers in the world and what gave them an edge over the competition.
And it featured some of the best financial minds in history.
Guys like Beat the Dealer author and math genius Ed Thorp, who cranked out average yearly returns of 20% for three decades with seldom a losing month… and the manager of the world’s largest hedge fund, Ray Dalio.
It’s easy to see why Larry made the cut.
Between 1990 and 2010, when Larry ran his own hedge fund, he had no losing years. His biggest “drawdown” – or peak-to-trough fall for his portfolio – was 5.5%.
He profited to the tune of $1 million on 509 separate occasions.
And he had some of his best years in bear markets. In 2008, as the financial world was falling apart, his hedge fund made $95 million.
Now, Larry is using his 35 years of experience as a trader to help his readers profit in today’s bear market.
The Opportunistic Trader is the advisory where he had his 16-win string of bitcoin (BTC) trades.
He didn’t recommend buying bitcoin directly…
He based his trades on the ProShares Bitcoin Strategy ETF (BITO).
It was the first bitcoin exchange-traded fund in the U.S. It tracks the prices of bitcoin via the futures market.
That’s where folks buy and sell contracts for future deliveries of goods or assets. These can be commodities such as oil, gas, and wheat. They can also be cryptocurrencies, including bitcoin.
Larry doesn’t recommend his readers buy shares in BITO. Instead, he recommends they take low-downside-risk “side bets” on BITO in the options market.
Most folks think options are risky…
Especially newer investors. When they think of options, they think of dangerous leverage… speculation… even gambling.
But if you use these trades right, that couldn’t be further from the truth.
When you buy an options contract, you make a side bet that an ETF such as BITO will move higher or lower. And you make a one-time payment called a premium.
This allows you to control multiple shares of BITO in the options market for a fraction of what it would cost to buy those shares directly. (Typically, each options contract gives you control of 100 shares.)
Options can be calls or puts.
With a call option, you make money only if an asset’s share price rises. If it doesn’t, you lose money.
But the most you can lose is the premium you paid to own the option. And it’s a small fraction of what you’d pay to own shares directly.
Even better, put options allow you to bet that shares will fall. In other words, they allow you to “short” an asset.
They make money when an asset’s share price falls. But again, the most you can lose is the premium you paid to own the option.
See why options are so useful in bear markets?
They allow you to make bets on movement up or down. Here’s Larry…
If you have the discipline to stay the course through bear markets, buy-and-hold investing works great. But as a trader, I focus on taking advantage of short-term moves.
The more volatile the market is, the bigger those moves are. That’s why I love to trade bitcoin. It’s one of the world’s most volatile assets.
I can also trade it in both directions. Most of my winning bitcoin trades were betting on the downside. Because of the crypto collapse this year, that’s worked better overall.
Still, I’ve recommended a few profitable bullish trades on bitcoin. I racked up 16 straight wins by not limiting my trades to being just bullish or bearish.
This doesn’t mean you shouldn’t own bitcoin for the long term. As I’ve written about many times in these pages, colleague and crypto investing expert Teeka Tiwari sees the crypto heading to $500,000 and beyond.
That’s a 2,193 % gain from today’s price of $21,800.
But you can also set aside some money to trade bitcoin in the options market as you wait for that longer-term climb.
I’ve been putting trading strategies front and center on your radar lately because they’re great ways to profit in bear markets.
Unfortunately, Larry isn’t accepting new Opportunistic Trader subscribers right now. But I’ll alert you when new slots become available.
Meantime, I highly recommend you check out Larry’s daily e-letter, Trading With Larry Benedict.
You’ll hear from Larry on his favorite trade setups. And you’ll learn how he spots winning trades like the ones he’s recommended on bitcoin.
There’s also a trading glossary Larry and his team put together. It demystifies the often-confusing jargon traders use – including call and put options.
These are great ways to familiarize yourself with trading. Even better, they’re free to read.
So head there to learn how to beat the market as a trader now.
Until tomorrow,
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Chris Lowe
July 27, 2022