Betting on a Bevy of Options

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Or did they?

If you look behind the headlines focused on U.S. employment numbers, the pullback in global stocks, and particularly those in your Global Bull Market Alert portfolio, wasn’t exactly dire.

Brazilian construction play, Gafisa S.A. (GFA), actually ended the week higher. And four of your positions — the iShares MSCI Chile Investable Market Index (ECH), the iShares MSCI Israel Cap Invest Mkt Index (EIS), the SPDR S&P Emerging Markets Small Cap (EWX) and Mechel OAO (MTL) — all hit highs for the year.

Therefore, I continue to stick to my fundamental investment thesis that global stock markets are set for a strong Q4.

That said, the U.S. and Asian markets are suddenly as technically oversold as they have been since early July. And with your current Global Bull Market Alert portfolio already chock full of bullish stock picks to take advantage of a Q4 rally, this is a good time to buy options on your existing positions.

So this week, I want to highlight three of my existing options recommendations, as well as make two new ones.

My existing option recommendations are:

Baidu, Inc. (BIDU) — buy the $360 December calls (BPJLL).

First Trust ISE-Revere Natural Gas (FCG) — buy the December $15 calls (FCGLO).

Gafisa S.A. (GFA) — buy the March $35 calls (GFACG).

My new options recommendations are:

iShares MSCI Hong Kong Index (EWH) — buy the December $15 calls (EWHLK).

PowerShares Financial Preferred (PGF) — buy the January $15 calls (PGFAO).

Here’s a word of warning:

Options may not be for you. They are a quick way to make money. But they are a quick way to lose it as well.

Exclusive  Doubling Down on AGNC alongside an Insider's $655,000 Bet

You should limit the size of your investment to an amount that you feel you can afford to lose. And if you are a beginner, start small, buying one or two contracts at first, just so you can get a feel for how volatile options can be.

Portfolio Update

The iShares MSCI BRIC Index ETF (BKF) was back near record highs in the middle of last week, before falling back slightly. With Rio winning the Olympic bid, expect a short-term bump to Brazilian stocks, which make up four of the top 10 holdings of this ETF. BKF remains a BUY.

Baidu, Inc. (BIDU) dropped 2.8% last week — though on Friday it had already come off of its lows. This institutional favorite is a BUY.

iShares MSCI Chile Investable Market Index (ECH) hit a high for the year of $47.89 last week. With Chile showing surprising resilience on the down side, I am moving this relatively low volatility pick back to a BUY.

The iShares MSCI Israel Cap Invest Mkt Index (EIS) also hit a high for the year of $49.19. EIS remains a BUY.

The iShares MSCI Hong Kong Index (EWH) fell below $15 for the first time since the beginning of September. Hong Kong is a BUY on its current pullback.

SPDR S&P Emerging Markets Small Cap ETF (EWX) hit a high of $44.15 for the year last Wednesday. This leveraged play on emerging markets is a BUY.

First Trust ISE-Revere Natural Gas (FCG) pulled back only slightly last week. Yes, gas supplies are up, but rig capacity is down by more than 50% from last year. That spells big rises in the price of natural gas as the economy turns. With this ETF now technically oversold, FCG is a BUY.

Exclusive  Profiting from the Ebola Outbreak

Gafisa S.A. (GFA) rose back above the $31.00 level last week. With news of Rio winning the Olympic bid, you can expect this Brazilian construction play to pop in today’s trading. Gafisa remains a BUY.

Mechel OAO (MTL) hit a high for the year of $18.12 last week before pulling back on Friday. This is a high risk/high return play that will soar on any market turnaround. MTL is a BUY.

PowerShares Financial Preferred (PGF) pulled back last week, as it was dragged down by bad news about the U.S. economy. The pullback is overdone and this high-yielding play remains a BUY.

Claymore/AlphaShares China Real Estate ETF (TAO) ended the week slightly lower. This will soar as Chinese markets regain their footing. But for now, TAO remains a HOLD.

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

This past week was one of consolidation for your Global Stock Investor portfolio, with most of your positions pulling back slightly. That said, your bets on Vectors Russia ETF (RSX) and India’s ICICI Bank Ltd. (IBN) ended the week higher, suggesting the appetite for risk among global investors is still strong. Curiously, the Shanghai stock exchange is down 7% this month and is coming off of its worst quarter this year.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE