Earlier today I was listening to a financial segment on the radio. When asked how investors could capitalize on the Kraft-Heinz merger, she said the best way would have been to have already purchased mutual funds. It’s no surprise that this person was a financial advisor. They have been preaching the same old thing for several decades now - buy mutual funds. And that’s because their job is to - sell mutual funds.
Yet, there are other ways to make much more money on both of these companies prior to the merger. Trading options and writing covered calls are just two of the ways. If you’re weary of too much risk, then write covered calls. If you’re more adventurous, then trade options. And even after the merger, you can still use these techniques.
Looking at the 6-month trend chart of Kraft (which has now become Kraft-Heinz a few days ago), there was enough volatility in the stock price to have made triple digit profits if you were trading options and double digit profits if you were writing covered calls in the last 6 months. If you were like most investors, you bought and held and would have made around 10%. But if you’re like me, then you’re not like most investors. I don’t care about what the average investor is doing especially when I know how to make much more in a shorter amount of time.
Now I understand that for some the roller coaster ride of the stock market may be a little unsettling. I’ve been on it for 17 years now. The key to my success has always been to use the volatility to my advantage AND manage my risk. Using the volatility to your advantage is your offense, and managing your risk is your defense.
All the best to you on your financial journey!
Aneshia