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Option LEAPS Economic Timing By Jason Schwarz Buy and Hold Economic Timing • Warren Buffett, "I would consider a year in which we decline 15% and the Dow declines 30% to be much superior to a year when both we and the average advanced 20%." • Steve Jobs, "You have to intercept a moving train." Since 2000 Economic Weather • Fear • GDP • Retail/consumer • Employment • Housing • Leading indicators • Corporate revenue growth • Earnings estimates Investment Vehicle • LEAPS • Strike price (out/in the money) • Premium (intrinsic value + time value + volatility value) • Expiration date Option LEAPS • Stock replacement • Diversification • Tool for hedging • Great way to make money, not keep money Rules for Improving • Fully invested Economy • Proper allocations • Seek leadership • Buy index on a selloff • Double down by increasing risk • Take profits • Buy in anticipation of catalyst events • Watch the economic weather! Rules for Worsening • Buy dips sellEconomy rips/defense. Beware of falling • Cash is home knife • Identify downward leadership • Be leery of high premium-investors take liquidity profits • Cautious puts • Slippery • One year expiration Current Conditions www.economictiming.c om [email protected]
