MoneyMorning.com Report - While the
vote has come and gone, market turmoil, globally, is here to
So much for making new stock market highs here in the U.S. and
riding the next leg of the old bull market higher...
So much for turning to emerging markets, or currencies, or
commodities, or bonds...
Everything's up in the air now. Everything.
If you didn't figure out how to play the Brexit and didn't make
lots of money on the Brexit outcome, you're going to need lots of
help navigating the markets going forward.
Fortunately for me and my newsletter subscribers, I knew
how to play the Brexit vote
and we made a couple of very smart, low-risk and high-reward plays
that netted us two triple-digit wins, which we banked last
If you understand what the Brexit vote was about and what's
changed across the world, you'll be able to make lots of big trades
like we did.
Here's why... and how you can profit now...
The New Post-Brexit Paradigm
What just happened - with the British voting to exit the European
Union, being as unprecedented as it is - actually opened up
That's because what the British voters were facing, what the
world's increasingly facing, should be obvious to all of us.
It has been to me.
Globalization and the unprecedented increase of
central bank manipulation
of free markets aren't working together to generate global
They're a complete and absolute failure.
There are lots of reasons why the intersection of the two giant
market-moving megatrends are negatively impacting growth, upending
markets, increasing the wealth gap, and destroying investors'
future possibilities of retirement.
I'm going to lay all the reasons out for you here soon - we'll
get to that.
But before we do, I want to show you how my subscribers made so
much money on the Brexit vote, and what you can do right now.
A Trade Gift-Wrapped by the Markets
It's not all the time that markets "tee-up" great risk-reward
plays where a small risk is easily worth the giant reward it
That happened with the Brexit vote. And it's going to happen
more and more, a lot more in fact, but I'll get to those
A "vote" is a binary play, it's black and white, a yes or a no,
a thumbs up or a thumbs down. Generally, you know, depending on
which way the vote goes, how a stock or the markets are going to
What we don't usually know is how much they're going to move. If
there's very little movement the play may be a non-event and it's
time to close it and move on.
Sometimes, as was the case last week, a binary play has a
potentially huge upside or a potentially huge downside. That makes
taking a side a risky proposition, if you get it wrong.
But the thing about Brexit was, it wasn't yet priced in to the
markets. Meaning that plays to profit on a potential Brexit were
incredibly cheap ahead of the vote.
Here's what I told my
subscribers on June 17:
If there's no Brexit, we should get a powerful upside
short-covering rally that easily could take us to new highs. But
that's not what we are positioning for... we're adding a few
positions over the next couple of days, to potentially earn a
bundle in the event of a Brexit.
We targeted put options on the iShares MSCI Europe
Financials (Nasdaq: EUFN), an index fund that tracks a basket
of big-name European financial stocks, including HSBC Holdings Plc.
(NYSE ADR: HSBC), Allianz SE (OTCMKTS ADR: AZSEY), Banco Santander
SA (NYSE ADR: SAN), Lloyds Banking Group Plc. (NYSE ADR: LYG), and
UBS Group AG (
EUFN was a great way for us to get the broadest exposure
possible to European financials without having to guess which
stocks would be hit hardest - and without having to load up on
multiple expensive stock positions.
So we bought puts on EUFN for just $0.35 about a week before the
vote, when everyone was predicting that Brits would vote
Now, there are a lot of novice traders out there who plug their
ears at the mention of options because they're "too risky."
But if the Brexit vote had gone the other way, and our puts had
lost 100% of their value, we'd have lost a mere $35.00 per contract
- far less than if we'd shorted EUFN or bought shares of something
like ProShares UltraShort FTSE Europe
(NYSE Arca: EPV). Buying 100 shares of EPV before the Brexit vote
would have cost more than $5,000 - and would have exposed us to far
That's just the kind of opportunity we look for in my trading
services. We haven't been getting a lot of those great
opportunities because the markets haven't presented us with a lot
of them lately. But like I said - that's all changed now.
As it turns out, when the vote was to leave, our puts soared,
giving us 242% gains.
Where Markets Go from Here - and How to Profit
The good news in the Brexit vote is that it is going to move
markets out of the doldrums, make them super volatile, and tee-up
lots of plays from now on, for the foreseeable future, for all of
us to take full advantage of.
A good risk-reward play to make right now is a bet that the euro
has further to fall.
It's bouncing after it sold off hard when the vote came out.
That's fine with me. I want it to keep rallying a little more,
because it can't last.
You'll get my analysis on the euro-dollar price soon. But the
bottom line is the euro is going to lose a lot of value against the
ProShares UltraShort Euro
(NYSE Arca: EUO) is a leveraged exchange-traded fund that
goes up in price as the euro falls in value relative to the
Right now, you can buy the EUO Nov. 18, 2016 $30 calls
(EUO161118C00030000) - a bet that EUO will go up. If you're
patient, you can probably buy them for $0.10, though you might want
to pay up a little if EUO starts moving higher in the next few days
Based on my analysis, the euro could drop below one dollar,
which would set off some panic selling and make EUO soar. That
would make your calls worth a small fortune.
That's a good risk-reward play, risking $0.10 to $0.15 or so to
potentially make a few hundred percent return.
Up Next: How the EU Takes Its Big Fall
The largely unspoken truth is that the Brexit vote was a
repudiation of the marriage of globalization and the manipulation
of free markets by central banks, especially the ECB.
The world will now look at Britain and see how it fares unyoked
from a failed experiment, and it will look at what's happening to
the rest of the EU.
And it'll eventually see that markets selling off on the Brexit
vote was, in fact, a harbinger of the brewing crisis, the next
meltdown and another super market crash.
This is how the European Union begins to
To get full access to all Money Morning content
including our latest Premium Report, "How to Make 2015 Your
Wealthiest Year Ever," click
About Money Morning:
Money Morning gives you access to a team of ten market experts
with more than 250 years of combined investing experience -
. Our experts - who have appeared on FOXBusiness, CNBC, NPR, and
BloombergTV - deliver daily investing tips and stock picks,
provide analysis with actions to take, and answer your biggest
market questions. Our goal is to help our millions of
e-newsletter subscribers and Moneymorning.com visitors become
smarter, more confident investors.
© 2016 Money Morning and Money Map Press. All Rights Reserved.
Protected by copyright of the United States and international
treaties. Any reproduction, copying, or redistribution
(electronic or otherwise, including the world wide web), of
content from this webpage, in whole or in part, is strictly
prohibited without the express written permission of Money
Morning. 16 W. Madison St. Baltimore, MD, 21201.