14 Aug

How To Maximize Returns Trading Blue Chips

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You’ve probably heard that trading and investing in blue-chip stocks is a way to build wealth…

… and that might be true to an extent… but there’s a lot of give and take in between.

Sure, blue-chip stocks have widely been considered financially sound and offer predictable returns. But are they really the best place to put your money if you are in search of outsized returns?

Today I’m going to talk to you about how I’ve figured out a way to trade blue-chip stocks for:

  • Better returns
  • More consistency
  • Abundant trading opportunities
  • Higher payouts

My blue-chip strategy takes advantage of all the things people love (and hate) about them. And it’s the reason why I have been able to elevate my trading to heights that they’ve personally never gone before.

 

(It’s shaping up to be another good week. Thanks to my new blue-chips strategy)

And while my approach to trading blue chips might sound radical and different to most folks… it’s actually the simplest and easiest way to make money in the market.

Let me break it down with some logic:

1. Opportunity Cost

One of the main disadvantages, when you’re trading blue-chip stocks, is the fact they drain your capital. You see, blue-chip stocks tend to have a higher share price because they generally offer safe and consistent returns over the long run.

As a result, these stocks are very expensive and if you buy shares… it’s going to prevent you from taking on other opportunities.

Here’s what I mean. Let’s say you have a $15,000 trading account and you wanted to buy shares of Apple Inc. (AAPL). Well, AAPL closed at $208.97 yesterday… and at that price, you would need to use all your capital to make it worthwhile.

Even then, the trade wouldn’t make a whole lot of sense… because you’d be putting all your eggs into one basket. You see, with $15,000… you could only buy around 71 shares of AAPL.

Some investors and traders will tell you that leaving your money tied up in blue-chip stocks is a good thing because many offer a dividend… they think it’s an easy and safe way to collect income.

However, with dividends, you actually have to wait every quarter to collect a small amount of cash. For example, AAPL offers a quarterly dividend of 77 cents.

Think about it like this, you would collect a quarterly dividend of $54.67 from AAPL if you put in nearly $15K in the stock. You’re tying up a lot of capital just to collect a small sum of cash and generate safe and “steady” returns.

However, let’s say you saw another trade and wanted to take it… you wouldn’t be able to because all your capital is tied up, so you’re forgoing a lot of money-making opportunities when you trade large caps.

2. Market Near All-Time Highs

With the market near all-time highs… blue-chip stocks are susceptible to pullbacks. While you might think that blue chips will actually protect your portfolio during an economic downturn… you’ll actually realize these stocks move with the market.

You see, these companies are widely followed by Wall Street analysts, investors, and traders… and any sign of slowing growth or failing to live up to expectations could send them much lower.

I don’t know about you… but buying and holding blue chips at all-time highs seems a little risky.

That’s not the only disadvantage with blue-chip stocks…

3. Lack of Volatility

When you’re trading blue-chip stocks… your returns are pretty much predictable. It’s very rare that you’ll see a blue-chip move more than 15% on a day.

You’ve probably heard of the bell curve or “the normal distribution” before.

Does this look familiar?

 

Looks like a bell curve right?

Well, let me refresh your memory. This is the distribution of Apple Inc. (AAPL) returns over the last 5 years. Basically, it gives us a visualization of how much AAPL has moved every day in percentage terms.

If you notice, there are big bars right around the center of the chart, this is known as the mean (or average), and if you look closely, on average, AAPL doesn’t move a whole lot. In fact, it moved an average of 0.07% per day… annualized, that’s just 21.2%.

When you look at the far left-hand and right-hand side of the chart above… it shows us that AAPL doesn’t move a whole lot.

You see, the most it’s ever moved over the last 5 years was just around 10%, to the downside. To the upside, we haven’t really seen it move more than 7%.

If you’re a stock trader, you would want to see more volatility… and more days where there are large moves… and blue-chip stocks just don’t offer that. Think about it like this… if you put $10,000 into AAPL and it moves to your direction, you can expect to make around $2,000 in a year.

To me, that’s just a waste of time and money.

Why?

 

A New Way to Profit Trading Blue Chips

 

Well, I’ve discovered a new and better way to trade large-cap stocks, and take advantage of the fact that they aren’t volatile and don’t move a whole lot… and a more efficient way to collect income (an alternative to investing to collect dividends). Not only that, you don’t need to use a lot of capital to get started.

If you recall the bell curve… we can expect large-caps to not move a whole lot. For example, the bulk of AAPL’s returns over the last 5 years were between -2.5% and +2.5%. In other words, most of the time, AAPL didn’t lose or gain more than 2.5% in a single day.

For the most part, that’s the way large caps trade… their returns are steady and they don’t move a whole lot.

When you’re trading blue-chip stocks… it’s not fun to see small returns… but when you use my Weekly Windfalls strategy, you can actually make money even if the stock doesn’t move a whole lot.

How?

How to Make Money in Blue Chips, Even if They Don’t Move A Lot

Well, let me show you an example.

The other day, I was bullish on Apple (AAPL) and saw it was trading above a key level of $200. This was a key psychological level, and I figured the bulls would try to support the stock at that price.

However, buying the stock would’ve been too expensive… and I knew that AAPL probably wasn’t going to move a whole lot, so it didn’t make a ton of sense risk-reward wise.

Think about it like this… when you trade stock, if it moves 5%… you make 5% of the capital invested. On the other hand, with options… a 5% move to your favor could translate to a 50%+ move in the options.

So what did I do?

I used an options strategy that allowed me to collect premiums… and I was betting the stock would stay above $200 by the end of the week… I figured AAPL probably wasn’t going to move a whole lot to the downside, and even if it did… my risk was defined.

So what happened with that trade?

 

 

Well, AAPL was up around 4.50%… but I was up 87% in the options position and I locked in $7,850!

 

 

Even though blue-chip stocks don’t move a whole lot and stay within the bell curve… the predictability and safety of them actually allow us to take advantage of the lack of volatility. So much so that my win rate is around 80% – 90%.

If you think you need to understand heavy math for this… you’re dead wrong because it’s extremely easy to pick up and start locking down large winners.

“Because of you, Jeff and Jason I am up over $46,000 in the last 24 hour” ~ D.A.

:heavy_dollar_sign::heavy_dollar_sign::heavy_dollar_sign:Closed all my WW positions except for tomorrow’s VXX. Locking profits before next tweet from Trump or Musk. Net $12.5K this week, WW Total Profit $22.5K for all position I was able to enter. THANKS JB!!! I’m still 100% profitable on WW trades. This will probably JINKS me” – R.E.

“Thanks JB my 401k already doubled with your alerts on verticals. Take the trade wait to be filled at the price you want and cash in later half at 50% and the rest around f the 80 90% mark” – D.C.

Sure blue-chip stocks can be safe and offer steady returns… but the lack of volatility, capital drain, minimal returns, and the risk-reward ratio don’t make a lot of sense in this market environment… especially when there is a more efficient and lucrative way to take advantage of blue chips.

My Weekly Windfalls options strategy allows you to take advantage of all the reasons why people love (and hate) blue-chip stocks. Why settle when you clearly don’t have to?

It’s my greatest breakthrough as a trader and instructor. And as you can see from the testimonials above, it is possible to learn a new strategy and make a comfortable four to five figures a week doing it.

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