In the “Strategy Room” part of the website, we lay out the different investment vehicles used to execute our future investments. For example, one “Strategy” people often use is called a stock-replacemenet strategy where an investor will sell his stock in favor of deep in the money call options or deep in the money call-spreads. By doing this, the investor gains non-margin based leverage to make more on his money.
For example, the January 2013 Apple $300 leaps cost $115.00 as of July 29, 2010. If Apple goes to $500 by January 2013, those leaps will be worth $200.00. That’s nearly a 100% gain from where Apple is currently trading — $400.00. Yet, with the stock, that is only a 25% gain.
Another strategy might be focused on call-spreads. In the strategy room, we lay out what a call-spread is, how it is used to maximize leverage and how to best create these spreads. There are different ways to create call-spreads, and those general methods are discussed in the strategy room.
The information in the strategy room is more of an education or guide on different investment strategies that can be applied to almost any other stock. It is static background information the knowledge of which is generally required of each subscriber who intends to keep up with the execution side of the equation.
For example, the tool we used to execute the January 2013 Apple investment thesis back in June was the Vertical Call-Spread. You can either leg-into a call-spread or create one in a single transaction.
We discuss all of this in the strategy room and more in the strategy room.