This sector is booming…
The gaming industry has had an unbelievable year.
This year has brought on a brand-new round of challenges for everyone. But for those companies that allow their customers to stay at home to enjoy the products, traffic and sales haven’t been an issue. For instance, online gaming has seen a massive increase in users. And don’t even get me started on the console frenzy we’ve seen the entire year.
Earlier this year, Nintendo Switches sold out for months and were nearly impossible to find. This was followed by an immediate sell-out of the PlayStation 5 and Xbox Series X, which is still, to this day, impossible to find. And new games are rolling out monthly and garnering solid sales and attention.
So, needless to say, 2020 has been the year of the video game boom. But many wonder if it can continue as the economy struggles…
Here’s what I have to say about that…
Where’s the money?
When the pandemic began, “Animal Crossing: New Horizons” was released and became a record hit for Nintendo, selling 26 million copies at $60 apiece. During such an uncertain time, people yearned for an escape, and Animal Crossing delivered just that. Many developers pushed out games that allowed you to play with people worldwide – so, even those who didn’t consider themselves “gamers” began to play, spending time with family from afar. And for many consumers, they were looking to fill the extra time they now found themselves with.
But regardless of reason, the gaming industry saw an unprecedented wave of consumer traffic. And I think despite an uptick in unemployment and whispers of a recession, we’ll continue to see that bullishness continues well into 2021.
First off, the pandemic is still causing lockdown measures to be carried out, so people are still in their homes. I believe this alone will lead to the continued sales of video games. On top of this, important names are stepping into the space. Tech giants like Google and Amazon are still investing in cloud gaming services like Stadia and Luna, hoping to join into the console wars dominated by Sony and Nintendo. And as more and more releases happen and games build their fan base, I believe consumers will continue to play even after the pandemic passes.
So, in my opinion, the gaming industry is recession-proof, no matter what comes next. And that’s precisely why I will be adding one of the biggest names in the sector to my lineup.
How do I get some?
With such high volatility in the market, options premiums can get a little out of control. The heightened uncertainty forces the price traders to pay for options up, making the risk to reward ratio of merely buying an opportunity less appealing.
It’s times like these where the Spread trade strategy is particularly useful…
By buying one option and selling another (in the same transaction), we can help alleviate the cost of entering an options trade while still maintaining an excellent risk to reward ratio.
Today, I’m looking at a Spread trade on Sony Corp. (SNE). SNE has continued to profit from the pandemic, and I believe we’ll see the stock breakout even higher as we see more people buying consoles and games.
Now, if you like the idea of a spread, I like the SNE March 19, 2021 $100 Calls and SNE March 19, 2021 $105 calls. You would buy-to-open the $100 and sell-to-open the $105 calls, creating a vertical debit spread. This is a great setup because it gives you plenty of time until expiration, especially if you can get in this setup for less than $1.30.
In the Spotlight: Pfizer and Moderna’s pandemic-fueled dominance
The biggest coronavirus breakthrough is here and it could single-handedly end the economic shutdown.
Pfizer (PFE) worked together with a young biotech company, Moderna (MRNA), to create a vaccine in record time. And Wall Street analysts expect these two companies will generate $32 billion by the next year.
But despite all these amazing accomplishments, PFE stock hasn’t seen a huge boom because it’s already such a large company. However, MRNA is a completely different story. The Covid-19 vaccine news has transformed this newcomer into a $62 billion biotech behemoth. Shares have skyrocketed nearly 700% this year alone. And the company is expected to generate an additional $25 billion in the next two years from their Covid-19 vaccine alone.
Now, as you know, I haven’t been chasing the big names in the vaccine race. But that doesn’t mean I’m losing sight of the progress being made and how it’s impacting these stocks. These two have established themselves as the world’s best Covid-19 vaccine provider. They’re generating billions of dollars and have government contracts with the planet’s wealthiest nations. So, I’ll be keeping a close eye on these stocks.
With that said though, the progression made with the vaccine could really breathe life back into the economy, so while PFE and MRNA may have the attention of most investors, I’ve got my eyes on something else entirely. It’s a market trend that happens every year, without fail. And regardless of the impact of the vaccine – I know we’ll be seeing this trend begin very, very soon. And over the next few days, I’ll be sending you everything you need to know.
So, keep an eye on your inbox. Because you don’t want to miss it.
Even Further Under the Radar…
It’s never been my style to chase news-making headlines in attempt to stay ahead of the curve when it comes to trading.
While Pfizer and Moderna have been the focus of the vaccine race, there are even more ways to play this major development…
And my colleague – biotech investing expert Michael Robinson – is revealing the full story right here.
Daily Action Plan (livestream recap)