Here’s one thing I’ve learned after 35 years of trading stocks and options, and recommending trades to clients and subscribers…

The most unpopular trades are the most likely to be profitable.

Don’t ask me to explain it. I can’t.

If you’ve followed me for any length of time, then you know I’m a contrarian at heart. I look for lower-risk trades, which by nature tend to be out of favor. And we profit as the trend reverses.

Just about 80% of the trades I’ve recommended this year have been profitable. And the annualized returns are off the charts.

But human emotions never change. Everyone wants to be in the hot stocks and the hot sectors. Risk isn’t a concern for most folks. Their focus is on the reward.

So, back in October, when I started recommending trades in the retail sector – even though we had tremendous success trading retail stocks up to that point – my subscribers were ticked off.

For example, in early October I recommended selling uncovered put options on Macy’s (M). We weren’t betting on a big rally in Macy’s shares. We were just betting the stock wouldn’t fall much further.

To me, it seemed like an easy bet. At the time, Macy’s was trading for seven times earnings and it paid a 7% dividend. Besides, we had sold uncovered put options on Macy’s three times previously this year. Those trades generated returns of 15.3% in 12 days, 12.9% in 45 days, and 28.3% in 27 days.

Those are enormous returns on a stock that is out of favor and has been falling in price all year. So, I figured my subscribers would willingly jump at the chance to sell another series of uncovered put options on Macy’s when I recommended the trade in early October.

You wouldn’t believe the vitriolic email I received after that recommendation.

That’s when I knew for sure we had a winning trade.

You see… when even the folks who know I’m a contrarian trader HATE a trade I’m recommending, then I know it’s going to be a winner. So, after recommending the Macy’s trade – which generated better than a 13% gain in 36 days – I got more aggressive in the retail sector.

I told subscribers to buy speculative call options on Bed Bath & Beyond (BBBY).

That trade produced a 117% gain in just two weeks. But you wouldn’t believe the heat I took on that recommendation.

Folks thought I was nuts. Some people canceled their subscriptions because of it. And the feedback I got… well… let’s just say it was less than flattering.

Fast forward to today…

The only sector that I think offers a low-risk/high-reward setup is gold stocks. I’m a big fan of gold stocks right here and I’ve made a few recommendations to my subscribers on how to profit off of the situation.

And they’re groaning. Seriously… even my subscribers – who know I’m a contrarian trader – are repulsed by the idea of buying gold stocks. Nobody wants to buy this sector.

That’s why I know it’s a winning trade.

Best regards and good trading,

Jeff Clark

Reader Mailbag

In today’s Mailbag, we hear Delta Report readers’ concerns…

Most of the year we have had a powerful market advance, yet you have recommended few long option trades compared to the short trades in your speculative recommendations. You have missed many good long setups.

Is your trading style primarily a beneficiary of falling stock prices? Do you anticipate that you will do better in a falling market?

– Joe G.

Jeff: Hi Joe. Thanks for writing in.

It’s no secret that I tend to lean bearish in my personal bias towards the market. But, that doesn’t mean I always trade that way.

In fact, of the 39 speculative trades I’ve recommended in the Delta Direct blog in 2017, only seven of them were bearish positions. Similarly, only seven of the 39 more conservative trades I’ve recommended as official Delta Report trades we’re bearish. So, that’s 14 bearish recommendations this year versus 64 bullish recommendations.

That said… my style is conservative. I look for low-risk opportunities – which means buying stocks when they’re oversold and/or shorting stocks when they’re overbought. I don’t chase extended conditions. So, you won’t see me recommending stocks that have run up too far too fast, or aggressively shorting stocks after a large decline.

Despite that conservative stance, I think we’ve done pretty darn well this year – with a win rate of almost 80% and an annualized gain well above 100%. There probably aren’t a whole lot of options trading services with that sort of record.

And yes, because of the conservative stance, I do anticipate we’ll do even better in a falling market.

I sure lost on your trade of the market going down last Friday and this Monday and Tuesday. I thought you were really smart before my first trade.

– Donald K.

Jeff: Hi Donald. The stock market did not do what I thought it would after the jobs report and right before the FOMC announcement last week. I was on the wrong side of that trade – which happens every once in a while.

Over time, though, I try to get more trades right than wrong. Let’s take a look at gold stocks a few weeks from now and see how that plays out.

I understand that there is no sure thing in trading. You win some, you lose, and with a good strategy that focuses on risk mitigation and money management the good trader will come out ahead in the long run. That being said, the few trades that I have participated in and paid attention to since signing up for the Delta Report are all getting obliterated.

After paying my hard-earned money for your advice I am surprised, although I probably shouldn’t be, to be wondering why I paid for advice that has me losing money a lot faster that I would be without the advice, and with the subscription fee still in my pocket!

– Frederick T.

And one reader tells us about his success trading cryptos this year…

I have a bitcoin and other cryptocurrency coins story. I began investing at $500 per day or $2,500 per week since 10/25/17. As such, 12/25/17 is my 2-month anniversary in buying cryptos. To date my $14k investment is worth just under $30k.

I’ve been investing long enough to know that one day the excitement may be gone. Maybe not. All I know is that so many people have invested money in cryptos and made a killing. I’ve lost good money trading stocks and options also. So why not try an alternative?

I’m pleased with the winning trades I’ve made following your investment advice, however I’ve also had a few losers. At 55 years old if I can make a decent score in the market, cryptos, and real estate over the next five years, I can coast into retirement feeling pretty good. It’s worth the risk. No risk, no big score.

– Merc D.

As always, feel free to send in your trading stories, questions, and suggestions right here.