This will be one of those trades I really regret missing…
I knew it was coming.
But I failed to act.
Last week, Tesla (TSLA) chief Elon Musk tweeted a poll to his followers.
He asked whether they believed Twitter (TWTR) was truly a platform for free speech.
“The consequences,” he stated in a follow-up tweet, “will be important. Please vote carefully.”
Man of Action
Elon is not a man that bluffs. He’s a man that acts.
So, when the world’s richest man hints that he is considering buying Twitter, he is considering buying Twitter.
I knew what would happen if he bought the stock… Twitter shares would go surging higher!
I even tweeted a jokey reply to his post about needing to take a position in TWTR stock before he made the announcement.
Sure enough, Elon put his money where his mouth is.
And I woke up Monday morning to see this headline…
I didn’t make a dime. Because I didn’t own a single share.
The reason? There was too much risk on the other side of the trade.
The Other Side of the Coin
You see, there was the possibility that Elon was going to take a stake in Twitter.
But on the other side of the coin, he could have just as well built a competing platform.
He even tweeted a separate reply to his own poll, asking “Is a new platform needed?”
Elon has the resources. And he has the engineers to build something better.
What would happen if Musk announced he was building a new social media platform of his own?
Twitter would have gone the other direction. In my estimation, the stock would have crashed by at least 25% this morning… probably more.
And that was a risk I was not willing to take.
Limited Risk, Unlimited Upside
What I should have done is buy call options on Twitter.
As regular readers know, what call options do is create a way for us to control our risk without breaking a sweat every time the charts tick up or down.
Even if Twitter stock went to zero, the most one could lose is the premium paid for the call option.
So, this would have been a limited-risk trade with unlimited upside. And I would have started my week with a big profit.
Of course, it’s no use crying over spilled milk. But I hope this will teach you a valuable lesson…
You can’t win if you don’t play. And no one ever got rich sitting in cash.
Embrace the surge,
Ross GivensEditor, Stock Surge Daily