How We Spotted a 57% Options Win on One of the Most Hated Stocks Last Week
Oversold signal. Negative news. Big rebound. Here’s how Trader’s Edge capitalized—and how you can, too.
Hi there,
We’re glad to have you as a subscriber to Investor’s Compass, and we hope you’ve been finding value in the daily insights we provide.
Today, we want to share a success story from our premium offering, Trader’s Edge, to show how our rules-based system spotted an overlooked opportunity—and how our disciplined approach turned it into real gains.
A Quick Look at How It Happened
When we examined our list of securities (over 350) on Friday morning, UnitedHealth stood out with a Relative Strength of 11, significantly oversold (for more on RSI, see the bottom of the post). There had been significant negative information in the news regarding UNH and the crowning blow was an announcement on Thursday that they were being investigated by the Justice Department for Medicare fraud. A perfect recipe for short sellers and investors who had decided to bail.
For most traders, this looked toxic. For us? It looked like a high-probability setup. We highlighted UnitedHealth as a possible trade for a call option in Trader’s Edge that morning.
UNH stock opened up during regular trading and we decided not to chase it but, later in the morning, it traded below the previous close and we were able to buy one call. UNH continued to trade lower, and we decided to buy an additional call. Shortly thereafter, the stock started moving higher and our Calls were in the money.
The Results
We eventually traded out of both positions with a 35.8% gain on the first option and a 57.4% gain on the second option. The contribution to the overall portfolio was 7.5% gain.
First UNH call: +35.8% gain
Second UNH call: +57.4% gain
Total portfolio contribution: +7.5% in one day
Not every trade wins—but our risk management rules kept all losing trades this month to around -1% or less. This strict loss discipline has allowed us to continue growing our portfolio in May despite our ratio of winners vs losers being around 50% this month.
What This Tells You
This trade wasn’t about guessing. It wasn’t based on hype.
It was about:
Letting data identify opportunity—even in the most beaten-down stocks
Following price signals + RSI + market structure
Staying patient, not emotional
Acting on signals—not headlines
That’s the core of Trader’s Edge.
We know option trading is not for everyone, but sticking to long only Puts and Calls, coupled with a strong risk management process, has resulted in a very positive 152.8% return.
The portfolio we have traded with our system started with a $1000 deposit into a Schwab account. We now have a market value of $2,528 in just 10 months far outpacing the S&P and the monthly subscription fee.
Please be reminded we are offering a 30-day free trial to Trader’s Edge. You owe it to yourself to give it a try.
Understanding Relative Strength Index.
Relative Strength Index (RSI), developed by J. Welles Wilder, is a popular momentum oscillator that is commonly used in technical analysis to identify overbought or oversold conditions in a financial market. It is a range-bound oscillator, typically oscillating between 0 and 100, and is calculated using the average gains and losses over a specified time period. The formula for calculating RSI is:
RS (Relative Strength) is the average of 'x' days' up closes divided by the average of 'x' days' down closes.
The most common time frame for RSI calculations is 14 periods.
Overbought and Oversold Levels:
· RSI values range from 0 to 100. Traditionally, and according to Wilder's original interpretation, an RSI above 70 indicates that a security may be overbought, and an RSI below 30 indicates it may be oversold.
· Overbought conditions, greater than 70, suggest that the security may be due for a price correction or reversal downward.
· Oversold conditions, less than 30, suggest that the security may be due for a price bounce or reversal upward.