How to Turn Panic into Profit
I’m not a full-time trader, but I do enjoy putting on a few trades each week when I can.
One of the perks of my position is exposure to some of the sharpest minds in the trading world.
So, when a simple yet powerful strategy crosses my path – one with a solid track record and minimal hands-on time – I’m all ears.
That’s exactly what our Head Trading Tactician, Bryan Botterarelli, brought to my attention about a year ago.
He calls it the “Gift Gap” strategy, and it’s fascinating in its simplicity and effectiveness.
The Gift Gap strategy zeroes in on a particular market inefficiency: the tendency for price gaps to get filled.
When a stock drops significantly, creating a gap in the chart, there’s a high probability that the gap will be filled.
That’s the market inefficiency we’re exploiting.
Our team has put this strategy through rigorous backtesting, and the results are nothing short of stunning:
- Over a 10-year period, we analyzed 3,735 gap down events.
- When targeting a 25% gap fill, our win rate was a staggering 97.11%.
- That means out of those 3,735 trades, 3,627 were winners.
- The average winning trade lasted just 4 days.
- Even more remarkably, 80% of these winning trades hit our target within the first two days.
These results aren’t just impressive… they’re game-changing.
And they’re why I’ve become such a believer in this approach.
We’ve been featuring this strategy in our watchlist. And if you’ve been following along, you’ll remember last week’s Dicks Sporting Goods (DKS) opportunity that paid off handsomely.
I wanted to share my personal experience with you because I truly believe in the potential of this approach.
My Winning Trade In DLTR
On September 4, 2024, Dollar Tree (DLTR) experienced a dramatic drop in its stock price, creating a textbook Gift Gap opportunity.
The stock plummeted from $81.65 to $63.56 in early trading, a decline of over 22%, after the company reported disappointing second-quarter earnings results that fell short of analysts’ estimates.
This sudden and severe drop in DLTR’s stock price created a large gap in the chart, presenting a classic Gift Gap scenario.
As the Gift Gap strategy suggests, such significant price gaps often have a high probability of being filled, at least partially.
Now, you don’t want to just jump in right as the stock is selling off, that’s what they call trying to “catch a falling knife.”
You want to wait for it to stabilize…
Which is what I did, and why I entered in on the trade on September 12th.
At the time of the trade the stock was trading around $67 per share.
But utilizing Bryan’s approach, I didn’t buy the stock, instead I bought call options.
To be specific, I bought the $75 call expiring on October 18 for $1.40 per contract.
This gave me over one month of time for the trade to work, and if it didn’t I would be out $140 as the worst-case scenario.
Well, what happened next made my week.
Within a few short hours after I entered my trade, DLTR began to pick up momentum. Over the next three trading days, the stock moved from $67 a share to over $73.
Now, that might not seem like much, but when you’re using options the way that Bryan teaches the results can be stunning.
In fact, I was able to get out of this trade at $2.80 in premium. In other words, I doubled my money in just three days!
Of course, not all of these trades are going to work this quickly, but it just shows you how powerful this strategy is.
- The Gift Gap strategy capitalizes on the tendency for price gaps to be filled, as seen in the DLTR example.
- Our extensive backtesting shows a 97.11% win rate when targeting a 25% gap fill.
- Wait for the stock to stabilize after the initial drop before entering a trade, as demonstrated in the DLTR case.
- Consider using options instead of stocks to potentially amplify returns, as shown in the DLTR trade.
Always implement proper risk management, even with high-probability setups.
Be prepared for quick moves, but remember that not all trades will work as rapidly as the DLTR example.
Your Action Plan
Want to see The Gift Gap strategy in action? And do you want to get some trade ideas in a live format for FREE?
Then join Bryan and I on Wednesday, October 2 at 2 p.m. ET. We will be hosting a live training session where you’ll learn:
- How to Trade Short-Term “Gift Gaps” in the Stock Market
- Why our backtests showed rare gains up to 114% in 19 days, 235% in 11 days, and 452% in 8 days
- LIVE Gift Gap trade setups, including names and ticker symbols
- Why high market volatility is BETTER for Gift Gap traders
Bryan’s top students have seen incredible results.
Like David, who took $20,000 and turned it into $185,000 in one year. Or Mo, who transformed a $25,000 portfolio into over $225,000 in just four months.
Ready to learn how to spot and trade Gift Gaps like a pro? Join Bryan and me for this exclusive event.