A One Month 50% Gain Just By Following this Simple Advice

Posted by Ian Cooper - Monday, January 17th, 2011

From Wealth Wire:

On January 7, we showed you a simple way to turn quick profits... 

And we played it in Options Trading Pit... buying puts at the top and riding it straight down.

Did you play along?  And if so, how'd you do?

MCPchartJanuaryshort 

Here's how it works... and how we profit from the “event.”

When any company goes public, only a percentage of the company's stock is offered for sale, also known as the float. The rest is held and owned by underwriters, company officers, and other insiders.

Contractually, insiders can't sell their stock for a period of time... usually six months to a year from the date of the IPO. This is commonly referred to as the lockup period and is set up to ensure that insiders cannot profit from the early trading frenzy generated by an IPO. It provides stability because insiders cannot dump their shares. But once the lockup period expires, anything goes, and insiders are allowed to sell their shares.

If insiders are realizing a significant gain on an investment, they can cash out at lockup expiration, like they did with eToys in 2000, for example.

eToys chart in 2000 

Insiders sold the stock heavily from October to December 1999, flooding the stock float with shares, and forcing the stock down from an $80+ high to less than $20.

Insiders cashed in, flooding the market with shares, and forcibly sent the stock price lower. Ordinary shareholders, unfamiliar with the unlock practice, are completely baffled. Share prices are dropping like a cement boot in the East River and they don't know why. Lucky for us, they panic and dump their shares at a loss, only adding to the glut and our profit opportunities.

You can read more here.

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