How to Profit from the Senate’s Health Care Vote

After the Senate scored the votes on Tuesday to review a plan for repealing or repealing and replacing what’s come to be known as Obamacare, we saw a mixed bag reaction from health care stocks. Even some of the bulletproof ones, like Amgen Inc. (AMGN), closed lower from their opening highs.

Now Whether or not this was simply a kneejerk reaction remains to be said. Only time will tell if their bill will pass – and it’s got a ways to go from here.

But no matter what happens next, you’ve got a great opportunity to make some real money right now.

And here’s the easiest way to do it…

Despite Uncertainty, the Health Care Sector is at an All-Time High

Regardless of the mixed response from health care stocks on Tuesday, the drama that’s been playing out in Washington has actually had no ill effect on the overall health care sector.  Just take a look at the Health Care Select Sector SPDR® ETF (XLV):


As you can see, it’s just barely off its all-time highs and is in a solid uptrend so far this year. And when you analyze its year-to-date performance, XLV only trails the technology sector.

Image provided by www.sectorspdr.com.

Both XLV and the Technology Select Sector SPDR® ETF (XLK) are the top two performing sectors so far this year, and both have performed better than the next best ETF by at least a full 5% or more better.

And even though we’re going to have to wait to see how this health care bill plays out in Washington, there’s no denying one thing: the health care sector as a whole and the stocks in this space are climbing.

So as long as you and your financial professionals deem it worthy to employ money to this sector, the easiest strategy to consider is buying calls. I wouldn’t say Long-Term Anticipation Securities (LEAPS) are the way to go since a vote could some sooner rather than later… so I’d consider options with 30- to 60-day expirations.

And the first thing you can consider going long options on is the ETF itself. XLV is an optionable security, so you could look to trade options on the whole sector, OR…

You can look at stocks that make up the holdings in XLV and find out which ones are the heaviest weighted in the index, as the more these stocks go higher (or lower), so likely goes the ETF.

Here’s the list of XLV‘s holdings, ranked by largest to lowest weighting:

Image provided by  www.etfdb.com

What I’d consider doing is finding the stocks in that ETF that are at their 52-week highs and look to employ the long call option strategy on one (or a few of those), with the idea that stocks at their highs should maintain their momentum higher.

But to make it even easier for you…

I created a list using my proprietary tools of the top 12 stocks that are at or near their 52-week highs:


And remember…

We’ve still got much more to come from Washington. But don’t let the headlines decide your trading decisions for you. Plan your trade, and trade your plan. My hope is that this strategy serves as a nice, easy, and lucrative starting point for you.

To your continued success…

Up Next: New Legislation to create millionaires (details here)

Tom Gentile

3 Responses to “How to Profit from the Senate’s Health Care Vote”

  1. If you wait until your sick to get insurance, you should be required to “pay UP” or go on medicaid. It’s insane to expect an insurance company to buy you a new house after it burns

  2. Tom, Will you be suggesting some specific trades in this space in some of your subscription services? That would be really good. Otherwise, thanks for the thoughts. Very enlightening.

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