War Room members have made a lot of money with online retailer The RealReal (Nasdaq: REAL). And just for a refresher, The RealReal is not your typical online store. Its main attraction is high-end retail consignment, with brands such as Valentino and Christian Dior.
Its unique selling proposition is that it authenticates everything it sells and if you’re not happy with your purchase for any reason, it will refund your money.
That’s quite a promise, and The RealReal’s sales have been on fire lately…
The company takes a cut of each sale, so there is very little it invests in inventory. It’s basically a trustable platform for those wishing to sell their high-end items… and those looking to buy those items at a huge discount to retail.
Although it has been doing well, The RealReal has run into a problem that plagues just about every high-end reseller… knockoffs.
Counterfeit merchandise can be so good that it sometimes evades authentication. The key word is “sometimes.” The vast majority (more than 90%) of The RealReal’s items are not in question. But CNBC recently did an exposé that revealed the company sells knockoffs.
In response, the company said it will try harder and hire people with more experience. It took a toll on the shares, which dropped from the mid $20s to the mid-teens.
That is where the opportunity for a surprise lies.
The assumptions are as follows:
- The RealReal’s buyers are not tuned in to CNBC 24/7.
- The company offers an ironclad money-back guarantee.
- The RealReal still offers the only online platform of its kind that delivers hundreds of millions of dollars in sales.
- The company is acting proactively to make the goods it delivers even more legitimate.
- There is huge demand for high-end goods.
- The RealReal is entering its strongest selling season.
So how are War Room members attacking this speculative situation?
Well, for the actual details of this play, which is still open to new members, you’ll have to be a member of The War Room.
Action Plan: What I can tell you is that War Room members entered the play using a spread, which reduced their cost significantly and allows them to profit on the upside. Because they used a unique strategy, they have the chance to reduce their cost even more and increase their upside equally.
The RealReal is the perfect type of stock to trade and cash in big… or risk very little if it goes against you. And with almost three months until The RealReal reports, War Room members could be in for a very, very profitable wild ride!
[adzerk-get-ad zone="245143" size="4"]About Karim Rahemtulla
Karim began his trading career early… very early. While attending boarding school in England, he recognized the value of the homemade snacks his mom sent him every semester and sold them for a profit to his fellow classmates, who were trying to avoid the horrendous British food they were served.
He then graduated to stocks and options, becoming one of the youngest chief financial officers of a brokerage and trading firm that cleared through Bear Stearns in the late 1980s. There, he learned trading skills from veterans of the business. They had already made their mistakes, and he recognized the value of the strategies they were using late in their careers.
As co-founder and chief options strategist for the groundbreaking publication Wall Street Daily, Karim turned to long-term equity anticipation securities (LEAPS) and put-selling strategies to help members capture gains. After that, he honed his strategies for readers of Automatic Trading Millionaire, where he didn’t record a single realized loss on 37 recommendations over an 18-month period.
While even he admits that record is not the norm, it showcases the effectiveness of a sound trading strategy.
His focus is on “smart” trading. Using volatility and proprietary probability modeling as his guideposts, he makes investments where risk and reward are defined ahead of time.
Today, Karim is all about lowering risk while enhancing returns using strategies such as LEAPS trading, spread trading, put selling and, of course, small cap investing. His background as the head of The Supper Club gives him unique insight into low-market-cap companies, and he brings that experience into the daily chats of The War Room.
Karim has more than 30 years of experience in options trading and international markets, and he is the author of the bestselling book Where in the World Should I Invest?
