Managing Editor’s Note: Turning $1,000 into $1 million or more is almost impossible. Those investment opportunities are extremely rare.
And that’s what makes the phenomenon that Jeff Brown calls the “million-dollar cycle” so special. It has played out four times since 2011. Every time, it has created multiple opportunities to turn $1,000 into six figures.
While Jeff can’t guarantee you’ll become a millionaire, he says this cycle is happening again by the end of this month. And thanks to the ongoing AI boom, the gains this time could be mind-blowing.
Stock down sharply? The stock repair strategy uses call options to lower your breakeven without averaging down. Here’s how it works – and the risks…
Written by
Larry Benedict
Published on
Oct 12, 2026
No matter how much research you do, some trades don’t work out as planned. It doesn’t matter if you’re new to the markets or have been trading for decades like I have.
As painful as it is, sometimes you need to cut your losses and move on to your next trade – especially if the rationale for the trade no longer holds up.
But sometimes things aren’t clear-cut…
What if you believe the stock could recover at least a portion of your loss?
Some folks average down on their stock position. In other words, they keep buying when the stock goes down. That lowers their average entry price (and breakeven point).
But that can be a costly mistake. You can end up with huge losses if the stock price keeps falling to new lows.
So what’s the alternative?
One solution is an options strategy that I’d like to share today. It can recoup your losses even if the stock doesn’t return to your original entry price.
While Jeff Brown can't guarantee you'll become a millionaire... The last four times this secret market cycle played out, you could have turned $1,000 into $1.6 million during the first cycle in 2011… More than $1.8 million in the second cycle in 2015… More than $680,000 in the third cycle… And more than $1.7 million in the last cycle in late 2022. It’s happening again by the end of October, so click here to RSVP to Jeff Brown’s The October Million-Dollar Cycle special event.
(When you click the link, your email address will automatically be added in the guest list.)
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How the Stock Repair Strategy Works
To understand the strategy, let’s consider an example where you bought 100 shares of a stock at $200. But after buying those shares, the price tumbles to $100.
As I mentioned above, if the reasons you bought those shares no longer exist, then you’re better off just cutting your losses.
However, if you believe the stock will recover, you have choices…
You could hold on in the hope that the stock gets all the way back up to $200. But that could take a long time… if it happens at all.
The riskier choice is to “average down” and buy another 100 shares at $100. That lowers your average entry price to $150. But now you own twice as many shares and have tied up more of your valuable capital. You’re even more vulnerable if the stock takes another leg down.
In contrast, consider the strategy we’re looking at today…
In this scenario, you decide to keep your original 100 shares that you bought at $200 a share.
Then you buy one call option with a strike price of $100 – that’s right around the current stock price.
Buying that call option gives you the right to buy 100 shares at $100 per share until the option expires.
If you exercise the option, you will own 200 shares. You would also lower your average entry price to $150 (similar to averaging down).
However, there’s a major difference…
That call option only costs you a fraction of buying more shares.
And a second leg to this strategy lowers your cost (and potentially hands you a credit)…
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For the second leg, you sell two call option contracts at a $150 strike price. You typically receive enough premium to cover the cost of buying the $100 strike call option contract. So you shouldn’t be out of pocket to enter this trade.
Then, if the stock rises to $150 (or higher), the option buyer will likely exercise their contracts, and you’ll be out of the trade at breakeven.
(Remember, if you exercise your bought call option at the $100 strike, your breakeven becomes $150.)
It’s a low-cost way to reduce your breakeven on the original trade without committing additional capital.
If the stock stays around the current level (or falls), you’re no worse off than if you had just held your original 100 shares.
Yet if it recovers up to $150, you’re out of the trade without a loss.
As with all option strategies, you need to understand the risks and obligations…
Using our example, buying the $100 call option gives you the right (but not the obligation) to buy 100 shares at $100 per share right up until expiry.
However, selling two $150 call options means you must hand over 200 shares at $150 if the buyer exercises those options. That’s true even if the shares recover strongly and are trading much higher than $150.
Also, remember that options expire, so the clock is always counting down on your position. You have to get the recovery you’re expecting within a specific time frame.
And one more note: This strategy offers no protection if the stock price continues to slide below the $100 level.
But when you remain convinced that a stock could recover after a fall, this can be a very useful strategy. And unlike “averaging down,” it enables you to lower your breakeven without tying up additional capital.
Happy Trading,
Larry Benedict
Editor, Trading With Larry Benedict
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Lamb Weston Holdings Inc (NYSE: LW) has spent the last year fighting a nasty combination of weak restaurant traffic, customer destocking, falling price/mix, and bloated potato inventories across the industry. The latest Q1 FY2027 earnings report finally gives shareholders something more useful than another promise of improvement: North American volume is accelerating while the potato market is moving toward tighter supply.
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That creates an unusual setup for a company whose earnings have been dragged lower by pricing and input costs. LW grew companywide sales volume 2% in Q1, North American volume 6.7%, and North America delivered 11% growth in adjusted EBITDA. Yet company-wide adjusted EBITDA still fell 5% to $286 million because Europe remained under pressure.
The stock responded accordingly, jumping 7.49% to $47.91 on October 6, with 8.38 million shares changing hands. After months of selling, the tape is starting to price something different.
The most important number in Lamb Weston’s Q1 report isn’t the $1.67 billion of revenue or the $0.75 of adjusted EPS. It’s the seventh consecutive quarter of North American volume growth.
North American sales rose 5%, powered by 6.7% volume growth, while price/mix was still negative 1.7%. Management said volume growth came from existing customers, new wins, and a strong mix of QSR relationships, with the company particularly exposed to chicken-focused chains. U.S. restaurant traffic was essentially flat and QSR traffic declined 1%, yet Lamb Weston still outperformed those trends.
The pricing drag is shrinking too. Price/mix improved from negative 2.4% in Q4 to negative 1.7% in Q1, a 70-basis-point sequential improvement. About 70% of contracts up for renewal this year have already been completed, with high retention and pricing reflecting the inflationary environment.
That is a much healthier setup than the stock’s recent price action suggests. Lamb Weston doesn’t need restaurant traffic to explode. It needs its existing volume gains to keep showing up while the pricing hole gets smaller.
Europe Is The Problem That Could Become An Advantage
Europe is still ugly. International sales fell 8%, with volume down 6% and price/mix down 2%. International adjusted EBITDA dropped to $27 million, reflecting lower European volume and higher carry-in potato costs. Then the supply picture gets complicated.
Lamb Weston says prolonged heat and dry conditions in Europe produced a smaller potato crop, with tonnage tracking well below historical averages. The company expects tighter supply to raise raw-material costs and is already working with customers to modify product specifications. Normally, higher potato costs would be another reason to stay away from LW.
This time, there is another side to the equation. Management says industry capacity is rationalizing, expansion projects are being delayed or shut down, and supply and demand are beginning to move back toward balance. Lamb Weston has also stopped production at its Broekhuizenvorst facility and shifted customers to other locations to improve network utilization.
The company is therefore entering a tighter supply environment with a cost structure it has already been attacking for more than a year. That can matter enormously once volume gains stop being swallowed by excess capacity and weaker pricing.
The Guidance Requires Less Than You Think
Lamb Weston raised fiscal 2027 guidance despite the international weakness. Management now expects low-single-digit net-sales growth, $1.125 billion to $1.215 billion of adjusted EBITDA, $3.05 to $3.35 of adjusted EPS, $730 million to $810 million of adjusted operating income and $750 million to $800 million of operating cash flow. The previous EPS range was $2.95 to $3.25, while the comparable FY2026 adjusted EPS was $2.90.
The EBITDA math is particularly interesting as Q1 produced $286 million. The midpoint of the new full-year EBITDA range is $1.17 billion, leaving roughly $884 million for the final three quarters, or about $295 million per quarter.
That isn’t an outrageous hurdle at all. Management already expects Q2 adjusted EBITDA to rise in the high single digits to low double digits, with net sales up in the low single digits. Meanwhile, the company is running an enterprise-wide zero-based budgeting program, with adjusted SG&A essentially flat year over year after removing one-time items. Management says the cost program has permanently lowered its operating cost base.
Put another way, the ingredients for better earnings are starting to line up: volume is rising, price/mix is recovering, costs are being attacked, and industry capacity is coming out.
Elon Musk has gone "all in" on Texas, home of SpaceX. But Texas just froze ALL new AI data center buildouts.
The reason? Data center demand in Texas has soared from 48 gigawatts to 474 gigawatts... since 2023, according to Reuters. But according to 60-year Wall Street legend Marc Chaikin, one company has the solution. Its "micro cluster" technology will consume an estimated 99% less electricity and water. And it'll come online as soon as Oct. 20th. When it does, it'll make current data centers obsolete when it comes to major AI breakthroughs – including Elon's Grok.
The technical picture gives the fundamental story some teeth here. LW spent September sliding from the mid-$50s toward $40, where buyers repeatedly defended the stock. October 6 brought a sharp reversal: the shares closed at $47.91 after trading as high as $50.19, with volume surging to 8.38 million.
The stock has reclaimed its 20-day SMA at $45.57 and is now just above its 200-day SMA at $45.73. The 50-day SMA at $50.08 is the next obstacle. A clean move through 50–50.10 would take LW back above its intermediate trend and put the 54–55 September breakdown area back in play.
I like the setup. The North American business is already producing volume and EBITDA growth, while a tightening potato market and shrinking industry capacity could give those gains more earnings leverage than the current numbers show. If LW clears $50 with volume behind it, the market may finally start trading the earnings power that sits beyond this quarter’s headline results.
