Saturday, January 21, 2012

Profitable Trade: GDX Naked Puts

Yesterday I closed out for a profit in a taxable account the following transaction:

12/12/2011    STO 2 GDX Jan 21 2012 52 Puts @ 1.47                    +282.45
01/20/2012    BTC 2 GDX Jan 21 2012 52 Puts @ .03                          -6.03

We made $276.42 on this investment in 39 days. The average margin maintenance was ~ 4400.00. This equates to a return on margin of 6.3% or 59% annual. As I've stated I thought precious metals bottomed a couple of weeks ago. The massive run up of the dollar is consolidating and toppy.  I'm probably going to be trading GDX and GDXJ (junior precious metal miners) more than GLD and SLV as the latter ETF's are paper rather than physical metal. We've seen with MF Global that paper can vanish into thin air. Many investors have lost faith in the COMEX and some in the know believe that at some point GLD and SLV will default on their obligations. We've seen with credit default swaps, fractional banking and the like that paper assets can vanish in a corrupt dark cloud.

No comments:

Post a Comment