Yesterday I entered into the following transaction:
04/16/2012 STO 3 SLV April 21 2012 30 Puts @.29 74.71
Silver has been pretty steady in the 30 - 32 range for quite some time now. In this account we have some longer term trades so I wanted to put some shorter term money to work. Even though SLV has been range bound the option premiums are still relatively high. It is very easy to roll out and down for a credit especially since there are weekly options available so an exit strategy is in place. If these puts expire worthless we will earn 4.3% in 5 days on $1737.13 in margin maintenance. That equates to 313.9% annual.
Risks are strength in the dollar and that the GLD and SLV house of cards come crashing down as there is no guarantee these precious metals are backed by physical gold and silver.
Showing posts with label GLD. Show all posts
Showing posts with label GLD. Show all posts
Tuesday, April 17, 2012
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.
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.
Friday, December 30, 2011
Precious Metals and other thoughts
Well it looks like precious metals bottom was yesterday morning. The GDX, GLD and SLV are all on the rise this morning. I assume that fear of a metals crash shook the herd out yesterday. In the face of this crash we were entering positions. With the MF Global situation and the weakness in the Euro it took more resolve than usual to go against the herd.
I understand and appreciate the simplicity and lack of stress that the dividend growth investor exists in! That being said, I believe I've learned methods that enhance the returns of the dividend growth strategy and which offer greater downside protection. It should be noted that in some accounts I hold that we are simple dividend growth investors with the usual suspects of Proctor and Gamble, Johnson & Johnson, AT& T, McDonald's, Wal-Mart, Pepsico, etc.
I understand and appreciate the simplicity and lack of stress that the dividend growth investor exists in! That being said, I believe I've learned methods that enhance the returns of the dividend growth strategy and which offer greater downside protection. It should be noted that in some accounts I hold that we are simple dividend growth investors with the usual suspects of Proctor and Gamble, Johnson & Johnson, AT& T, McDonald's, Wal-Mart, Pepsico, etc.
Thursday, December 8, 2011
Swing Low Sweet Sentiment
We've got cash at the ready. We just need the herd to swing the pendulum back toward fear. Downright Damien Omen, Exorcist panic and horror would be this gal's preference. Trade the Psychology, Ride the Lightning...ha.
World economies are in the position of relying on government to set things right. May I have some examples of when that has ultimately worked in the past? Politicians are short sighted. Short sightedness put the world economies in the situation we're in. A doctor with broken arms flapping in the wind can't perform surgery on the gasping patient.
When the market heads back south I will be at the ready to sell naked and covered puts below the support levels of Dividend Champions. I will be rolling my existing covered call positions to keep the premiums and dividends pouring in. I love my Double D's! (that's double dividends fellas..). I also love to trade precious metals ETF's with options. I believe we are in the midst of a long term secular bull in precious metals. If you'll search under GDX, GLD and SLV on this blog you'll find several examples of "have your cake and eat it" trades.
On covered calls we will look closely at in the money and at the money strikes first. I'm a believer that we now live in a world where we are witnessing the end of growth. I'll give up capital appreciation for boring double digit income returns.
As for now, I'm licking my lips...and waiting...
World economies are in the position of relying on government to set things right. May I have some examples of when that has ultimately worked in the past? Politicians are short sighted. Short sightedness put the world economies in the situation we're in. A doctor with broken arms flapping in the wind can't perform surgery on the gasping patient.
When the market heads back south I will be at the ready to sell naked and covered puts below the support levels of Dividend Champions. I will be rolling my existing covered call positions to keep the premiums and dividends pouring in. I love my Double D's! (that's double dividends fellas..). I also love to trade precious metals ETF's with options. I believe we are in the midst of a long term secular bull in precious metals. If you'll search under GDX, GLD and SLV on this blog you'll find several examples of "have your cake and eat it" trades.
On covered calls we will look closely at in the money and at the money strikes first. I'm a believer that we now live in a world where we are witnessing the end of growth. I'll give up capital appreciation for boring double digit income returns.
As for now, I'm licking my lips...and waiting...
Wednesday, November 30, 2011
Trading a Bipolar Market
Today the futures are up big, building on Monday's momentum. Last week the world economy was headed toward sure collapse. China is in a bubble...no wait....China's government is taking action to support banks. The end of the Euro...no wait...world bankers are getting together to support the whole world economy. Back and forth it goes...
So what's a gal to do in this mad, mad, man's world? Read the charts baby, that's what. I'm selling out of the money puts at or below a stocks lows during the last year. I'm only entering new income positions when the bipolar meter is set to doom, gloom, dog and cats living together.
With such high volatility there are above average premiums to be collected out there. Even deep in the money covered calls are providing double digit annual returns. Lovin' it! Yumsicle!...*clears throat*...where was I? Oh yeah..
And all this money to be made on widow and orphan blue chip Dividend Champions. If one wants to get a little racy they can trade the precious metals etf's like GLD, SLV and GDX. They don't pay dividends but the option premiums are juicy and this gal loves long term secular bulls.
Be greedy when others are fearful. Be fearful when others are greedy. Buy low, sell high. Only invest in those stocks that you are happy to own for the long haul. Only roll options for a credit. Don't stand under a tree holding a golf club when it's lightning. And finally: What's sexier then a hot babe who can trade the average guy under the table? :)
So what's a gal to do in this mad, mad, man's world? Read the charts baby, that's what. I'm selling out of the money puts at or below a stocks lows during the last year. I'm only entering new income positions when the bipolar meter is set to doom, gloom, dog and cats living together.
With such high volatility there are above average premiums to be collected out there. Even deep in the money covered calls are providing double digit annual returns. Lovin' it! Yumsicle!...*clears throat*...where was I? Oh yeah..
And all this money to be made on widow and orphan blue chip Dividend Champions. If one wants to get a little racy they can trade the precious metals etf's like GLD, SLV and GDX. They don't pay dividends but the option premiums are juicy and this gal loves long term secular bulls.
Be greedy when others are fearful. Be fearful when others are greedy. Buy low, sell high. Only invest in those stocks that you are happy to own for the long haul. Only roll options for a credit. Don't stand under a tree holding a golf club when it's lightning. And finally: What's sexier then a hot babe who can trade the average guy under the table? :)
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