Market Overview

Fixed Up Friday – You Call That A Sell-Off?

Come on bears – is that all you've got?

We (or wheeeeee!) barely had time to enjoy the ride down before we bounced off a bottom.  Of course, it was a bottom we anticipated (see yesterday's post for predicted levels) and we were not greedy, as I called for taking the money and running on oil at $92.75 at 10:02 in Member Chat, missing the day's low by 0.15 and our long-standing $92.50 target by .25 overall – not bad for a USO play we added to our virtual $25,000 Portfolio on 1/29!

That trade was the USO March $35.50 puts at $1.18 and we already took half off the table and it was a continuation play from an already successful position and we were able to take them off the table at $2.20 (1/2 was already taken off on yesterday's dip) for a gain on our final five of $102 per contract or $510 off a $590 investment (86%) in about 3 weeks.  That's not bad!  

Of course, that was nothing compared to our March SCO $36 calls, which we added just last Wednesday on oil inventories at $1.52.  Those were closed at $4.60 – up almost exactly 200% in a week and we had 10 of those for a $3,080 profit.  Wheeeee indeed!

We also made a nice return on TZA, as we got out of a whopping 100 weekly $10.50 calls we had picked up last week for .17 ($1,700) as protection against the drop that "no one" saw coming.  Those flew up to .57 and StJ made the call to take the money and run at 2:31 in Member Chat and I agreed with him at 2:34 and made it official, in time to salvage .50 for a very nice $3,300 gain (194%).  This is what hedges are supposed to do and, of course, we usually are not this aggressive with our hedging but we know how to read a chart and overbought is overbought so we looked for ways to guard against a likely downturn with highly leveraged positions that limited our losses – just in case we were wrong. 

Hedging is not just for hedge funds – everyone should learn how to do it.  Not only did dropping over $5,000 of profits into our virtual portfolio take the edge off the pullback, but we were then able
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Posted-In: Commodities Markets

 

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