In a continuation of last week's call to transparency, I'm revealing 3 other trades that my subscribers and I entered back in early June. You can see all of our closed trades here, but I want to go into further detail about them.
Trade #4 - FSLR
This trade was based on the assumption that the support found after that large earnings gap would hold. After some initial weakness, we saw the bid go straight back into our channel, so we entered in the trade: Sell FSLR Jun 210/175 Strangle. I entered at -7.5, but there were subscribers that received much better fills than I did due to moving into shorter timeframes. If the channel broke later on, we would definitely stop about if it tagged below 174.8. With that in mind, we risked 200 per strangle. The channel held and we picked up some delta gain as well as some time decay, and we ended up with a profit of +$400, or 2.2% (4.5% on margin) per strangle -- the percentages are so small as we were selling strangles and dealing with a lot of capital that was tied up in the trade. That trade lasted all of a couple days, but the returns definietly were worth the risk. You can see the trade here.
Trade #5 - ILMN
This trade was a play on the breakout pattern that was occouring in the underlying. It was an ascending triangle getting ready to break above 39. The moving averages were coming in as a potential support so I decided to get long calls with the expectation that price and volatility would increase on a breakout higher. The trade was Buy ILMN Jul 40 Calls for 1.65 or better. Unfortunately, the breakout didn't come, and we were stopped out at our price of 36. We were risking 120, so we had a full loss of -$120 per contract. This trade is a great example of why you should set stops-- and a time stop would have been even better for the trade! If you had held or added more capital to the trade, you would be severely underwater. Losses are part of the game, and I'm glad to have the discipline to admit I'm wrong and move on. You can see the trade here.
Trade #6 - UNG
UNG is a crowded etf that was experiencing some violent whipsaws-- a perfect time to sell some insurance to weak hands. So on a pullback to support, we Sold UNG 14 Puts for 1.25 or better. We saw a bounce, but since it was such a good runup, I decided to get into a risk-free vertical. The position is still open, but we can no longer lose any money. Max gain currently is 100, provided it breaks above 14 (probably not!) but because we timed this correctly and legged into our vertical, we don't have to sweat it, as we won't see a loss. You can see the trade here. The adjustment was made here.
We've got plenty more trades, and we're making some good money. The current cost for subscribing is only $49.95 a month, and the current subscribers have been seeing some returns on their investment already. You can subscribe to my premium service here.