I made some trades on Friday but was very busy and didn’t have time to talk about the what and why.
Given the strength in $NUGT, I sold some additional puts to give me more protection if $NUGT just keeps running, and gives be a bigger window for making money if we do get some pull backs short term. I’m thinking that the strength in $NUGT/$GDX on friday was short covering before the weekend and any further pullback in Gold will show itself in a pull back in $GDX/$NUGT. Longer term puts were sold such that if I do get put stock, that will happen in the $20’s or lower. Likely be able to close for a profit long before expiration. Gold will eventually either stabilize or pull back, both will reduce volatility/reduce options premiums (vol suck).
STO Feb 19 $50 puts @ $4.00 to pair up with my short $50 calls. I now have a profitable window from $55.20 down to $44.80 so with a short week and any sort of pull back, I’m likely to end up in that window. Below $46 and I roll the put down and out. Above $54 and I roll the call up and out.
STO Mar 11 $40 puts @ $3.30 against $70 calls, now profitable between $75 and $35
STO June $40 puts @ $9.90 against $70/$72 calls, stock put to me @ effectively $26
STO Jan’17 $53 puts @ $26 against $75 calls, stock put to me effectively below $20
If we get a pull back this week (improving put premium), I will be looking to sell Feb 26 puts against my $60 calls. I still have a few other call positions not covered with short puts while I monitor how this plays out.
Time will tell if this was a smart move or not.
Hope you all have a great weekend.