Crazy couple weeks with a lot going on with more to come this week…LOL Caught up on the NUGT conversation from the last couple days. Thanks everyone for posting thoughts and ideas.

I closed some of my short call positions on Friday morning (so far I’m up on those trades!) at hopefully temporary losses. Taking a page from Jeff’s SPX book and setting them off to the side until I can find a safer entry point to get back in.

After watching this thing rise 300 percent I’ve thought all weekend about how I maybe could have played this better. I’ve decided to start playing my option selling trades a little more directional sometimes but still with an emphasis on time decay.

For example, when NUGT started breaking out a little in early Feb I started looking at recent resistance to establish some call sales. To my eyes that was up over 50 with the 200ma and a couple short term tops looking like they would hold. Of course hindsight is 20/20 and nobody could have seen a 300 percent run coming. I feel like what I should have done was start selling PUTS on the breakout above the 20ma and using the moving average as a stop. Seems like if I were to add a little directional bias into my sales and get out when I’m obviously wrong might be a safer play in the long run.

I’m certainly open to any thoughts or crticisms on this way of thinking…

Using this theory, I would re-sell my short call positions on NUGT when it starts showing signs of weakness and closes back below some major moving averages and then using those levels as stops if it breaks back above. Basically trading it the way I would trade a stock with entries near support or resistance and then having a nice close “I’m wrong” level. I’d just like to avoid selling a call for a 2 bucks and watching it go to 50! At least then I know what I’m risking and I think I could put on more positions knowing my risk is small and avoiding all the rolling and reverse rolling and margin worries. Of course I’ll never capture the entire move but I’m ok with sacrificing that for some safety.

So for now sitting on the NUGT sidelines (except for my short puts that are still out there) until we get a definite break of the uptrend. Then I’ll jump back in with some call sales possibly closer to the money with a (mental) stop loss level in mind.

I’m thick skinned so tell me if I’m crazy…LOL!

Off to training this week then back home to move my daughter back in for the summer. Happy trading everyone and SVXY and XIV you just keep on doing what you’ve been doing!