1strangealien 9:19 am on Monday, October 24, 2016

Gettin DUSTed

BTO DUST shares @ 41.66, STO DUST 28oct16 42 call @ 2.20, STO DUST 28oct16 42 put @ 2.50. Never traded this before. Call me crazy. Don’t follow unless Iceman gives me his blessing. Any thoughts or better ways I could have gotten involved welcome. Guess I should have asked that before jumping!

fuzzballl 10:08 am on Monday, October 24, 2016

It could work. I closed my bear call spreads on Friday since it looked like a bounce coming. I’m guessing with the looming Dec rate hike it will keep a lid on gold prices for now. This is contango infested so keep a close eye on it trading it to the long side.
- 1strangealien 10:52 am on Monday, October 24, 2016
  
  Good move on the spreads! I own both NUGT and DUST now, one will work if the other’s not maybe? Don’t know for sure what gold will do with the election and 2 Fed meetings to go this year. But I’m leaning towards exiting NUGT for now if I get a chance. Gold hanging right at the 200 day (for now). We’ll see if my experiment is expensive. I am staying fairly small on this. Would like to collect consistent premium as do you.
  - Jeff 10:59 am on Monday, October 24, 2016
    
    As triple-levered ETF’s, these only work as opposites on a single-day basis. During strong, multi-week moves in the Gold Miners (GDX) they will also be inversed, but when things are quiet, or over time, they will BOTH head down. Look at the weekly or monthly charts to see.
  - Jeff 11:01 am on Monday, October 24, 2016
    
    So my strategy is to mostly sell calls. NUGT was the hot topic for several months, until they foolishly split it at the same time that gold experienced its recent pullback. So now my attention has shifted to DUST, as it’s easier to get stronger premium from its higher stock price. I will also sell puts as a balance to calls, but I am more cautious, as the eventual direction is down.
  - 1strangealien 11:10 am on Monday, October 24, 2016
    
    Thanks for the info Jeff!
    - vxxkelly 11:21 am on Monday, October 24, 2016
      
      Here’s some data to back up what Jeff mentioned. On 6/21 the $GDX opened pretty close to where it opened this morning. On that day $DUST opened @ $54.60 vs $37.67 today.
      - 1strangealien 11:38 am on Monday, October 24, 2016
        
        Ok, so if you’re trading an IRA account and can’t sell naked calls what’s the best way to trade the contango etf’s? Sell puts and roll down and out when you have to? Cause to sell calls I have to own the stock, but then my stock position goes down faster than I can get the cost basis down by selling premium.
        
        fuzzballl 11:40 am on Monday, October 24, 2016
        
        Those bear call spreads I closed were in an IRA. Trading UVXY like that also. Does your IRA allow call spreads?
        
        1strangealien 11:49 am on Monday, October 24, 2016
        
        Well duh why didn’t I think of that?? Lol. Thanks 😂
        
        fuzzballl 12:07 pm on Monday, October 24, 2016
        
        I stay really small because if they go in the money you’ll never get a credit roll without widening the strikes or adding contracts. Have to leave a little room for that if needed. Otherwise, works pretty good. I remember having UVXY 50/60 bear call spreads back in Aug 2014 when UVXY was rocketing towards 100. No worries whatsoever with the spreads. Giving up a little flexibility for peace of mind and safety vs. selling naked. I’ve found I haven’t really given up that much since I’m more inclined to sell closer to the money with the spreads since there’s no potential margin issues.
        
        1strangealien 12:11 pm on Monday, October 24, 2016
        
        Cool thanks! I think I did look at spreads when I first started trading NUGT but greed whispered in my ear and said more premium if selling covered calls. Now that I see how contango can bite I appreciate your knowledge! Thanks again to all! Ben