Open: Put Calendar on GDX

After recently learning about Calendar spreads I was excited at the chance to try another one. Mojo has found a nice channel on GDX. The purple lines show the edges of the channel and the dotted red line show the median between them.

Unlike Mojo I sold the Feb/Jun Put 47s for a debit of $2.90. As Mojo states in his blog we will most likely roll this one early. I chose the puts because although Gold is on the rise, the mining of gold is on the fall.

Our stop loss on calendars is set at 50%

Open: ERSX Put Vertical Feb 70/65

In a bearish market it's good to find some of the bullish trades.

My friend and teacher, Mojo, at insanemoney found one such trade. He put on a diagonal but I'm much more of a vertical fan. The "fire and forget" method of setting for max loss (see bottom of post for explanation on max loss) and letting the trade expire is more my type of trade.

If you look at the chart there is a strong uptrend and it just bounced of the 50 day. I put in a Put vertical for the Feb 70/65 and got a credit of $1.59.

ROI is 1.59/3.41 = 45% in 4 weeks!!


Max Loss: Any losing trade can not equal more than %2 of your portfolio before exited. Example: 100K portfolio has a %2 max loss of $2,000. If your trade is risking $4.00 per contract you multiply the risk * 100 (number of shares in a contract) $400, and divide that by your maximum allowed loss per trade (2k) for the number of contracts you can trade. 2000/400 = 5 contracts.

**Note** When using a stop loss, the stop loss price is the "risk" of the trade.

Open: WMT Call Calendar Feb/June 47.50

WMT has always been a favorite stock of mine. I've never learned how to make money in such an ugly chart until now.

I recently learned about Calendars. In short, a calendar is a diagonal trade with the same strike on both ends. (Ex: Feb 47.50/June 47.50) This type of option is great for channeling stocks that just bounce up and down between two numbers. The more the stock touches the strike price the better opportunity to make money either thru a roll or early exit.

Now let's talk about this trade. Walmart has been channeling between 44.50 and 49.50 for the last 2 years. It has a high of around 56.65 on 03/01/2002 and a low of 41.25 hit on 10/02/2000. This definately classifies as a channel!

The options on WMT are great right around the median of 47.00. I placed a Call Calendar at the median Feb/June 47.50 for a debit of $1.95. Roll out will be either the week of expiration in Feb or within 10 day of exipry if the stock price crosses the median line again.

Feb 47.50 price 1.30

June 47.50 price 3.40

ROI = 1.30/3.40 38% in 5 weeks!

Open: BRCS GS 210/220

I opened a BRCS on GS today.

Here's the chart.

The most recent down run has increasing volume and the rally had declining volume with a large down day today. There is strong downtrend and volume to confirm the downward runs.


I put on a BRCS Feb 210/220 for $1.85. Expected ROI 1.85/8.15 = 22% in 4 weeks!

Current trades: LFC, TGT and RIG

Just to get everyone up on my account right now I have 3 trades that I entered into on Jan 10:

RIG: BLPS (Bull Put Spread) Feb 130/125 for a credit of $1.25
Calculated ROI (return on investment) 1.25/3.75 (Risk: $5 difference in strike - credit) = 33%

TGT: BRCS (Bear Call Spead) Feb 55/60 for a credit of $1.01
Calculated ROI 1.01/3.99 = 25%

LFC: BRCS Feb 85/90 for a credit of $.075
Calculated ROI .75/4.25 = 17%

Any questions??