With last Friday’s options expiry we have six trades to report, a few of which put blockbuster gumbo in our pockets.
We run them down for you now, one by one.
Our first report is from our September 30th trade. The letter was called How to Profit as America Goes to Hell, and in it we recommended you buy CALLs on fast expanding restaurateur BJ’s Restaurants, Inc. (NASDAQ:BJRI), a company with a market cap in excess of a billion dollars that operates 150 restaurants focusing on deep-dish pizza and beer.
Our argument at the time was that an entire cohort of unmarried twenty somethings were living at home, making a reasonable living and therefore had more funds to spend on slightly upscale fast food. BJ’s, we figured, was as good a bet as any.
So we bought BJRI April 45 CALLs for $1.75 and sold the April 30 PUTs for $0.85 to offset the cost. Our total debit on the trade was $0.90 per pair traded.
A month later, on October 28th, the stock popped, and as we reported in Making a Quick Killing, we sold the CALLs for $3.00.
Last Friday the PUTs expired worthless, so our total take on the trade is a very hefty 233% (2.10 on 0.90 invested).
Hunting Elephant Profits was the name of our January 13th letter, in which we suggested an upcoming bounce in the commodities could be played via a debit CALL spread on the PowerShares DB Commodity Index ETF (NYSE:DBC). We bought the DBC 18 CALL for $0.60 and sold the DBC April 19 CALL for $0.20, for a total debit of $0.40.
DBC did bounce, but not enough to put us in the money. She closed last Friday at $17.94, six cents out-of-the-money, and we lost our forty dollar investment.
Better luck next time.
Ditto for the following trade.
On January 27th we lost another forty dollars when our Intel trade went sour. The letter was called Call it Investor INTELligence, but it proved less than genius. We bought a CALL and sold a PUT, and last Friday they both expired worthless. Lost our initial debit of $0.40.
Trade number four worked out better. It was launched on the 24th of February in a letter called Apples Fall and Cars Go Vroom! As the title suggests, we paired corporate giant Apple (AAPL) against up and coming Tesla Motors (TSLA) in a trade that bet on Tesla out performance.
The details were as follows –
We recommended you buy the TSLA April 230 CALL for $3.90 and sell the AAPL April 135 CALL for $4.10. Every pair traded credited you $0.20.
Then, just last week, we sold off the TSLA CALLs for $0.19 and left the Apple CALLs to wither. And so they did. As of last Friday, they were worth nothing, and we came wagging home with $0.39 (0.20 + 0.19) on nothing expended. Call it a million percent because there’s no way of quantifying the gain on this one.
Hope you loaded up.
Our penultimate trade report centers on a wager we made on the 10th of March in a letter called The Impending Gold (GDX) Consolidation. In that missive we wrote two separate trades, both with the Market Vectors Gold Miner ETF (NYSE:GDX), each with a different expiry.
The April expiry closed last Friday with both options out of the money and a penny for our troubles. Call it a one dollar profit and await the second trade’s closure on the third Friday in June.
We’ll have more to say about the precious metals in a moment, but first let’s close out one more trade.
Take a breath – and here we go…
Our last trade was a St. Paddy’s Day special, arriving in your inbox on the 17th of March with the title Can Oil Overcome the Dollar? Our focus at the time was the price of oil, as represented by the U.S. Oil Fund (NYSE:USO), and the inevitability of it bouncing.
And what happened since?
We got the bounce.
As the chart shows, we were nothing short of biblical in our prognostication. The St. Paddy’s Day closing low marked the exact bottom for USO and our trade has since flourished.
The details were as follows –
We urged you to buy the USO January 17 CALL for $2.25 and sell the USO January 21 CALL for $0.94, for a total debit of $1.31 on the trade.
And today the options are priced as follows –
The 17 CALL is worth $3.95 and the 21 CALL goes for $1.88. Sell the first and buy back the second for a profit of $2.07 on $1.31 expended, or 58% in just five weeks. That’s 603% annualized, Jack.
Don’t talk back!
But why not wait? We could strike it rich!
It’s true, there could be a little more to squeeze out of this one if we wait, but our maximum gain is capped at $4.00 – if USO closes above 21 after expiry.
That’s an ‘if’ that, at this stage, we don’t have a great desire to entertain.
A whole lot can happen between now and 2016, as we all know, and to hold a 58% profit this early in the game is simply heaven sent, in our humble opinion. It’s very possible we’ll see fit to reinstate the trade at a future date, but as of today we feel it wise to close out and go to the bank.
We’re going to close today with a look at silver, as represented by silver proxy stock SLV, the iShares Silver Trust.
And what we see doesn’t look good.
Silver, you’ll recall, has led the precious metals both higher and lower over the last five years, and her current direction once again appears to be down.
Have a look –
Whether this means gold is about to follow lower is not definitive. Just some food for thought. But we wouldn’t be long on the PMs at this juncture.
Might we go short?
We might, rabbit. We might.
Options Trader Elite recommends you close out your USO CALL spread, as indicated above.
With love of the hunt,
Hugh L. O’Haynew