Business Magazine

Fixed Up Friday – You Call That A Sell-Off?

Posted on the 22 February 2013 by Phil's Stock World @philstockworld

We (or wheeeeee!) barely had time to enjoy the ride down before we bounced off a bottom.  Of course, it was a bottom we anticipated (see yesterday's post for predicted levels) and we were not greedy, as I called for taking the money and running on oil at $92.75 at 10:02 in Member Chat, missing the day's low by 0.15 and our long-standing $92.50 target by .25 overall – not bad for a USO play we added to our virtual $25,000 Portfolio on 1/29!

That trade was the USO March $35.50 puts at $1.18 and we already took half off the table and it was a continuation play from an already successful position and we were able to take them off the table at $2.20 (1/2 was already taken off on yesterday's dip) for a gain on our final five of $102 per contract or $510 off a $590 investment (86%) in about 3 weeks.  That's not bad!  

Of course, that was nothing compared to our March SCO $36 calls, which we added just last Wednesday on oil inventories at $1.52.  Those were closed at $4.60 – up almost exactly 200% in a week and we had 10 of those for a $3,080 profit.  Wheeeee indeed!

We also made a nice return on TZA, as we got out of a whopping 100 weekly $10.50 calls we had picked up last week for .17 ($1,700) as protection against the drop that "no one" saw coming.  Those flew up to .57 and StJ made the call to take the money and run at 2:31 in Member Chat and I agreed with him at 2:34 and made it official, in time to salvage .50 for a very nice $3,300 gain (194%).  This is what hedges are supposed to do and, of course, we usually are not this aggressive with our hedging but we know how to read a chart and overbought is overbought so we looked for ways to guard against a likely downturn with highly leveraged positions that limited our losses – just in case we were wrong. 

Hedging is not just for hedge funds – everyone should learn how to do it.  Not only did dropping over $5,000 of REALIZED profits (as opposed to unrealized losses) into our virtual portfolio take the edge off the

This article will become free after 48 hours (see below for free content). To read the rest of this article now, along with Phil's live intra-day comments, live trading ideas, Phil's market calls, additional member comments, and other members-only features - Subscribe to Phil's Stock World by clicking here.

Back to Featured Articles on Logo Paperblog