Tuesday, July 6, 2010

July 2010 Trade is "BOOM" Cash Flow!

Use your best John Madden here... on July 1 the 80/70/2 Option Income indicators (Williams %R, Probability, and Profit) all flashed green "AND BOOM" we pulled the trigger to generate some cash flow!

The trade was... Sell Open GDX Jul 17 '10 $46 Put at $0.60. For every option sold you pocket $60 cash straight into your account!

Here are the Option Income Indicators for the GDX $46 Put on July 1. At the time we placed the trade GDX (the underlying asset) was selling at $49.00 per share, so there you go.
  • Williams %R = -82 "Extreme oversold"
  • Trade Probability = 78.7% Success "Hey, you gotta like them odds"
  • Profit = 1.3% (15.6% Annualized) "Some yards is better than none yards?"

More about this trade and why I like it:

  • Check the technical's on the GDX chart - the price of GDX would have to break the trend line, the 200 day moving average and the $46 support level to get assigned in 11 trading days to get assigned the stock.
  • The trade is three points below bottom of upward trend

  • Even if I get assigned I would like to own GDX at $46 long-term, because I like gold long-term and the price of gold helps support this fund of gold miners
  • Did I mention that as a seller of the option I have time decay on my side and on the day of this post the probability of not getting assigned is now 83.7%

More fun with "BOOM" John Madden...

So there you go!

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