My only negative trade for the month (which is my GDX trade) is only negative on the books (Mark-To-Market can bring down some of the largest investment banks and may even bring me down!). See below for a discussion on that.
| YTD Return: | 4.19% |
| Month's Return: | -0.09% |
| Best Trade | UNG: +19% (too bad this was also my smallest trade) |
| Worst Trade | GDX: -10% |
GDX Update
If you are following GDX, you will know that gold dropped pretty significantly in the last couple of days and GDX followed suit by dropping around 12%. My trade, although still somewhat ITM, showed big time losses and my position was greatly altered. As such, I have gone ahead and bought a $48 calendar spread to neutralize deltas as well as prepare for a further possible down move.
I believe GDX could fall as low as $46 if it breaks current resistance. The chart below shows significant fibonacci resistance at $49 and $46. At the moment, we are very close to the $49 mark and today we were unable to sustain the lows. Gold too showed similar patterns and has in fact made a decent recovery in the last few hours.
My overall hypothesis is still that GDX and gold will not fall significantly (and by that I mean GDX at ~$40) until interest rates go up. Meanwhile, I have three targets over the next 2 weeks - $46, $49, $55. More than likely we will see it stay between $49 and $55 which are the two major support and resistance areas.
My GDX Trade
After many modifications and adjustments, I have finally reached the following trade (see chart below). Unfortunately, at this point, I am simply trying to curtail losses as much as I can for this month. My plan is to let this trade go to expiry and then roll it into the next month. I believe that although at this moment I am showing a loss of nearly 10-12%, this will significantly fall because my short options are very overpriced because of the recent volatility. For instance, my 50 Puts are trading at $1.65/contract when there is a mere week left to expiry and the option is OTM.
IV has spiked up and although it is hurting my short positions quite a bit, my long positions will benefit as I roll this trade into next month.
Here is the current (very complicated) trade:
Ignore the colored trades
3 comments:
I made a comment on your previous GDX post before seeing your new post above. Sorry. Thanks.
ya, this GDX is really killing me... I wish I would have stuck to the original trade - I acted too hastily. It has turned into my 2nd worst trade ever.
Don't feel bad. I saw gold's fall coming a mile away. GDX is the only stock I follow so I loaded up on puts. Only problem is that I loaded up about two weeks too early and bought Decembers. Long story short I was forced to sell on December 14th for a -($16,000) loss even though I could have made +$11,000 if I had held a few more days. Lesson? Plan entry better and buy further out. Now I am gearing up to go long at the right time, but I did not expect gold to fall so far so this might be a bit tricky.
Post a Comment