Posts Tagged ‘randgold’

Profiting From The Wild Market Volatility

Jun 2, 2010 Options

With the stock market currently undergoing an extreme case of volatility, individual investors are no doubt very nervous and debating whether they should be in the markets at all. If you are a trader, the answer is yes you should be in the markets. For a trader, these are the best of times.

Yesterday, with the pre-market indicators suggesting that the Dow Jones Industrial Average would open lower by more than a hundred points, we sent out trades for the day to subscribers of our Options Capitalist service.

Being that we were going to be seeing major moves to the downside in individual stocks, we sent out three trades instead of our usual one, in case one opened outside of our entry range. The trades consisted of two puts and one call and with stocks looking to open much lower, we knew the puts would open much higher and we did not want to be shut out for the day. By sending out three trades we were hoping that at least one would pan out. As it turns out, we were able to get into all three.

The trades were the Freeport McMoRan (FCX) June 65 puts, which we got into at $1.70, the First Solar (FSLR) June 100 puts, which we bought at $2.25 and the Randgold (GOLD) June 90 calls, which we entered into at $2.95.

We were looking for a much lower close from where we entered, but at 2:50 PM, we sent out an exit alert to close out all the trades. Not all our subscribers use auto trading and we were worried that if we sent out the exit alert after 3 PM, some of our subscribers might miss the email before the market close.

We closed out the FCX puts at $1.87, the First Solar puts at $2.74 and the Randgold calls at $3.43, which gave us decent gains of 10-20% in the trades. Not bad for one day, thanks to volatility. Of course, just as soon as we exited, the markets fell off a cliff and had we been able to hold on, we would have had over 25% gains in the put trades. But we did want to be out to avoid an up day today and as it stands, in the early going, FCX and FSLR are up.

While the volatile moves are scary, traders willing to brave it, can make very good money.

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