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« Massive 197.14% Gains Banked After Just 24 Days | Main | The Market Dynamics That Sent Gold Past $1800 »

SK OptionTrader Banks 53.67% Return in 23 Days

Whilst global financial markets endue turmoil, SK OptionTrader subscribers have been enjoying significant profits. On Monday 8th August the S&P 500 fell a massive 6.66%, but the model portfolio for SK OptionTrader subscribers was up 8.38% on that very same day. Days later markets plunged again, but SK OptionTrader made 8.77%.

Just recently we decided to bank some of these gains, closing a trade on GLD for a 53.67% gain in 23 days. The trade was called a calendar call spread, which is just a slight variation on buying outright calls. We signalled to enter the trade 18th July 2011 at $2.18 then signalled to exit the trade on the 9th of August at $3.35.

SKOT GLD Call Calendar Spread 53pct gain

The graph above shows the progress of the trade on a daily mark-to-market basis since we opened the position on July 18th. The LHS axis shows the percentage profit/loss and the RHS axis shows the price of the position.

To go into a little more detail the trade actually involved buying January 2012 $170 GLD calls and selling October 2011 $170 GLD calls. The idea of the trade is that selling the near term calls lowers the cost of buying the longer term calls, since the near term calls will decrease in value as expiration approaches since they are out of the money.

Admittedly gold prices rose faster than we had anticipated, but we are not complaining having made 53.67% in 23 days. In fact we had recognised that gold prices could go on a runaway rally and we had considered the implications that this would have on our trades.

We wrote to our subscribers explaining that “...The idea of this trade is that selling the nearer dated call can cheapen the cost of buying the longer dated call, especially if the nearer dated call expired worthless. If gold prices rocket upwards faster than we anticipate then this trade should still be profitable since it benefits from an increase in implied volatility as well as an increase in gold prices...”

At SK OptionTrader we always consider how alternative scenarios could impact our trades, and therefore design our trading recommendations to ensure optimal performance in a variety of market conditions.

Our trading signals are crystal clear, easy to understand and simply to execute. In this case we wrote to subscribers to give advanced warning that we were going to take a long position on gold and then on July 18th we wrote:

“We hereby signal to buy the GLD Jan-12/Oct-11 $170 Calendar Call Spread @ $2.18. This trade involves selling the GLD October 22nd 2011 $170 calls and buying the GLD Jan 21st 2012 $170 calls for a net debit of $2.18. We are allocating 5% of our capital to this trade.”

As you can see the signal was clear and simply to understand. It also contained a suggested amount of capital to be risked in the trade. We provide this with every trading signal to ensure our performance can be realistically measured, via the return on our model portfolio.

Then when we closed the trade on 9th August we were just as clear.

"SK OptionTrader Trading Signal: Close Long GLD Jan 21 ’12 / Oct 22 ’11 $170 Calendar Call"

"...We therefore signal to close our Long GLD Jan 21 ’12 / Oct 22 ’11 $170 Calendar Call Spread Trade, that we bought for $2.18 on the 18th July 2011 with 5% allocated, for $3.35 Closing this trade involves buying back the Oct $170 calls and selling the Jan $170 calls. Having opened the trade at $2.18 on 18th July and closing at $3.35 on 9th August we have banked at 53.67% profit on this trade in 23 days.."

Hopefully this example has given readers a bit more insight into how SK OptionTrader works and therefore can help you decide if you would benefit from subscribing.

Investing just $500 in this trade would have produced a profit of around $268.35 – more than paying for a $199 six month subscription with the profits of just one trading recommendation.

In the interest of full disclosure we do current have other open trades, which are showing an average gain of 78.41% each. However details of these trades are for subscribers only, so if you want to receive our trading signals and market updates, sign up now.

The key stats on SK OptionTrader are as follows:

- Our model portfolio is up 347.50% since inception - An annualized return of 110.47% - Average return of 40.57% per trade - 82 closed trades, 79 closed at a profit - Average trade open for 45.98 days

Our full trading record can be viewed at - with no trades omitted or altered. All trades are detailed exactly as they were sent to subscribers.

For those subscribers who are too busy to trade their own accounts we are now able to offer an Autotrading program with our SK OptionTrader service, as we are pleased to announce that we have entered into a partnership with Global AutoTrading and therefore auto trading is now available for SK OptionTrader signals.

This was the first trade that we have opened and closed with GAT and we are pleased that the Autotrading program has got off to a good start.

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