The ‘mechanical’ set-up I detailed here last night caught this morning’s trampoline bounce two pennies off the low. The subsequent rally was a doozy, adding 7.4% to the value of GDX shares in just a few hours. Subscribers who bought call options as advised saw them at least double in value, and in one reported instance quintuple. It depended on which strike and expiration date you used, but the gains would have been impressive regardless.
I posted my own bet in the chat room shortly before the trade filled: bid 0.26 for 6th Sep 29 calls. I subsequently closed out 25% of the position when the options doubled in price, then offered 6th Sep 31 calls short for 0.27 to create a riskless $2 vertical spread. If I am filled on the order, I’ll have a chance to make $200 per spread with no loss possible. I am not establishing a tracking position because all who took advantage of this opportunity are solidly in-the-black and presumably capable of managing your own positions. I will, however, continue to post any adjustments I make to my own position. _______ UPDATE (Aug 2, 11:06 a.m. ET): My order to short GDX 6th Sep 31 calls @ 0.26 has filled, making me long the Sep 29/31 vertical call spread at a cost of zero. If GDX rallies a mere 10.7% over the next month, I stand to make as much as $200/spread (which I have done in size). No loss is possible. Since each spread makes me long the equivalent of 20 shares, I may scalp against it. It is a positive-gamma spread, or backspread, meaning I will get somewhat longer if GDX rises. _______ UPDATE (Aug 6, 10:21 p.m.): I plan to add 6th Sep 30 calls to my long position if GDX pulls back to p=27.52 (daily, A=20.28 on 5/28). My goal is to cover strikes from 29-32 with vertical bull spreads. If each spread is legged on at no cost, a graph of profits at expiration will be a horizontal line at around $20k-$30k. I will move out to more distant strikes after Friday. Just to remind you, the weekly chart projects to 36.67 (A=12.40 on 1/22/16). When the C-D leg of this pattern impaled p= 26.98 on first contact in mid-July, it raised the odds that D will be reached to at least 80%. I expect this to take three months, giving us an opportunity to butterfly or calendar-spread the target. I will offer some strategies shortly that should be suitable for novices and experts alike. I want to be putting on the first leg of those vertical/calendar spreads pegged to $36 on weakness in any case. If GDX runs away from me, I’m not going to chase it, especially since I’m already long the 29/31 vertical call spread. The key, as trading-room ace Skii has demonstrated, is to acquire a bullish ‘starter kit’ in GDX at a relatively low price. Do that and you can trade the big trend with great confidence, as Skii clearly has._______ UPDATE (Aug 7, 9:35 p.m.): Like Gold futures, GDX slightly overshot a Hidden Pivot rally target today, and that is mildly bullish. However, it will come under pressure if the bounce in stocks begun from Tuesday’s lows continues. I will still look to buy more calls on weakness, but today, as I made explicit in the chat room, I bought some insurance via 16th Aug 28 puts @ 0.20. I’d love to see them get pounded, since that would imply my 6th Sep 29/31 call spread is widening.