This start to this year has been by far the best of all operational years for SK Options Trading. We are on a winning streak of profitable trades since the year began, each averaging 68.08%, including winners of 212%, 175%, 135%!
Our model portfolio is now up over 600% and we have outperformed silver, gold, gold stocks, junior miners, and even the soaring S&P 500.
We began the year by closing a winner as we took advantage of falling volatility in the S&P. On December 28th 2012 we signalled to our subscribers to short VXX stock and simultaneously buy VXX calls to gain a limited risk short position on the volatility of equities. The result was that only 6 days later we were able to bank a profit of 24.01% to open the year. Some say that the way you begin your year is indicative of how the next 12 months be, this has certainly been the case for us.
We then closed January the same way that we opened it; with a winner. SSO, the doubled leveraged S&P 500 ETF, allowed us to close a trade with gains of 15.91%. SSO is an ETF that endeavours to produce twice the performance of the S&P 500, therefore the returns on holding an SSO position should be 200% of equities performance over the same time period. However, as a result of the careful timing our entry and exit levels, we gained a profit that was 216% that of equities.
The poor performance of gold since its previous highs in August 2011 and the apparent down trend through the latter part of 2012 lead us to reconsider our outlook on the bull market. After careful consideration we came to the conclusion that the bull market may well be over, and therefore we should position ourselves to take advantage of falling gold prices. Miners have underperformed both gold and silver for a long time; thus the end of the bull market would mean that there would be complete capitulation in the mining sector.
One stock in particular that caught our eye as being overvalue was Coeur d’Alene mining; consequently we took a short position through the purchase of CDE Puts on February 12th. The outcome of the trade was that a week later we were able to take profits of 53.33%, adding the third winner to our streak.
Shortly after the purchase of the CDE puts we saw that Hecla mining was also incredibly overpriced with a huge price to earnings ratio. This led us to open our most profitable trade in the history of our service; only 17 days after opening the position we were able to take gains of 212.50%. We closed the position with these profits, and went 4 – 0 in 2013.
Gold stocks underperforming gold is an occurrence that can be taken advantage of in many ways; puts on mining stocks and other option plays can be used in many ways, however one of the simplest ways is to open a Long GLD/Short GDXJ pair trade. Accordingly we held such a position between February 11th and March 7th, making a total return of 7.85% to supplement our already significant gains. This particular trade took our returns since inception to 488.67%.
If there is one thing that we really appreciate in the options market, it is the ability to make money when prices go sideways as well as either up or down. Our vertical call spread on GDX allowed us to do this, the position steadily increased in value and delivered a 15.88% gain as gold stocks failed to perform. Our positions like this that have been short mining stocks have made us an average return of 80.11% each this year, and yet many investors continue to be in love with them. If we can make an average of 80.11% on each trade that is short gold stocks, then those holding the underlying must be losing money.
As the saying goes “Love is blind” and one such stock that investors have been blind to the returns of is Silver Wheaton. This, probably the most loved stock in the silver market, but we took a contrarian view and banked our 7th win for the year as its price fell. Using $25 September Puts we profited 29.41% in 17 days. The most loved silver stock made us money as it fell!
Silver Wheaton Puts and a GDX Vertical Put spread were 2 winners that were closed in the same week, bumping our portfolio up to more than a 500% return since we began!
If that week were not enough for subscribers, Monday 15th April, the day that gold had its largest fall in COMEX history, saw us close 2 trades that more than doubled in value. Once again we made money on the plummeting price of gold stocks, and in one day our portfolio rose 10.03%!
The first of these trades was a $15 January 2014 Put on GDXJ. These had been purchased on March 18th for only $1.40, and were being held to return a profit on the deteriorating value of the junior miners sector. The enormous drop in value of GDXJ resulted in our gains of 135.71% being returned in less than a month.
The 15th of April saw another profitable trade closed for SK OptionTrader subscribers. This trade made an incredible 175% in only 2 trading days. Purchased April 11th, our GDX Vertical Put Spread nearly tripled in value as gold fell over $200. We swiftly realised the gains and saw our returns for the year rise to 35.87%.
Our most recent trade for the year resulted in our model portfolio having returns of over 600% since inception. Once again we banked yet more profits with a Long GLD/Short GDXJ pair trade, this time for 11.47%. Closing this trade when we did meant that only 11 days after we passed the 500% mark we passed the 600% milestone as well!
Our latest trade brings the 2013 score to 10-0, each of those winning trades with an average of 68.08%.
We have outperformed the S&P 500, which has made all time highs this year, by more than 4 times this year already.
We have beaten gold by over 50% and silver by more than 60%. That’s not to mention gold stocks, which we have beaten by over 75% this year.
If your performance has not been as good as ours, then all you have to do is subscribe to find out what it is that we are doing to outperform these other vehicles.
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