MayWk4 - GLD Monday Market Update

MayWk4 - GLD Monday Market Update - GLD last night had a major upswing. Which is a good sign, because that just means that there could be a correction coming for the SPY. The old "Sell in May and Go Away" might be true for the markets this week.

In any case, the Kijun Sen and Tenkan Sen has met as a result of last night's beautiful movement.

Just take a look at the beautiful movement after midnight (Singapore Time) last night. The price of GLD shot upwards in recovery mode. I bet there is some correlation with the fact that the SPY has hit the doldrums in a star formation.

The SPY chart for Monday (above) shows that the the market is fairly overbought, and there could be a retraction or correction from tonight onwards. But who can really tell in these uncertain markets. Nevertheless, the SPY reached the peak at 12 midnight (Singapore Time), just as GLD started to climb. Now isn't that an interesting observation? I bet you guys already know that. ;)

And after that, GLD started to climb, and the SPY took its long descent to where it opened. It's a sign. Let's see what the market offers tonight. ;)

MayWk3 - GLD Market Summary

MayWk3 - GLD Market Summary - GLD has been a bad boy, giving up its value in the wake of the strong demand for stock equities. Last Friday's market day is a great example of that and a reminder that we are treading dangerously every week as we sell options.

Why would I say that, this is because any time the market could turn against you and there would be no way out of that. Especially if you're a trader in a different time zone and your enemy is your sense of the ability to stay awake.

That has always been the challenge and it will continue to be so. Perhaps you might ask, is there something truly as a safe trade? The short answer would be a resounding yes, but that would also mean a long arduous journey to attain that level of investment that would elevate your investment capital to other financial instruments.

I am trading in this gung-ho manner now just so that I can attain a certain level of consistency. I know it sounds like an oxymoron when I say "take risk, higher gain" - because the reverse is also true. It could also mean a total wipe out.

So in my gung-ho-ness (if there is such a word), I decided that if the SPY were to continue to go up, then GLD will continue to struggle, and therein lies my opportunity. My strategy so far has been in GLD, and so far it has been a safe ride. With a little bit of novice (perhaps naive) reading of the market, I was able to place a trade.

My rule is that I would only place a trade after midnight (Singapore Time) because I noticed that the premiums tend to also drop much faster after midnight. Maybe that's because there is only 4 more hours before the market expiries for weekly options, and the time decay accelerates. This only occurs when the market is fairly unstable, just like Friday's market activity.

I love fluctuations and intra-day highs and lows, this just mean I can sell a trade that will provide me the buffer that I need. All I am looking for is a trade that would expire worthless. Not too difficult a thing to do considering that premiums drop much faster towards expiry.

So I did the foolish thing last week. I sold a fairly risky trade in GLD. I entered the market at precisely 12 midnight, and sold a GLD Put Spread $130/131 at a premium of $0.12. I placed a contingent order on spread price for $0.23 and then eyeballed the market till I was fully assured that I would make the money. Unfortunately, I couldn't stay awake till the end of market day and as you can see, the market nose-dived towards the strike price of $131. Intra-day low was $131.02 which was very near to expiry. It finally closed at $131.07.

My contingent order on spread price did not trigger because by then, the premiums were all competed away due to time decay, and I would have woken up to a very sad saturday morning, should the price of GLD were to hit $131.00. If that were to happen, my trade would have been assigned, and I would have to deliver.

Thank God, instead I made a return on investment of 9.95%. :) 

MayWk2 - GLD Market Summary

MayWk2 - GLD Market Summary - The SPY market was fairly flat with a lack of interesting premiums. However, not so far the GLD market. I entered the market at 1.30am (Singapore Time) and managed to place a trade for GLD Put Spread $137/138 for a premium of $0.08. The trade expiry worthless and I made a profitable 5.95% return on investment.

As you can see from the ichimoku indicator above that there is no way there is any money to be made, but the beauty of it is, there is actually money to be made. You just need an eye for it. I wish you success as well in your own personal journey to financial freedom. Stay safe.

MayWk2 - Wednesday Market Update

MayWk2 - Wednesday Market Update

From the charts above, the trend is definitely bullish. There is no doubt about it at this stage. If you were to take a look at the movements last week, maybe one might say that it is quite uncertain, but from the looks of it, it is a bull-run that has no boundaries. We are definitely into uncharted territory here, so my advice is to tread carefully and not be swayed by temptation.

I am definitely going to hunt for a trade this week, but from the looks of it, anything might happen, and the last thing you (or me) wants is to be caught in the middle of a sell-off come Friday. If you examine the movements during the day, there were some opportunities to sell a Put Spread. (See Below).

Source: Yahoo Finance

Looking at the movement of the SPY, there was a potential for a trade at just slightly before 10.30am US Time. Imagine if you were to sell a Put Spread at that moment if there is a suitable buffer and the premium was ideal. You would have hit a home run for sure. :) Is this gambling? You decide.

In any case, the SPY futures this morning (Singapore Time) looks negative to me. So who knows what will happen tonight. My guess is, it is a cross-hair movement, but who really knows. Let's see if there is a suitable buffer to sell something tonight.

MayWk2 - GLD Market Update

MayWk2 - GLD Tuesday Market Update

Last night's performance by the GLD market was a sideways movement. There are a few opportunities that we can see from this. I am looking for a trade come Friday past midnight Singapore Time. 

Last week's GLD trade was quite profitable. I sold a Put Spread for $140/141 for a premium of $0.08. I am looking to repeat that feat this week. So hopefully GLD will be volatile this week as well.

MayWk1 - GLD Market Summary

MayWk1 - GLD Market Summary

The market last week was an interesting up/down motion, and I am referring to Friday's movement on 3 May 2013. The trick is to look at the interactive charts on Yahoo Finance for GLD. The movement and volume helps guide you the retail investor into making an even more inform decision before putting in the trades.

My experience, limited though, but at least I observed that on any ordinary week, there is a similar pattern to be noticed. Usually after midnight, the premiums tend to drop. That's a good sign because the faster the premiums drop, the higher the chances that the trade will expire worthless.

The important thing to note is that we are selling call and put spreads. There is nothing more delightful than actually getting in on a trade with a high premium and then it drops immediately after that. Getting that trade is often the difficult part.

The charts above just doesn't seem anywhere near exciting, but coupled with the interactive charts and bollinger bands, the trade hunting gets very, very interesting. Needless to say, my trade expired worthless, and I pocketed an ROI of 5.95%. :) Nice.