Editor’s note: Judging by the feedback, you all really enjoyed Jeff’s trade recap last Saturday. We’re glad to hear it.
So today, Jeff will run through the second leg of the GDX trade… and show you how he tripled his subscribers’ money – risk-free…
One of the best feelings in the world is scoring a big win at the casino.
But, for me, an even better feeling is putting my initial bet back in my pocket… and playing with “house money.” It’s a risk-free way to keep the profits coming.
Over my 37 years trading for a living, I’ve found that this strategy works just as well as a trader.
In my new service Jeff Clark Trader, the focus isn’t on maximizing the gains of every single trade. It’s to teach folks how to use options the right way… and make consistent profits by trading just three stocks.
Part of doing that is knowing when – and how – to take your chips off the table. And, there’s no better example than how we closed the second half of our GDX position this week…
You’ll remember from my essay last Saturday that we booked a 117% gain on our very first trade in Jeff Clark Trader.
But, I didn’t recommend selling the whole position – just half.
Here’s why…
When trading options, your main goal should be to reduce risk. As I’ve often said, that’s why options were created in the first place. Options allow you to hedge your positions… and risk much less money than you would buying a stock outright.
And, there’s really no better way to reduce your risk than selling half your position once you’ve hit a double. Subscribers will see that guidance in nearly every recommendation I make.
Of course, if it looks like the trade has run its course… and we’ve already captured most of the profit potential… I’ll recommend taking the full gain. But, more often than not, the trades still have room to run.
Sometimes the remainder of the trade goes against us. But even so, the risk is completely out of the equation. Even if we’re wrong to hold on, we don’t lose a penny.
But, that’s not what happened with the GDX trade… Far from it.
Take a look at this updated chart of GDX…
The red arrow on the chart shows our entry point. The next two arrows show where we first sold half of the position (blue) and then the remainder of the position (green).
Now, why did I recommend selling the rest?
Gold stocks have enjoyed a great run higher over the past few weeks. But on Thursday, when we sold, GDX was stretching into overbought territory.
We might have been able to squeeze a little more profit out of the calls if we held onto them for another day or two, as GDX continued higher. But, there’s a Federal Open Market Committee (FOMC) meeting next week. And gold stocks have a habit of trading poorly right in front of an FOMC announcement.
So, we took our gain and moved to the sidelines.
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[If you’d like to see Jeff’s full track record – wins and losses – click here.] |
We sold the first half the position for about a 117% gain. By selling the second half when we did (for about 269%), we recorded a blended return of 195% on this trade.
In other words… we nearly tripled our money in just under a month… And, we did so with our risk completely off the table.
That’s the advantage of playing with house money.
We still have another trade in our portfolio – a call option trade on Macy’s (M). (If you’re a Jeff Clark Trader subscriber, it’s still within our recommended price range. Get the full trade details here.)
I’m keeping a close eye on it. And, once we do close it out, I’ll let you know how we did.
Best regards and good trading,
Jeff Clark
P.S. My next Jeff Clark Trader recommendation releases this coming Thursday at 5 p.m. ET. If it’s anything like the first, you could triple your money in just a few weeks.
I highly encourage you to give the service a try. It’s only $19 for a whole year. And, even if you’ve never traded options before, I included a number of training materials to help you get started.