Sometimes a day-trade takes a couple days to develop

Hey all,

Sometimes it takes a few days for a trade to develop - today's trade is such an example. 

A couple of trading days ago we saw a nice break on the gold market through key support at or near $175 on GLD. I became very bearish and bought October $165 Put options at $2.68. The following day the market rallied back into resistance and the option price came down. I was tempted to blow the position out at a loss (readers will recall I suggested I would risk down to $2.30 area on the option) but decided to hold on to see if the overhead resistance would be taken out  at or near the $177.50 area. That level was never taken out. Indeed, the market promptly put in a new double top through Wed. and I went and bought more Puts (Point (B) at $1.95).

Today the world is melting down as the US Fed announced late Wed. that the economic situation is still very poor and that it would continue to promote its 'operation twist' to help the consumer credit market. Regardless of the underlying reason, the market came down hard and GLD for example has moved into a dramatically oversold condition (Point (C)). The option position moved into a very profitable situation and so I took profits this AM. I sold half the position on the open (at $3.90) and then sold the remaining position a little later at $4.20. Could this option go higher- sure; but I am more than happy to take a healthy profit on the trade. I'm done and I'm happy :)

That's all for this post,

Brian Beamish FCSI

The Canadian Rational Investor

the_rational_investor@yahoo.com

the-rational-investor.com

All appropriate disclaimers apply, DO NOT risk capital in options trading that you cannot afford to lose.