Monday, August 24, 2015

August 24th - Research Notes & Trade Blog

At Altitrade Partners We Live For Days Like Today

As an investor for more than 35 years, there is nothing more exciting than watching a trade work out exactly the way it was planned.

We've been commenting on the problems in China now for just over a year, and felt that ultimately China would be the undoing of the global financial markets.

Here is a post from out Facebook page last July, when we began to become concerned regarding some of the things that we saw going on in China. We listed 12 things that gave us cause to worry about the appearance of a "Black Swan" event.

Since Black Swans are totally unpredictable (and we don't claim to be able to predict the future, just prepare for it) we had to call them "Grey Swans", since they are already known, and don't come out of nowhere like Black Swan events do.

At Altitrade Partners, we started to become bearish on the U.S. stock market last summer, and while we weren't exactly sure of the timing, we saw a number of fundamental & technical indicators which were beginning to flash yellow warning signs.  


While we are not going to re-post all of our Facebook & Twitter entries, if you are interested, you can follow the chronology of our thoughts by visiting both our Facebook & Twitter pages at and

At that point our tactical strategy became one of short stocks, long gold.

We started buying NUGT, a leveraged ETF that provides a daily return equal to three times (3X) the movement of gold-related stocks found in the Gold Miners Index GDX. We also started to purchase shares of SPXS, also a leveraged ETF, that provides three times (3X) the inverse return of the S&P 500 Index.

In other words, it provided a way to short the market with leverage, but without having to worry about the unlimited risk associated with being outright short stocks. 

We also sold options against both our NUGT & SPXS positions as a hedge, and to capture some additional premium income.

While typically we are sellers of options (option writing) about 80% of the time, we decided to take a flyer on some deep out-of-the-money options, just in case we experienced the equivalent of a "Financial Armageddon"

We started buying the first of these back in late March at around a 0.25 cent premium per contract, and continued to build a very speculative position over the preceding months. 

Then on August 7th, these options went to a one cent (0.01) premium and we quickly added another 500 contracts to our existing 500 contact position.

Today, with the Dow Jones Industrial Average down over 1,000 points, we sold those options that we paid a total of $10,308.88 for $99,165.70.

The 500 option lot that we bought for one penny each on August 7, 2015, produced a 10,000 percent return in just over 2 1/2 weeks (before commissions & fees). 

Yes, you read that correctly 10,000%.

Our other trades which we won't get into here, have also produced some rather exceptional results. 

One of the things that we learned long ago is that the key to producing solid, long-term investment performance is to protect capital in down markets. If you lose 50% on an investment, you will need a 100% return just to get back to even.

Doubling your money is never easy. If it was, everybody would be a professional trader/investor. 

Every once in awhile the market gives you an opportunity to put on a position that has the potential to produce astronomical returns. 

When you have done all the research, come up with a plan, and then watch it unfold and come to full fruition right before your very eyes, .......WELL, THERE JUST AIN'T NOTHING BETTER.

These truly are the days that professional traders and investors live for.

Good luck trading everyone !!!

This is not a recommendation, or a solicitation to purchase or sell any securities.  Be sure to read our complete disclaimer at, The opinions expressed herein are those of Altitrade Partners, and its principals, and should not be used as the basis for any decision to buy or sell securities. All investing involves risk. Do not rely solely on the opinions of others in making investment decisions. Please perform your own due diligence and invest responsibly. Altitrade Partners makes this blog available for informational purposes only. You should not follow our trading & investment strategies, as they are subject to change without notice.

No comments:

Post a Comment