Sunday, December 20, 2009
Market Beating Options: SPX Short Position Expires For 100% Gain
Not much movement in the Aggressive Portfolio as the portfolio essentially ended the week where it began. Despite ending flat, we had two positions that made strong moves during the week. Amedisys stock turned sharply upward helping our call option on the stock rise 95% for the week! That is a big move and highlights once again the volatility in trading options. Our position expires in March, so we still have time to ride the option and the stock price higher. The other big gain came from our short position on the SPX index which expires this week worthless. Since we were on the short side, that means a 100% gain for us! Generating income through the short sale of options can be very lucrative if risks are managed properly. We have several other long call options that are out of the money and some will surely expire worthless. Options are different from our stock portfolios in that we expect to win less often, but expect much larger gains when we do win to more than make up for lower win ratios. Our portfolio returns over time, clearly show our strategies toward buying and selling options is working very well. Since inception, our total return has now grown to 378% in just three short years!
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