|
|
|
|
|
|
|
If the market goes lower, the profit on these contracts is calculated from a sell price of 285, the strike price of the put options. |
|
|
|
|
|
|
|
|
In both of these cases, you make enough money back to pay for the put options. But what if gold doesn't go up to 290 or down to 280? Here is scenario 3: |
|
|
|
|
|
|
|
|
If gold goes up to 286, sell one contract. If it goes back to 285, buy it back for a $1.00 gain. If gold goes back up to 286, sell one contract. If it goes up to 287, sell another contract. If it drops back to 286, buy back the contract that was sold at 287 for a profit of $1.00 on this trade. If it falls to 285, buy back the contract sold at 286 for a $1.00 profit on this trade. If gold drops to 284, buy a contract. If it rallies back to 285, sell it for a $1.00 profit. |
|
|
|
|
|
|
|
|
Each time gold rallies $1.00, sell a contract until you run out of contracts. Each time gold drops $1.00, buy a contract until you own ten contracts. Each time you get one of these swings, you make $1.00. If you get fifteen swings, you have the cost of the puts back. |
|
|
|
|
|
|
|
|
The ideal situation is for gold to run up and down several times and let you get a lot of these swing trades put in your pocket. Then, hopefully, it will run straight up or straight down and let you collect the fifteen points from either scenario 1 or scenario 2. |
|
|
|
|
|
|
|
|
Neal: I understand you offer an Internet course that's free and easier to grasp than what you just said. |
|
|
|
|
|
|
|
|
Don: Yes, I started doing it so people could bite off morsels of information. |
|
|
|
|
|
|
|
|
Neal: You know, volatility is an important consideration in trading. |
|
|
|
|
|