Remember how I told you guys a few times…

Remember how I told you guys a few times over the last few weeks while we were letting the portfolio stew a little bit and not doing many trades that we’d soon have some wild opportunities to do more.  Does the 20% gain on our silver short in 2 days count?  How about the 5% collapse in gold and the resulting big gains in our GLD puts?

On that note, I’m going to go ahead and buy back the common part of my short in the precious metals.  I’ll hold on to the puts, which are now nicely in the money and will work as natural stop-losses if the metals are to spike against us again.  That is, the value of my, say, GLD puts with the $147 strike that are set to expire in a few months, will basically lose all their value if GLD runs far above $147 before the expiration date of these put options, but that would cap my loss at whatever capital I risked in the puts.  I’ve also got some gains now in the common short positions that I’ll be locking in, which means I can’t lose more money than what I put in.  When you short any stock, you risk infinite losses like the guys who were short Apple at say $25 a share and now would be down more than 1000% on that trade.   Such a 1000% loss is much worse than the 100% loss that the guys who bought long-dated Apple put options with a $25 strike price back at the same time.

We’re not here to be exciting though.  We’re here to navigate these markets, analyze the trends and try to maximize the gains from our conclusions.