What a rally!
The markets are going up and up and up some more, which is exactly what we were guarding against on April 14th, when I wrote "5 Trade Ideas that can Make 500% in an Up Market." At the time, the S&P was "only" at 1,588 (now 1,632) and, of course, the intention of our bullish hedges was not to catch a 3% move but, now that we are up 3% in 4 weeks – let's see how they are performing, along with my other 5 inflation hedges from the following week, which I will review tomorrow.
At the time I had noted: "What's really been disturbing us is that our Materials indexes aren't following though. Not just oil and gold – those are silly things anyway – but copper and iron and corn and wheat and rice and rebar – things that are, traditionally, consumed in a healthy economy."
Just today, we finally began to see serious signs of life in the materials sector and, of course, this morning we finally capitulated to the upside and redrew our Big Chart – maybe this rally IS here to stay. We'll benchmark our trades by netting in a virtual $1,000 cash to each one and see how they performed. Obviously margin requirements vary widely, but we went into that in the original post, so I won't waste the time here:
- DBA Jan $23/26 bull call spread at $2, selling $2015 $25 puts for $1.55 for net .45, now .65 – up 44% ($440)
- X 2015 $15/22 bull call spread at $2.80, selling $13 puts for $2 for net .80, now $1.70 – up 112.5% ($1,125)
- CLF 2015 $18/28 bull call spread at $3.20, selling $15 puts for $3.10 for net .10, now $1.85, up 1,750% ($17,500)
- ABX 2015 $20/30 bull call spread at $2.95, selling $20 puts for $3.30 for a net .35 credit, now -$1.20, down 242% (-$850)
- 7 QQQ Jan $65/$70 bull call spreads at $3.24, selling 1 AAPL 2015 $300 put for $22.50 for net .20, now net $15.04, up 7,420% ($74,200).
Wow, up $92,415! Now, on CLF, we would not have made a commitment to buying 100,000 shares of them, even at net $12 so let's say 10,000 shares and drop the net return on $100 cash and call it just $1,750 profit and let's say we…