Saturday, March 29, 2014

OnlyDoubles Profit Spotlight for March 29th, 2014

Hello and welcome back to CRI's OnlyDoubles Profit Spotlight.

Here you will find past OnlyDoubles trades that have been recently closed. This blog's purpose is to update the public on recently completed OnlyDoubles trades as a demonstration of the model and a teaser to get you to subscribe. If you would like to learn more or subscribe (for real time access to OnlyDoubles NewTrades) please visit ourSubscription page.
Regular readers of my blogs will know that by nature I am a very conservative investor. I look for deep discounts to value, never risk more than 5% of my total stake on a single investment idea and stick religiously to the notion of selling half of your position on a double (hence the name OnlyDoubles). Typically, my hold period is between four to six months and I can have more than a dozen stock positions on at any one given time (not to mention options). Usually, I do my DD and if I like what I see, I slowly accumulate a position. Most of the time, a stock or an option gives me plenty of time to take a position and then write up a nice 'Rational' case for buying it. Best case scenario, I'm in and then you all get in. We all have the same price target in mind and we all get out in and around that area.....makes sense no? 

After an almost 25 month pause (I have been very busy learning the craft of day-trading Crude oil futures) CRI's Only Doubles has another winner!

Last September 21st, CRI issues an OnlyDoubles trading alert on Sugar #11. Specifically, buying the October, 2014 $.20 call options at 46 cents or better. That translated to roughly $515.20 ($11.20/pt) plus commissions. Considering the time value alone I thought this was a good idea. Add in some realistic technical targets and this was a veritable 'no-brainer'. Those Calls initially zoomed higher and I was looking like a genius. However, the option price never did double so as the market slowly melted back down to our purchase price and then even lower, I was looking rather foolish. In very typical commodity fashion, this market had one more push lower up its sleeve. This is one specific reason why I like options trading rather then futures or stocks. Since the premium paid is the maximum liability an option purchaser can incur, it really didn't matter if the price of the underlying went lower, I was more than happy to consider the $500 as the entire invested capital and whatever happens happens – October, 2014 was a very long way away. Indeed, that feature of options purchases seems to have paid off because prices of late have come storming back. So much so, that our long outstanding open order to sell half the position at double our purchase price (in this case $.92) was recently hit. Those that did do the trade should be sitting in a 'free' position. You should have sold half the position at that double level and have all your original $500 invested back in your hands. Who knows where the market will take Sugar prices over the next six months but my hunch is somewhere above $.20. 

That's all for this post, 
Brian Beamish FCSI
The Canadian Rational Investor