Friday, January 28, 2011

Yesterday's trading alert results in almost 108% profit!

I think this one can go in the books as my most accurate and profitable trade ever! I once in awhile issue trading alerts (marked by a red rectangle box in the post). On Thursday I issued a trading alert regarding the VIX trading low and I quote myself

"I think it's the calm before the storm. In fact, there hasn't been a major storm in quite some time. One is bound to happen,"

And it sure did.. The option I mentioned in the alert rose to $2.70, a 107.69% increase to be precise...

Take a look at the last candle stick, it skyrocketed to 20.04.

This is the option quote price (for a 17.00 February 16 call) in the box below;


What happened?

I knew it right away when I logged on this morning and the Dow Jones was down over a hundred points (closed today at 11,823.70 -166.13 (-1.39%). Usually that means the VIX (panic index) has risen, and not just by a little bit, it was up 24%

Why?

Unrest in Egypt that may destabilize the middle east could be a reason investors are cautious to make investment decisions. Besides that, economic volatility news from around the world has been relatively quite, for me, it's a little unusual seeing the VIX below 20 points.

What's next?

In my opinion, monitoring the markets on Monday is a good idea to see what the next direction could be. If it stays down, or it looks there's no sign of improvement I don't recommend any trade at all at the moment.
However, if the stock market turns out to be a bargain bin (especially the S&P500, today was its biggest decline since August) focus on call options on for end of February ; SPY, QQQQ and the Diamond (DIA).

Still can't believe I made an stunning 107.69%+ profit! I'm going to celebrate this weekend!


Disclaimer:

All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.