A nice 470% gain (so far)
As well as my weekly trading system, I have an interest in options trading. A 'call' option is the right to by a share at a certain (hopefully lower), price. A call option increases in value dramatically if the underlying share rises in price.
Some time ago, I noticed that the price of Westmoreland Coal (WLB), was rising. I invested in a call option. The value of the option has since risen over 470%. I spent $352 on the call options, and my options are now worth $1308.00 .
A little while later, instead of buying call options, I bought some shares in another resources company, Cliffs Natural Resources. I spent approx $5000. These shares have also gone up significantly in value.
However, these shares have 'only' gone up 63% in value. I find it interesting that buying call options do allow one to make significantly more profit per unit invested, than buying the share. However, it has to be remembered that a share can be held indefinitely and the holder can benefit from a gradual rise in price but an option has an expiry date, so ultimately an option trade has to be closed.
Furthermore, what can go up significantly in value can also go down significantly in value. One of the good sides to option trading is that if I am only buying options, I cannot lose more than 100% of the value of the option. So if I buy two similarly priced options, and one crashes and loses me 100% of the initial investment, and the other goes up and makes me 470% of the initial investment, then I am quids in! Selling options is another matter and would expose me to too much risk. It's not something that I do.
As regular readers know, what I do regularly is to run my portfolio of asset class investments with a timing system. To see what asset classes I am invested in, and what asset classes I have liquidated, click here to see my video!
Do make sure that you are signed up to get my regular blog posts from my website. Click here to get to my sign-up page. Do remember that this website is simply information about what I do, and should not be taken as investment advice from me to you. I am not a financial adviser (thank goodness)!
Have a great week!
Some time ago, I noticed that the price of Westmoreland Coal (WLB), was rising. I invested in a call option. The value of the option has since risen over 470%. I spent $352 on the call options, and my options are now worth $1308.00 .
A little while later, instead of buying call options, I bought some shares in another resources company, Cliffs Natural Resources. I spent approx $5000. These shares have also gone up significantly in value.
However, these shares have 'only' gone up 63% in value. I find it interesting that buying call options do allow one to make significantly more profit per unit invested, than buying the share. However, it has to be remembered that a share can be held indefinitely and the holder can benefit from a gradual rise in price but an option has an expiry date, so ultimately an option trade has to be closed.
Furthermore, what can go up significantly in value can also go down significantly in value. One of the good sides to option trading is that if I am only buying options, I cannot lose more than 100% of the value of the option. So if I buy two similarly priced options, and one crashes and loses me 100% of the initial investment, and the other goes up and makes me 470% of the initial investment, then I am quids in! Selling options is another matter and would expose me to too much risk. It's not something that I do.
As regular readers know, what I do regularly is to run my portfolio of asset class investments with a timing system. To see what asset classes I am invested in, and what asset classes I have liquidated, click here to see my video!
Do make sure that you are signed up to get my regular blog posts from my website. Click here to get to my sign-up page. Do remember that this website is simply information about what I do, and should not be taken as investment advice from me to you. I am not a financial adviser (thank goodness)!
Have a great week!
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