After a slow week – in which we exited just one position across our services — we picked up the pace a bit, closing five trades during the holiday-shortened week.
Here are all the closed trades from April 14-17:
This was still on the slower side for us, and the loss we took on the VanEck Semiconductor ETF (SMH) diagonal call spread in put us in the negative for the week.
We entered that trade on March 20, encouraged by how semiconductor stocks were holding up following selling in late February and early March. But investor sentiment soured again as the trade war between the U.S. and China ramped up. We rolled the position out in an effort to buy time for SMH to recover, but before we could roll it again, we were assigned on the short leg of our spread.
We chose to sell shares and sell the long put versus exercising, as this resulted in a slightly smaller loss than the $500-per-spread max loss.
Given the chip sector’s exposure to China, we decided it was too risky to re-enter the trade on the put side, although it’s possible we’ll consider a bear call spread in the near future.
If we remove SMH from the equation, we booked four winning trades last week that netted a combined $1,461 in cash.
One of those winners was a pre-earnings play on Netflix (NFLX). With the streaming giant set to report earnings after the close on Thursday, we entered a 1-DTE (days to expiration) bull put spread that expired just before the announcement, taking advantage of elevated premiums and the fact that the market was closed on Good Friday. We pocketed a quick $375 in just over 24 hours from this trade.
A shoutout to @dutch2191 who came up with the idea of a pre-earnings trade on NFLX prior to the market holiday!
Last week’s other winning trades were all on gold-related equities. This included our biggest winner from an income and rate-of-return perspective — the diagonal call spread in the 5K Challenge program that earned us $910 and a 45%-plus return in less than three weeks.
Gold has been our go-to sector amid the recent market turmoil. Some of the gold-related equities we’ve been trading include:
SPDR Gold Shares (GLD)
This is the world’s largest gold ETF by assets under management. GLD tracks the price of gold bullion. It provides a relatively liquid and accessible way for investors to gain exposure to the price movements of gold without the complexities of buying, storing and insuring physical gold.
VanEck Gold Miners ETF (GDX)
This ETF tracks the performance of a global index of publicly traded companies involved in the gold mining industry. Although it is generally more volatile than GLD, it offers diversification across a range of large and mid-cap gold producers. It also provides leveraged exposure to gold prices to some extent, as mining companies’ profits can amplify gold price changes. At the same time, it carries the risks associated with running mining operations, such as political instability in mining regions, production costs and environmental regulations.
VanEck Junior Gold Miners ETF (GDXJ)
This ETF tracks the performance of a global index of publicly traded small-cap and junior gold mining companies. These are typically companies focused on exploration and development, or smaller-scale production. It offers exposure to a potentially higher-growth segment of the gold mining industry but also carries significantly higher risks due to the speculative nature of exploration and the financial vulnerability of smaller companies.
Newmont (NEM)
This is one of the world’s largest gold mining companies, with operations and projects in numerous countries. It also produces other metals like copper, silver, zinc and lead. It carries company-specific risks in addition to gold price risk. These include operational issues, political risks in mining jurisdictions, environmental liabilities and management decisions. As a large, established producer, it might be considered less volatile than junior miners but can still be more volatile than GLD.
In recent weeks, gold has been the area where we’ve found the most consistent profits on the bullish side. We’ve employed a range of strategies including cash-secured puts, covered calls, bull put spreads, diagonal call spreads and even broken-wing butterflies.
So far this year, we’ve made more than $4,000 trading gold-related equities in the live account across our services:
With uncertainty likely to remain high in the coming weeks and months, you can expect us to continue to target opportunities in this sector.
