2013 Was A Good Year For Options Traders
For option traders, 2013 was a very good year. Whatever your strategy of preference, there’s a good chance it was successful last year. Many of the most popular strategies perform the best during strong bull markets like we saw in 2013.
For instance, the strategy I employ in my flagship service, the Option Trading Wire, was very successful last year. The purpose of the service is really quite simple – to make money by purchasing calls and puts on stocks.
And in 2013, making money is exactly what we accomplished.
In fact, we had NINE triple-digit winners during the year, and several other profitable trades to boot.
Let’s take a look at a couple of the more interesting trades I made in the service last year…
One of my favorite winners was an Amazon (AMZN) trade we made back in late January. I felt the stock was trading a little low heading into earnings. And in recent years, earnings have typically boosted the shares.
As such, with the stock trading at $267, I recommended the February $300 calls for $1.29. Apparently, other investors felt AMZN was due for a bounce because it took less than 24 hours for the stock to pop.
The very next morning, with the stock trading at $275, we sold our calls for $2.74. That’s a 112.4% winner… in less than a day!
Okay, so that’s a nice example of a big winner that I nailed. How about a trade that didn’t turn out so well?
Here’s an interesting situation that we had dealing with Outerwall (OUTR)…
In early September, OUTR had taken a downward turn and was trading around $59 a share. I believed the stock wasn’t going to fall much further and was due for a rebound. So, we purchased the October $62.50 calls for $1.53.
Unfortunately for us, the company surprised the market and slashed outlook. The stock plunged and our options became worthless. However, we still had another month left until expiration, so there was no reason to dump the near-zero calls. In the meantime, I continued to believe the stock was significantly undervalued.
Just in the nick of time, a private equity company purchased a large stake in OUTR – confirming that the shares were in fact ultra cheap. The stock shot up to $62. Not wanting to take any chances, I recommend we sell with less than two weeks to expiration.
We closed our calls for $0.95, or a 37.9% loss. While it’s never fun to lose money on a trade, by holding on to our calls we were able to salvage much of the value. And it just goes to show how quickly options can gain value.
As a matter of fact, the ability for options to post big gains in a short period of time is just one of the reasons we had those nine triple-digit winners in 2013.
More importantly, 2014 has the chance to be even better. I urge you to try out the Options Trading Wire and give yourself the opportunity to cash in on some huge winning trades this year.
Yours in Profit,
Gordon Lewis
Category: Breaking News, Investing In Options
