Gold put option sold for a 205% profit

September 23rd, 2011 | Posted by octafinance in Commodities | Gold | Options | Precious Metals | Trades - (Comments Off)

Today I sold my Gold put option that I bought for 49,66 USD/oz on August 23 2011. I sold it for 151,43 USD/oz, or a profit of 205% on my invested capital.

The gold put option was a position in my trading account. A speculative play that I make with less than 10% of my total trading account size. I use put options when I detect a parabolic rise of an asset. The options limit the possible loss if I’m wrong, but they also offer me opportunity to leverage my trade. I always buy out of-the-money options, so I pay cheap premium for the option. As after parabolic rise, I do expect huge correction, I prefer to buy cheap out-of-the options and risk less capital for a high return, if I’m right. I also buy the options for a short period of time. Usually I buy options for few months, so they are cheap. In this case my option was bought until November 15 2011.

Summary: Gold put option bought on August 23 2011, for 49,66/oz, with gold price strike 1770 USD/oz, and expiration date 15 October 2011. The gold option was sold on 23 September 2011, for 151,43 USD/oz or a 205% ROIC.

Please see my previous parabolic bets on Silver and Swiss franc and how they ended with huge profits.

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Protected: Portfolio Update

September 21st, 2011 | Posted by octafinance in Portfolio History - (Comments Off)

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Advance Terrafond. Analysis and Fair Value

September 19th, 2011 | Posted by octafinance in Commodities | Farmland | Stocks - (Comments Off)

Because I believe that farmland will be one of the most profitable investments in the next decade, I have decided to do an analysis of the biggest farmland REIT that operates in Bulgaria. I was looking for a cheaper way to invest in farmland as the prices of farmland locally have already increased drastically in the past few years. Because REITs usually promote themselves as “a really cheap way to buy farmland”, I wanted to challenge that and see if it’s worth it.

After a deep dive in the company’s financial statements, I have create a spreadsheet with the financial data and few charts for your reference.

Expected long-term return based on stock priceadvance terrafond expected return
expected return of advance terrafond (more…)

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HKD Call option bought in portfolio

September 17th, 2011 | Posted by octafinance in Currencies | Options | Portfolio - (1 Comments)

Two countries share the same monetary policies but have absolutely different problems and solutions to them. I refer to USA and Hong Kong and their currencies, the USD and HKD.

Hong Kong shares U.S. monetary policy because of it’s currency. The HKD is pegged to the USD. Hong Kong import the U.S.’s ultra accommodative monetary policy. All factors for which HK decided to peg to the USD are no longer active. Now we are left only with the negative impact of the peg on Hong Kong. Consumer price inflation in Hong Kong is accelerating. The weak currency is intensifying the inflation problem.

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