Cocoa Futures Sold at $2,375 USD/ton

January 10th, 2012 | Posted by octafinance in Commodities | Trades - (Comments Off)

Today, I sold my Cocoa at $2,375 USD/ton. That is a 16.2% return on the invested capital. I still believe that it will continue going up but I prefer to take profits at this point. If Cocoa go down again, I will probably re-enter the position.

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Cocoa Futures Bought at $2,044 USD/ton

December 12th, 2011 | Posted by octafinance in Commodities | Trades - (Comments Off)

Today, December 12 2011, I bought Cocoa Futures at $2,044 USD a metric ton. Please keep in mind that I’m extremely pessimistic about the resolution of the European debt crisis. I still think that commodities will go down next year due to BRICS slowdown, countries in Europe going under and more bankruptcies. This position, is not in my portfolio but in my trading account, so it’s just a speculative play. I don’t have a stop or take profit yet. I believe the time to buy Cocoa is now but I might be early as usual. I might add more Cocoa if the price continue going down.

Please take a look at the chart below:
Buy Cocoa

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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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Fair value of Gold. Gold as an insurance.

August 24th, 2011 | Posted by octafinance in Commodities | Gold | Precious Metals | Trades - (Comments Off)

By writing this post, I’m sure that I will provoke disaffection in some readers and investors.  It’s really tricky to measure the fair value of gold but still I believe that some gold models offer a fair measure of the value.

Before I start with the fair value of gold I want to say that anyone who doesn’t have gold as a part of it’s portfolio, should add 3-7% on a price weakness. Gold is still the best insurance against currency collapses, hyperinflation and uncertain times. But that’s all. I view gold as an insurance more than as investment. I will buy personally gold as an investment only after and if the gold price goes near or below it’s fair value.

I use two models that measure the fair value of gold:

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Gold put option bought due to parabolic move

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

Today, August 23 2011, I bought gold put option at 49,66 USD/oz with a strike 1770 USD/oz and expiration date November 15 2011. The put option on gold is for 1.1% of my trading account. The rationale behind this trade is the parabolic move that I detected. To be honest, I’m extremely optimistic that gold and silver will rise long-term and I plan to buy more of these precious metals after they go down big. No matter how much I love some assets, now we must face reality and the fact that gold has risen in parabolic move due to public fear and buying of retail traders. Gold has been up 10 years in a row, which is very unusual in any asset class. I believe that gold is overdue for a deep correction. We have a huge standard deviation parabolic event, which could correct at least a few hundred dollars. When I detect a parabolic move, no matter what the asset is, I usually risk a small amount of my trading account to buy put options while try to be as precise with the timing as possible.

Parabolic moves always end badly. They form because super high optimism about an asset, many factors supporting it, and it goes much higher than 200 DMA. There is also another red flag that might help destroy the parabola and it’s “margin hikes”. (more…)

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USDCHF call option sold for a 187% profit

August 11th, 2011 | Posted by octafinance in Currencies | Options | Trades - (Comments Off)

Today I sold my USDCHF call option that I bought for 0,0146 on August 9 2011. I sold it for 0,042, or a profit of 187% on my invested capital. In fact, it has been only 3 days since I bought this option, but the SNB did an intervention and I believe that this move is enough for me to take profit. Interventions are usually ineffective and the safe-heaven status of the swiss franc will probably be tested again.

The USDCHF 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 August 31 2011.

Summary: USDCHF put option bought on August 9 2011, for 0,0146 USD/oz, with strike 0,737, and expiration date August 31 2011. The USDCHF option was sold on August 11 2011, for 0,042 or a 187% ROIC.

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Swiss franc parabola

August 9th, 2011 | Posted by octafinance in Currencies | Options | Trades - (Comments Off)

Currencies rarely go parabolic. Guess how big the problems are. I’m sure that the swiss franc is appreciating because everyone in Europe is transferring money from unstable banks to Switzerland and many people expect the EUR to weaken. All these factors have contributed to a strong currency going parabolic. Today, August 9 2011, I bought USDCHF call option at 0,0146 with a strike 0,737 USDCHF and expiration date August 31 2011. The option is for 1.65% of my trading account. I’m not only bearish on the swiss franc due to extreme overvaluation, but I’m also optimistic on the USD appreciating this year, and even next year depending on whether the USA give tax incentives to companies to repatriate USD back to USA or not. The main rationale behind this trade is the parabolic move that I detected.

The swiss franc has risen in a super parabolic move due. The Swiss franc has appreciated 60% from the low in 2010. That’s unbelievable. Just in the last month CHF has risen 20% to the USD. I think that the swiss franc will soon crash due to actions by the SNB. Parabolic moves always end badly. They form because super high optimism about an asset, many factors supporting it, and it goes much higher than 200 DMA. The siwss franc is 20%+ higher than the 200 DMA.

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Silver put option sold for a 567% profit

April 21st, 2011 | Posted by octafinance in Commodities | Options | Precious Metals | Silver | Trades - (Comments Off)

Today I sold my Silver put option that I bought for 0,54 USD/oz on April 21 2011. I sold it for 3,62 USD/oz, or a profit of 567% on my invested capital. I have decided to take profit because silver post-top corrections after parabolic moves have been on average 30% (please refer to the image below). So far, silver has declined 30%, so I believe silver might correct and go up before going down hard again. I believe the direction of silver will be down because broken parabolas don’t recover fast if they ever do. I believe silver will recover and even exceed the 50 USD/oz high, but that will take long time.
Post-top corrections of silver
silver post-top corrections
The silver 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 August 1 2011.

Summary: Silver put option bought on April 21 2011, for 0,54 USD/oz, with silver price strike 35 USD/oz, and expiration date August 1 2011. The silver option was sold on May 5 2011, for 3,62 USD/oz or a 567% ROIC.

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Silver put option bought due to gigantic parabola

April 21st, 2011 | Posted by octafinance in Commodities | Options | Precious Metals | Silver | Trades - (Comments Off)

Today, April 21 2011, I bought silver put option at 0,5438 USD/oz with a strike 35 USD/oz and expiration date August 1 2011. The put option on silver is for 0.87% of my trading account. The rationale behind this trade is the parabolic move that I detected. To be honest, I’m extremely optimistic that silver will rise long-term and I plan to buy more of silver when it corrects. No, we must face reality. Silver has risen in a super parabolic move due to speculation and shortage and retail traders bought it aggressively . Silver has risen between 2002 and 2011 – from 5 USD to 45 USD/oz or 900% for 9 years. I believe that silver will crash soon. We have a huge standard deviation parabolic event, which could correct at least 30%. When I detect a parabolic move, no matter what the asset is, I usually risk a small amount of my trading account to buy put options while try to be as precise with the timing as possible.

Parabolic moves always end badly. They form because super high optimism about an asset, many factors supporting it, and it goes much higher than 200 DMA. There is also another red flag that might help destroy the parabola and it’s “margin hikes”. Silver has risen between April 2010 and April 2011 – almost 160%. This is not sustainable rise and points to extreme speculation. We will get another opportunity to buy physical silver, but at much lower prices. (more…)

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