Make money in either direction

Since I called the market bottom early this month, it has been really a crazy roller-coaster experience for a couple of weeks now: the DOW was up 200+ one day, and down 100+ the next day. You need a very strong heart to go through this if you want to dance with the market real time. But my gut feeling is that the market wants to go up. I’m still convinced that we are currently in the trend towards a year end rally. While the overall market is schizophrenic these days, it did create some good trading opportunities both up and down directions. Today is the option expiration date and I got two winners, one for the up and other for the down trend. Both profits came within a month time.

For the uptrend, I traded Intel (INTC) via call spreads. As you know I have always been very bullish for Intel. It is the superman in the PC chip industry with almost no competitors. Somehow the investor herd just didn’t see it. However, in the terrible summer of the market with a severe correction ongoing, Intel actually did very well compared with the majority of others. I figured its down side risk was very minimal but it could jump higher easily with little bit good news in an upward market. So I went in a month ago to trade it via call spreads when its share price was at about $21. Intel did surprise the market with a great quarter results and its stock price jumped to $24 these days. With some leverage, my profit was not trivial. 

Which sector was doing very poor in the past few weeks? Probably precious metals were one of the worst. Although nothing can change my long-term bullish view for the precious metals, I must admit that I have been bearish for them in the very short-term, which was also true for some mining stocks which had climbed too much too fast. Royal Gold (RGLD) is one of them. Actually RGLD is one of the best gold stocks in the long run and I like it very much, but it went up too fast in the past few months. Technically speaking, it is almost a no-brainer that it  must drop down first before going up again. I shorted it via put spreads when it reached $80, betting that it would plummet to below $70 in a short run. Fortunately I was right and it did crash about 20% in less than a month. Again it is a great short-term trade for me. I think RGLD is close to its bottom and it would be a great buy if it drops below $60.