Unprofitable: This trade is unprofitable if GDXJ closes under $24.60 by April 20, 2012. The most this spread can be worth is $1 minus the $.40 I sold it for, so my maximum loss is $.60. I am risking $60 per 1 lot to make $40 on this spread.
Reason I Like This Trade: When GDXJ was trading $25.58, I saw someone sells 4250 GDXJ April 26 Puts for $1.50. A also saw someone sell 2500 GDXJ March 28 Puts for $2.50 and then buy 2000 GDXJ March 27.63 Calls for $1. This is very bullish activity, so I wanted to get LONG the GDXJ.
UPDATE 3.9.2012 This is very similar to my DNDN trade, I am not taking profits, even though this trade is working out very well so far. I continue to play to the upside in many stocks, but always defining my risk vs reward.
UPDATE 3.12.2012 With GDXJ with overlapping bars, I think that GDXJ has limited downside, so I will leave this Put Spread on for more potential profit.
UPDATE 3.15.2012 With time on my side, this trade has decreased in value even though GDXJ is the exact same level than where I sold the Put Spread, so I will leave this trade on for more upside potential.
UPDATE 3.22.2012 With Gold, Silver, and Oil all gettuing crushed, the Put Spread is now worth $.55, but I will leave this trade on as I think there will be Gold buyers coming into the market very soon.
UPDATE 4.9.2012 Another stock I am glad that I sold Put Spreads instead of Puts. This spread will mostly expire worth $1, and the train moves on. Will be sitting on the sidelines on the commodity based Longs for awhile.
UPDATE 4.23.2012 I saved myself some money I worked out of the Spread when it was worth $.85, moving on to the next trade.