Monday, April 15, 2013

Trading ETF Options To Wealth

One great way to increase your wealth is through trading options on ETF's. They provide access to indices and commodities that otherwise would be too expensive or not available. Traders with less capital can still participate and profit from moves in that particular asset class. Because moves happen every day, opportunities come up all the time. A few examples are shown below.

SPY - SPY is an ETF that covers the S and P 500 stock index. In this most recent rise in price of the S and P 500, SPY has risen at a similar level. Since mid November of 2012, SPY has moved from the $135 range to the $155 range. Purchasing 100 shares of SPY would have cost over $13500. The profit if sold now would be somewhere in the range of $2000 or 15%. Purchasing an April $135 call option in November would have cost somewhere near $400 - $500. The call option is now worth $2275. That is a profit of $750 or 150%.

FXY - FXY is an ETF that covers the Japanese Yen. In mid - November, it was trading in the $122 range. A news barrage about how the Yen would be devalued if Abe was elected prime minister in December (which has happened) has caused the price to fall to the $100 range. Shorting 100 shares of the ETF would have brought a profit of $2000.00. Purchasing an April $120 Put would have cost around $1 -$2 range. The April $120 put is now worth $21.00. That profit would have been about $1800 or 900%!

GLD - GLD is the main ETF for Gold. Just in the last couple of months, Gold showed a negative trend. It then ran up against some strong support at the $150.00 level. But on Friday it broke through and today it is trading in the low $130's. Put Options in the $140's late last week are now 5-10 dollars richer.

The ability to trade in all three markets exist because of ETF's. In these three trades, the stock market, currency market, and commodity market are all covered. Because of options, the profits can be very large.

***Disclaimer - Trading Futures ETF Options did have trades (closed now) in SPY and FXY options and has written about GLD as recently as last week. Always do your own Due Diligence before trading.

7 comments:

QUALITY STOCKS UNDER 5 DOLLARS said...

Some exchange traded funds are really options. The ones that are 2or 3 times the standard and poor five hundred for example.

cabs on rent said...

Loved the put up, can make me feel bad about how normal ours is. I’d be interested to see the CTR/Conversion rates from some of them.

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