Counting golden chickens before they fib to us.   9% move from here to 1348.  18 % 2x ETF.  GDXJ could be looking at he 33 to 40.5 area, which is 43% higher at the high end.

The basics of what I'm doing are

1) Holding long PM stocks

2) Protecting them with long out of the money puts (instead of stop loss orders)

3) Opportunistically exploiting short-term moves in the index (5-10%) by using options trades to.  You see this all the time in PM indexes, just like this morning, how they slightly gap , then drain off all the gains of the previous day, and there you sit with a loss if you chased an entry.  I wouldn't doubt the take it most of the way back up this afternoon.

The trades I closed this morning were a short (bear call spread) and a bearish collar.  I flipped into a bullish put spread.  These trades are designed to take 0.5% here and there (almost daily with the volatility we're getting now)  rather than try to trade in and out of 20 stocks or deal with the inverse triple inverse ETFs , which will guaranteed lose money if you hold them for any length of time.

Current state of portfolio is 100% long PM stocks, mostly juniors,  65% hedged with 25 May GDXJ puts, and short term bullish put spread on GDX at the 20.5 / 19.5 strikes (26c ... up a nickel already)

Here are the current stock holdings.  Started a little "conservative" (this is week 4) with about 35-45%  lower beta items such as double long gold / silver ETFs and some larger cap names which are little more conservative.   Most of the juniors I put in are outperforming the index, but I stayed away from the deeply oversold names that have had a lot of short covering or dollar / oil related comebacks.

Some stocks appeared to have hit resistance lines and there are already several gaps below which can be exploited, but the upside risk is also very great and most stocks, and the index itself appear to be on top of the 100 fib extension of the past quarter's base.  Too early to get to bearish.

Portfolio surging up nearly 4% today and 20% overall, just slapped on a 23 / 20.5  GDX Feb monthly exp (39 day) collar for 3c debit.  This is a bit different as we're now long volatility, not short.   This will profit from any pullback to breakout area and gaps below that. Earlier (too early) I closed the weekly bull put spread and rolled to a 21.5 / 22.5 , 2 week short call spread.  That's also taking heat at a net -20 delta

We closed the 20/19 put weeklies for a tidy16c gain.  We are taking a little heat on the 21/22..  We can roll these up and out a 1/2 point and a week for about a dime a time debit, which would leave us with a slight overall gain on the weekly spreads.  However, we are now over 3 daily gaps, and the banksters did not break out /gc overnight, and we could easily see today's open retested.  I'd take breakeven on the call spread if I could get it later today and look to reposition as we repress the ranges.  Next rollup on the GDXJ long term puts would probably be around 4% higher , 29.25-29.50. 

UPDATE:  Bailed on the 21/22 call spread and moved up to 21.5 /22  9day for 9c net loss on the call side for now, net 7c on both sides.

We accomplished some  goals this week:

1) The protective puts were rolled up and out to May 25 strike on the GDXJ for net debit of 2.2 (.34 delta).  Ideally, we'd like to roll when can get to significant support level at .25 delta.   While things look very positive, we want to be able to aggressively sell puts and perhaps even roll into higher beta stocks on any.

2) The port is at 16%, which is between the GDX and GDXJ.   At first blush that might seem as a waste of time vs. using the index itself.   However, we deliberately started with 35% underperforming double ETF and royaltystocks , along with a few lower beta like HL. 

Also, we have reached this number with much less risk and volatility, which would likely allow a greater plop of capital at one price point than would otherwise be advisable.   South African stocks and some deeply oversold stocks (e.g DGC.to) didn't make our initial cut because they are too volatile or affected by extraneous factors other than the underlying metal. 

3) We swung about 7.5% of the royalty and double gold into higher beta stocks that are acting well and not too advanced.   We may continue to do so on orderly  pullbacks.  RIOM and HL are only up about 10%, but look fine. Most others are outperforming, and we are adding to high performers that are not just a product of short covering.

3) We've had wins on all our weekly put spreads.  We can now sell pretty aggressively on both sides.  We'll attempt to sell at 30c on a 1 point 7-9 day spread and cover at 10-12c.  Losing sides will be rolled out if necessary to avoid booking losses. 

The great thing about this method is that these spread trades can be made against 100% of the underlying stock.  At 30c per week (1.5% of underlying) theoretical gain for a one-sided spread you're looking at about 78% annualized in a perfect world. 

Realistically, if you can cover at 13c  credit, IB options are 70c each, and we're using 160 round trip , then (40x13) -(160 x0.70) = $408 after slippage and commissions.  13c per week is about 21% annualized.  3c net credit is about breakeven.  

Here's an update on the current contents and individual performance of the GDXJ 2015 Model Portfolio.  Look to buy aggressively a 38 fib dip from Dec 23 to recent highs on top names.  NG and PVG would be my go to add-to's.  They really do look fantastic.

Portfolio has been amped up to about a 3.8 (physical = 1, double ETF = 2, Royalty / Large Cap = 3;  Good junior producer = 4;  Everything else =5

The 10/30/14 daily bar is the watch area on all charts.  Hard to see the stocks which got whacked hard getting through there soon (e.g DPM, TGD, still have to test that area, gaps under recent move, too).  Best names took it back easily and have good buying patterns, which, to me, could mean strong hands.

I am taking the under performance in the gold royalties as a preference for beta in fund buyers appetites.  So I chopped them in half, along with about 1/3 of the double ETFs and rolled into other smaller companies, PVG, OGC,to, LYD.to, and AKG.  Had already added a little DGC.to and RBY to inital portfolio.  A couple of those are a bit outside the multiple-time frame relative strength analysis I prefer, but are well-funded, advanced projects that are doing OK in the market.

Ok, I have GDXJ dialed in at 28.72 for a 100% fib extn.  That may not look right, but the strong stocks bottomed on 11/5/14, and this drawing lines up with their major fib extn / reistance lines. (see HL I drew earlier today).

I will look to roll up the 22 Feb puts to 25 Mays, which will cost about 2.2 points if things go as planned.  That protects the most aggressive 2/3 of the longs, which may not be necessary, but I expect we'll be in a range from 29 to 25, This will allow us to exploit short term trades in this range aggressively if that is what ensues.

Here's a good example of using the automated 2 step conditional order. 

MDR noted for its relative strength yesterday.  Gap fill at  2.80 was noted, which was a 38 fib of the 2.20 to 3.15 range.  If looking to capitalize on potential oil snap backs, this is a potential vehicle.

Condition 1 Fill gap -  "bid goes below 2.80"  .   This sets buy stop.

Condition 2 Order trigger -  Trade Price goes back through support / recent intraday lows around 2.85  ... " trade price goes above 2.85" 

Doesn't look like much but , 20c potential gain  (2.85 to 3.05) with 5c risk, and that's just intraday / overnight stuff with good trade location and computerized execution.

My choices in these trades are also influenced by the context of long only IRAs and siphoning off a bit of vol on a long portfolio which is directly correlated to .  The options trades aren't meant as best practices on options trading in general.

I could use the inverse ETFs but do not want to hold them or book losses, and the option spreads give a bit of price buffer and theta decay if I get bad trade location.  I could use high delta in the moneys, particularly with more directional bias, but that has a bit more risk, too.  Certainly welcome any ideas for more efficiency.

Wasn't supposed to be this crazy, but it's just working out this way.  Account up 17% as of the moment.  I 'm going to leave the 2 day weekly puts naked for now with the resurgence in buying. 

Since we have a full range bar already, I sold a 2 day GDX call spread for 11c  ;  21 / 21.5.  Rolled profits (assuming it goes to zero) , about $880 into 100 shares Detour Gold. 

GDX options are pretty liquid, even on the weeklies.  Not great fills, but can work pretty well if good trade location.   Beats trying to get off orders on  18 individual stocks.

i have an updated list of top performers off the Nov 2014 lows on the right.  On the left is the original 2015 Model GDXJ Fund.   As you can see, we had many of the best names in at the start, and have added 3 more from trading profits.   We expect FNV, RGLD, and the double ETFs to underperform during a nascent rally, as juniors always fly.  They are their to provide diversification, and they outperform on selloffs.  In our view, buy aggressively / sell put spreads at the bottom of yesterdays range in these good names that have no gaps.  Expect higher prices to 5-6% above recent highs in very short term.