Thrilling Thursday – Another $1,000 Profit

That’s right, we did it again!

In yesterday’s morning post (and on our Twitter feed) I mentioned the Alert we sent out to our Members in the morning, noting the following long plays in the Futures:

1,900 on the S&P (/ES), closed 1,907 – up $350 per contract

16,100 on the Dow (/YM), closed at 16,320 – up $1,100 per contract

0.975 on Gasoline (/RB), closed at $1.045 – up $2,940 per contract

$30 on Oil (/CL), closed at $32.50 – up $2,500 per contract

Yes the futures are risky but they give you a tremendous advantage in volatile markets as you can use them to better balance your portfolio before the market opens or after it closes – rather than sitting and sweating while you wait for the opening bell to trade. Since we practice a generally Balanced Portfolio Approach at Philstockworld, we mostly play the Futures for fun but the experience we get while having fun really comes in handy when there is an after-hours surprise in the market. You’ve probably seen this commercial recently:

And no, it doesn’t matter who your broker is (most of us use TD’s Think or Swim) but this commercial hits it right on the head – being able to trade the Futures gives you a tremendous edge on the market. Let’s say you only used one of our trade ideas and made just $1,000 yesterday on a single contract. What percentage of your portfolio is that? How many times a year would it be nice to save $1,000 here or $1,000 there by being able to balance your positions based on news you received before or after the trading floor had closed?

Not wanting to trade the futures because they are risky is like only wanting to have dull knives at the dinner table: It will usually work out OK – until it’s steak night!

The same thing goes for our Options Hedges – another valuable tool you should have in your toolbelt. Our Short-Term Portfolio carries the primary responsibility of protecting our 4x larger Long-Term Portfolio (20% allocation to short-term positions) and, in it, we keep our option hedges that protect us against downturns. At the moment, we have 50 S&P Ultra-Short (SDS) March $22/27 bull call spreads that we paid net 0.85 for ($4,250) as our primary hedge (we’re not that bearish, yet) and it pays $25,000 if SDS is over $27 at March expirations (18th) and SDS is currently $22.37 and moves 2x to the S&P, so it would take a 10% drop in the S&P for us to hit our $27 target on the 2x ETF.