While we try to be unemotional about our trading, sometimes we’ve got to step in and let the world know when things go really well. Last week we sent out a trade idea to our premier members, an INTC butterfly spread, after predicting a short term bounce in INTC prices based on the above chart.
We were right - after entering at .44 and getting out at .67 (a 50% gain!) INTC almost immediately tumbled below the established resistance point and is now operating without a net, meaning there is no support level in sight.
This is an excellent example of using risk-defined options strategies to place short-term trades and increase profit. If we had just bought the stock to bet on a bounce we’d have paid $2400 to take a $100 gain, as opposed to paying $44 to make a $23 gain. If we had done 5 of the butterflies, that would be $220 to make $115, the same cash return on 9% of the capital investment. Not bad!