ANR (Alpha Natural Resources) gives us another great example of a trade gone right. On August 28th we sent a trade alert out to our premier members, advising a sale of the September $6 put for $0.42, giving us a breakeven price of $5.58 and requiring about $150 in capital. The trade had 60% probability of success.
Today we sent out the closing alert, buying back the short puts at $0.10, a 20% gain on capital in less than two weeks. If you look at the chart, you’ll see that ANR even fell below our breakeven point for a few days, but we held steady, believing in our analysis. Because our trade was short an option, even though we were temporarily incorrect there was still benefit in waiting, as each day knocks off a little time value from the option, and puts a another penny in our pocket.
We were rewarded for our patience today, as were our premier members who chose to follow this one.