CMG this week had no news, no earnings (or lack thereof) to report, there was nothing to justify a monster move in the stock. Who could possible have predicted the $36+ 2 day move for CMG??
He bought and alerted the CMG $300 calls at $.29, $.30, $.35, and $.45 just before the stock started to explode higher. Today those calls were over $26 in the money! Truly astounding. That is almost a 9,000% gain, or to put it into monetary terms that is potentially $290 into $26,000 in a few trading days. Many would be selling their profits much earlier, but not Jimmybob. His strategy may leave many profits on the table at times, but in the end he's hitting some enormous gains when hes in the zone, like he was this week.
He also bought and alerted SINA and LNKD, with LNKD hitting brand new all time highs today of $122.85. LNKD is a stock everyone has been calling to collapse. To fall apart. To die. It's a POS. Jimmybob on the other hand has been fighting the bears all year calling for the stock to rise to $150 a share.
Some of the options Jimmybob was buying this week:
SINA $60 calls at $.22 hit $4.85 today or 2,100%
LNKD $115 calls at $.20 hit $7.20 today or 3,500%
The life of an options trader is not always chocolate and roses. For instance I did not profit from this absurd rally (not saying stocks shouldn't have rallied, just saying the rally continues to be 95% central bank manipulation) as I played for a pull back and an increase in volatility. Both did not come to fruition.
Jimmybob himself struggled through much of August as stocks were one big yawn fest. A week like this week could make an option traders year and for many it was well worth the wait.
Clearly Jimmybob is not the perfect trader, he makes mistakes like you and I, but his strategy continues to result in some massive gains. Earlier this year he was knocking it out of the park, and now he's back clubbing the balls senseless. While others are quick to lock in profits, he defies rational trading and that is what makes him unique. Certainly it is not a trading style that many would be comfortable with, but it is a trading style that he continues to validate.
Lee ran a great webinar this morning about Spread Strategies. He also covered some of the Greeks and explained how they affect the price of an option. For those who who trade vanilla puts and options I suggest you listen in on some alternatives. Spreads offer you more variety, the ability to finance the purchase of an option by selling a farther out of the money option. Lee covers Spread Strategies in a very easy to understand webinar.
Here is a great webinar held on Vertical Spreads by Lee. What are Vertical Spreads? In a Nutshell Vertical Spreads involve two options of the same type, with the same expiration, but with different strike prices. One of the options is purchased (or long), and the other is sold (or short). Two common types of vertical spreads are the Bull Call Spread and the Bear Put Spread. Instead of just trading puts and calls, Vertical Spreads offer a way to limit your risk and/or cost.