Trying to Catch a Falling Knife

It's a cliche on Wall Street. "Don't try and catch a falling knife." I couldn't resist; even knowing Natural Gas supplies are running ahead of short term demand. I bought calls on UNG on August 27. I will build a spread by selling higher strike price calls. It is customary to buy and sell both sides together as a hedge, but the speculator in me likes the asynchronous action.

A good trade on the GOX (gold index)

I thought the GOX had become very oversold at 126.42 on August 16, so I swallowed hard and sold puts (OptionsXpress ticket copy below). This was a very good trade as the GOX recovered 10 points very quickly giving me a $4,000 paper profit. Instead of recognizing the gain, I built a vertical spread by buying the December 160 puts on August 22 (ticket on the right).

This provides a favorable profit profile as the GOX moves +/-15% from here @ 136.62.