Stock / Symbol: Gold Miners ETF / GDX
Strategy: Diagonal Call Spread
Trade entry date / price: 14 Jul 2022 / $25.70
Trade exit date / price: 11 Nov 2022 / $28.10
Price at this post: $28.10
Recap: In mid-July, I identified an opportunity for a long Delta trade on GDX with it trading near 52 week lows. Fortunately, I went with a long call that didn't expire until mid-2023 because this trade really went against me. After reaching a high of $27.58 on Aug 10th, GDX spiraled down to a low of $21.59 on Sep 26th. Along the way, in order to generate additional revenue / lower the cost of the long call, I sold a total of 6 different calls against the position. Finally, on Nov 11, With GDX up above $28, I was able to close out the trade for a 31% profit . On entry, the net position Greeks were: 31.3 Delta, -4.4 Gamma, 1.5 Theta, and 7.8 Vega. On exit, the net position Delta was just 8.
Opening Position and Adjustments:
Long 1 GDX 16Jun23 27 call
Short 1 GDX 5Aug22 29 call
Short 1 GDX 19Aug22 28.5 call
Short 1 GDX 2Sep22 27.5 call
Short 1 GDX 30Sep22 27.5 call
Short 1 GDX 21Oct22 28.5 call
Short 1 GDX 18Nov22 28 call
Entered for a net debit of $3.45 per contract on Jul 14th. Realized a net credit $1.22 from 5 adjustments / 6 different short calls sold over the trade period. Exited the remaining 27/28 diagonal call spread for a net credit of $3.35 on Nov 11th.
Analysis:
Max Risk: $360
Max Reward: $160 or 44% with GDX at $28.5 on Nov 18th
Profit Range: GDX between $25.25 and $33.50 by Nov 18th
Commission (round trip): $6.65
Suggested upside stop: $29 (take profits)
Realized Profit / Loss: $112 or 31% (pre commissions)
