SPX3: Trades the 300% Leveraged ETF's (Exchanged Traded Funds) SPXL & SPXS.
SPXL goes up 3% when the S&P 500 goes up 1%, and visa versa.
SPXS goes up 3% when the S&P 500 goes down 1% and visa versa.
Uses 25% of total investment funds.
@25% means only 1/4 of the SPX3 Quadrant Fund and @50% means only half the SPX3 Quadrant fund was used in a trade (12.5% of total funds), whereas @100% means the whole fund quadrant was used (25% of total funds).
Works well in all types of markets including strongly up trending, and choppy sideways as well as choppy down markets. Has the least risk of all the Quadrants.
GDX3: trades the 300% Leveraged ETF's NUGT & DUST.
NUGT goes up 3% when GDX goes up 1%, and visa versa.
DUST goes up 3% when GDX goes down and visa versa.
Uses 25% of total investment funds.
@25% means 1/4 of the quadrant was used; @50% means only half (12.5% of total funds) of the quadrant was used, whereas @100% means the whole fund quadrant was used (25% of total funds).
GDX is an ETF which mirrors a basket of gold mining stocks. GDX3 trades as often as SPX3. Mining stocks are highly volatile making this quadrant riskier than SPX3, but potentially more rewarding.
VOL!: Trades the VIX through UVXY and SVXY that mirrors the Volatility Index Futures Up and Down.
When volatility goes up, generally the stock market goes down and visa versa.
UVXY generally goes up when the stock market falls (and volatility rises), while SVXY generally goes up when the stock market goes up (and volatility declines).
VOL! uses 25% of total funds in its own quadrant with the same @25%, @50%, @75%, @100% designations as SPX3 and GDX 3 do.
VOL! trades less often than SPX3 and GDX3 and does not do well in sideways choppy markets. VOL! does well in strongly trending up markets coming off of a significant bottom, and strongly declining markets. VOL! has the same risk/reward ratio as GDX 3. VOL! spends more time in cash than the previous two quadrants.
BluStar Option Trader: Trades calls and puts on the ETF's - SPY, GDX and (rarely) UVXY/SVXY. Calls are an extreme leveraged bet on the upside, while puts are an extreme leveraged bet on the down side. Option trading is the riskiest, but potentially the most rewarding of all trading you can do.
Uses 25% of total funds, but unlike the previous quadrants instead of e.g., @50% and @100%, uses @2.5% @5%, @7.5% or @10% total funds in the quadrant. These could be divided equally between SPY (2 positions as a combo) and GDX (2 positions as a combo). In the event of a volatility/anti-volatility move (VOL! - UVXY/SVXY), it may be increased to @15% or more of the total fund.
When purchasing an @5% combo position, 2 different ETF time/price strikes are used. If the total investment fund's cash value were $100,000, the two different (e.g. SPY or GDX) positions would use only 1.25% each ($1250) for a total of 2.5% ($2500); if an @10% position is used, then 4 different (SPY and GDX or UVXY/SPXY) positions are used for a total of $5000.
Example: @5% combo GDX Calls Sep16 28.00; and GDX Calls Sep 30 28.50. With a $100,00 total investment account each position would use only $1250 max (or less). In the rare event all three @5% combos are used, the only back up left would be the remaining 2.5% of the quadrant or to a maximum of 10% of the investment portfolio maximum.
Options are traded fast and often for the most part, and profits (or losses) taken quickly. It would be extremely rare to have all three @5% combos going at the same time, or to utilize the last @5% combo for that matter.
Options may be day traded, swing traded or trend traded depending on market conditions. If the conditions are uncertain, we may cash out 50% of any position to cover the other half as insurance. There may be times when the combos are broken with the riskiest cashed in at a gain or loss. Other times, one half of the combo may be at a loss while the other half may be at a gain offsetting each other somewhat (Ex. SPY Call Sep 16 215.00 -5%; Sept Call Sep 23 216.00 +10% for a net 5%).
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