Where to start.........Royal Gold

This is going to be a multi-part piece on the closed out and losing positions (yes there are that many!). I am going to go over the Royal Gold trade first. At the very end I will take a look at my current evaluation of the gold market after having made so much and later lost EVEN MORE money in it. :)

Anyways here is the profit and loss:

There is no neat p&l statement because the trade was never closed out. Instead the options expired worthless this afternoon and the entire amount was lost - $1047.55.

Here is the entry and exit (make sure to read the subtitles as it is hilarious.........even to me):

My thought pattern here was very simple - Greed. I figured that gold was sure to go to $500 this week. All the right factors were present in my mind - 1) ridiculously high CPI and PPI, 2) bearish stock market, 3) options expiration week, etc. If gold could get into that $490 range even - I figured RGLD would rally to $28 - and I would make 20-30 times my money on those super spec out-of-the-money call options. Instead I got burnt and Sandisk, Apple, and Google went for the moon. ;)

And gold declined about $20 over the course of the week, but rallied strongly to close:

Not much more to say on this one. At one point - I was up about $300 on a ~$1,000 investment. I figured it could be a big hit - maybe make as much as $5K or even $10K on it - instead the gold price collapsed and I lost the whole $1K. I would say the biggest mistake here was not realizing that I already had enough money betting on the gold price rise vis a vis the NEM options. It was also probably a mistake to not close it out on Wednesday during the big rally - even salvaging $300 might have been worth it. But at that point I still had "hope" or should I say - "prayer." :)

The subsequent massacres in the NEM options is pretty similar and will follow up shortly.