- The 2009 Men’s National Championship game was a real snooze — with North Carolina trouncing the “sentimental” favorite, Michigan
State.But our 2009 OptionsZone.com ‘March Madness’ Trading Contest was anything but boring. And in all, more than 500 traders entered
the contest with a chance to showcase their options trading skills and compete to win. It was a volatile competition, but we crowned
our winner on April 6, just ahead of the National Championship game itself.Our National Champion walked away with the victory (and the $1,000 grand-prize!) earning a 200% return for the three weeks of the
contest! But the battle for second and third place was much closer.Read on to get the details of all three winning trades and to get the Top 3’s next trading ideas.
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Third-Place:
BKE April 25 CallsOur third-place winner out of more than 500 entries was motionH20 with the BKE April 25 Calls, which generated a 68% return
at the end of the contest.How’d she pick it?
“I’m using a screener that finds stocks on the move — BKE was the only stock on the screen on the day I entered the contest. There’s
no emotion involved, purely technical. Closer to in-the-money than out-of-the-money options seem to work best.”Letting your emotions get the best of you when trading is a big no-no. Learn 6 other mistakes
to avoid when trading options.
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Bet On OceanFreight Inc.
So what is the next trade motionH20 recommends?
She likes the OCNF May 2.50 Calls (QZVEZ).
“It’s from a different screener — and just a guess. Three stocks came up from the other screener — Jos. A. Bank Clothiers Inc.
(JOSB), Buckle Inc. (BKE)
and America’s Car-Mart Inc. (CRMT) — all of which have options that have moved up in a big way. Maybe there’s more room to move.”Interested in other stocks on the move? Check out Momentum
Stocks on OptionsZone.com.
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First Runner-Up:
CME June 300 CallsTrader shmid was our first runner-up with the CME June 300 Calls yielding an 85% return at the end of the tournament.
“I picked the CME trade because it was the beginning of a recovery rally at the end of a long downturn, which means there are a
lot of people on the sidelines waiting for the best opportunity to get back in. When you have a rally like we had, everyone gets on
the bandwagon and the whole market trading volume soars. This is particularly good for brokers because they make their money from
people placing trades, which is why CME was a good pick for the time.”“I chose the June 300 strike because it is out of the money, so if it rises it will see large percentage gains. And the June expiration
insured that the theta, or the loss in time value, would be small as opposed to an April expiration.”
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Short Gold
What’s the next trade shmid thinks is a winner?
“A trade I have been considering is in GLD Jan 2010 80 Puts (KFFMB),
which is basically a short on gold. I think we are looking at a recovery from this point, which means less people will put there money
into gold and more people will buy stocks — as gold is considered a stable asset, but stocks can yield greater returns. Therefore,
gold has had its day, and it may go down from here.”This trader isn’t the only one who thinks investors would be wise to avoid gold. Get 5
Reasons NOT to Invest in Gold.
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National Champion:
JPM April 5 PutsTrader HM beat out more than 500 other option trades entered with the JPM April 5 Puts. He bet that “the market isn’t finished
bringing this one down,” and he was spot on. His trade returned 200% in three weeks.His secret?
“I had looked at a point and figure (P&F) chart that had a target of 5 for it, and the price of the puts was such that a little
move in price would have been big. The financial stocks can only be propped up for so long before their true value comes out, which
will make them drop hard.”The financials are just one reason your stock market nightmare isn’t over. Learn 7
Reasons Why the Market is Not Going up Anytime Soon.
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Short the S&P 500
So what’s our National Champion’s next trading idea?
“One of the current trades I feel real good about is the SPY May 84 Puts (SZCQF).
I feel we have hit the top of our correction, and will start back down toward the 800 area this week, which would give these puts
a very nice gain in a very short amount of time.”Need some other great trading ideas? Check out:
