Free Money: Being too Right.

Last post I was looking for gold to drop in price before July 1st.  Well, it has dropped but the problem is that the contracts on the site I use are mostly for ranges of values.  Rather than just paying more or less as Gold goes up and down, the contracts pay $1 or $0 if the price of gold is between two boundaries. As gold was dropping from $1360 to $1180 I had to quickly try to unload my contracts.  It did not work very well and I was forced to settle them at 5-40 cents on the dollar. So a chunk of free money is gone. The lesson of the month is that I would have been much better off in real gold futures where the larger than expected drop would have just paid off better than expected.  In the rush to clear those boundary contracts I was able to short a few others in the other direction to help to offset the losses a bit.

The prices dropped so fast and far that even the August contracts started pricing themselves close to closing values.  To take my gold vengeance I was able to pick up a small amount of shorts on the August 1st price.

I was also able to short a few Microsoft contracts.  Microsoft had lost me some money in the past so this was a good way to make some back.  I shorted their July 1st price closing at $37.50. It was not a huge opportunity because I got in at around 5 cents.  This means that I will make about 5% when it closes.

Finally, the new long shot.  Last time I went with the Syrian chemical weapons and that was my biggest gain so far.  This time I picked up a contract titled “Edward Snowden to enter Ecuador in 2013”.  Ecuador gave asylum to Wikileaks founder Julian Assange in their embassy in the U.K. They also stopped trade talks with the U.S. recently because they said they did not want to allow them to have any leverage over them when it came to Snowden.  Also, Assange recently said that he is helping Snowden.  To me these events are good enough to pick up some contracts.  This was a new contract and there was not much going on with it so I put an order in for 50 contracts at 50 cents.  It sat for a day or so before someone finally picked it up.  This kicked off trading and the price moved up to around 65-70 cents. I was considering selling when the price dropped to somewhere around 2 cents. I am still not entirely sure what happened but I picked up a few more contracts cheap and with slippage the price was pushed back up to around 25 cents.  The nice thing is that it pushed my average price down so if this goes my way then the profits will be larger.

My portfolio as it stands is:

Edward Snowden to enter Ecuador in 2013 +77 (Long) Avg. Cost: $0.3961.
Total Cost: $30.50
London Fix AM Gold price to be greater than or equal to US$1,380 on 1 August 2013 -12 (Short) Avg. Cost $0.0809.  Total Refundable Cost (to cover largest possible loss): $11.03
London Fix AM Gold price to be greater than or equal to US$1,360 and less than US$1,420 on 1 July 2013 -37 (Short) Avg. Cost $0.3069.  Total Refundable Cost (to cover largest possible loss): $25.645
Micrsoft NASDAQ share price to equal or exceed US$37.5 before 1 July 2013 -30 (Short) Avg. Cost $0.0486.  Total Refundable Cost (to cover largest possible loss): $28.542

Total investment: NZD$95.717.  Cash: NZD$ 75.68. Total: 171.397.

Total change from last post: -19.064%.  Overall Free Money gain since start: 185.67%.