Jim Rogers Versus Marc Faber – Round One

Two of the most notable commodities investors are once again at odds.

But, why do I care?

Famous contrarian Dr. Marc Faber, author of the Gloom, Boom and Doom Report, recently stated in a CNBC interview that the Chinese economy is losing steam.

Legendary global investor, Jim Rogers thinks Faber has got it wrong about China.

Unfortunately for those of us that like details, that’s the whole story. Thanks financial media. Thanks for telling me absolutely nothing that I want to know as a self-directed investor.

As a self-directed investor I want something actionable. I want ideas on how I should invest given my own assumptions on Faber’s and Rogers’ respective beliefs.

But most of the financial media, particularly the written media, don’t have skin in the game. They are not savvy traders or investors, they are writers. They are great at telling stories (and for some reason self-directed investors love a good story).

But again, I guess it is all one’s perception.

My idea of a good story would be considered boring by most financial readers’ standards. Why? Because, I want to read about a trade idea with an astute strategy attached to it – the story itself is secondary.

 I want to know the probability of an investment and the risks associated with it. In this busy, insane world where our time is precious, I want to use my vested time reading about something that is actionable.

Simply stated, I investors need want a story that helps them to make money. The story itself means nothing.

To solve this very problem I created my free weekly report, The Strike Price.

In a world where self-directed investors are overwhelmed by the abundance of financial fluff, The Strike Price keeps it simple with intelligent, rationale and methodical ideas associated with an actionable strategy.

With this publication I’m building a community of straight-forward advice for self-directed investors that are exhausted by the daily fluff that we watch on the TV or receive in our email inbox.

Most importantly, I want to teach you how to use strategies with a real probability edge. A stock can either go up or down.

An example of an idea or topic in The Strike Price is to make an assumption on an idea – like Marc Faber’s and Jim Rogers’ beliefs on China – and employ the appropriate strategy based on that assumption.

For instance, if I agreed with Marc Faber and thought the Chinese economy was going to suffer, what type of strategy could I use to take advantage of that assumption? What strategy would I use if I believed Rogers was right? The same goes for Jim Rogers’ belief?

IShares FTSE China 25 Index Fund (NYSE: FXI)

Every month, I construct a bullish trade AND a bearish trade for a specific stock or ETF in The Strike Price. I track the performance of the trade and go into detail about what’s working, what’s not working and why.

If you follow along you’ll quickly learn about the various ways to apply sound options strategies to your assumptions on a highly liquid stock or ETF. More importantly, the strategies can be used by newbies and experts alike.

FXI FTSE China 25 Index Fund

I have conjured up a few trades for those of you agree with Rogers and are bullish on China and for those of you who agree with Faber and are bearish on China.

Consider paper trading the ideas below. I am positive you will be enlightened to a new way to invest your capital.

Here’s how it works:

Bull Trade

If you agree with Rogers and are BULLISH on China you could do the following:

Simultaneously: Sell the Jan12 30 puts & Buy the Jan12 25 puts for a credit of $0.20.

Strategy: Short put vertical (bull put spread)

Max Loss: $1800 per contract

Max Profit: $200 per contract

Probability of Profit: 82%

Expiration: 36 days

Bear Trade

If you’re BEARISH you could do the following trade:

Simultaneously: Sell the Jan14 38 calls & Buy the Jan14 40 puts for a credit of $0.23.

Strategy: Short call vertical (bear call spread)

Max Loss: $1770 per contract

Max Profit: $230 per contract

Probability of Profit: 86%

Expiration: 36 days

In The Strike Price we will follow the trade over the course of the next few weeks and once the trades are complete (either before or at expiration) we will add another bullish/bearish or neutral based trade.

You can sign up for The Strike Price here.

As always, if you have any questions please do not hesitate to email me at [email protected].

Andy Crowder
Editor and Chief Options Strategist
Options Advantage
Wyatt Investment Research

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