Chinese Bubble Trade: Sell Your Options In Our Chinese Aluminum Play Now!

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

As a result, I am recommending that those of you holding our recommended ACH call options sell them now. We will be selling at a loss, but our aim is to limit the losses as much as possible. The stock would have to advance close to $37 — up roughly 9% from the current price — in the next 10 days for us to make money on this play. That, I think, is unlikely.

The options also have traded today in sufficient quantity so that you should have little problem with liquidity.

If you own the stock, hold on to your shares for now, and keep your stop at $29.50.

I want to emphasize that you should make sure you close out the position — even at a loss — by next Friday, June 8, at the latest. Otherwise, you will run into liquidity problems and will be unable to sell the options before they will expire worthless.

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Our Global Stock Investor portfolio consolidated over the last week as we head into the traditionally quiet summer months. As I noted in last week's update, global markets also need to digest their strong gains of recent weeks. The biggest danger I see to global markets is contagion from a collapsing Chinese stock market. Efforts by Chinese authorities to cool the nation's stock market frenzy could begin to have a ripple effect in other markets.


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