The strategy: Sometimes as a trader, you want to sound like a broken record. You have a good tune playing, it gets to a good part, and then it falls back and does it again and again. It’s annoying in music, but in trading it lets you hit the same high notes several times over.

The back story: When it was announced that China A-shares (the shares that trade within the country) would be available to outside investors, and that many index funds would go with them — including the MSCI Emerging Markets Index – I felt it created a dip-buying opportunity.

So I bought 32 Dec. 15 $44 call options in the iShares China Large-Cap ETF (FXI) FXI on a dip on August 21, figuring that with the FXI’s 3:1 edge this summer on the Standard & Poor’s 500 and the SPY would continue during any temporary rally. My purchase price was $1.10 per contract and I sold them at $1.91 on August 28.

See Davis Martin’s previous play on FXI calls

The set-up: The FXI has retreated off of yet another threat from North Korea. The last time North Korea caused some market chaos, the very next day was the largest one-day dip-buying session in nine months.

The play: I want to get back into FXI Dec. 15 $44 calls when they’re trading around $1.50 each. I will start with a half position, will average in down to around $1, and will look to close out exactly as I did the last time, as the price moves to close to $2 per contract.

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Davis Martin is the head trader at DailyProfitMachine.com. He trades SPY Calls and Puts and swing trades mid-large cap stocks and stock options. At the time this commentary was published on RagingBull.com, he had no open orders on FXI call options, though he was close to buying them for a swing trade as described here.

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