Go For Gold

(for details pls visit www.OptionPundit.net)

Markets are in volatile times and unless something exceptional occurs, I don’t expect markets to move much till Sept 18th FOMc announcement.

I am fully on-board for my Sept portfolio and will soon start looking for October picks. Here are couple of ideas that I thought might be worth sharing. I may not be able to follow-up, so choose carefully should you decide to play any of those.

Let’s begin with the great story “Go for Gold”. Gold is breaking multi year high and about to reach highest level seen last year i.e. 728 and only little far away from all time high 840something. There are several ways to play gold, but the most stable way is via ETF. There are two ETFs GDX or GLD. GLD is purely focused on Gold Bullion while GDX is linked with Gold and partial silver producing companies. I like GLD but it doesn’t have options, so I may choose to play GDX via Options vehicle. Why gold? Everything points to bullishness in gold e.g. Currency market turbulence, launch of GLD equivalent Japanese ETF, Rate cuts, or “remote” recession in addition to many more reasons.

Wheat is another story. There is a good article The Grain Drain by HardAssetInvestor. I will leave this for seasoned traders. Don’t get in if you are not comfortable with futures.

The Usual from Jim cramer, a long list, but this is something one may find useful as you build your portfolio for uncertain future, after 9/18th meeting. His six picks for recession– PepsiCo (PEP), Medco Health Solutions (MHS), Altria (MO), Northrop Grumman (NOC),McDonalds (MCD) and Procter & Gamble (PG). He then goes to talk about XOM, SLB, HPQ, DE, UTX and FWLT. You may wanna check out to pick an idea or two.

Other interesting play is CAM double diagonal for $0.55 credit.

  • Short Oct 90 call and 80 puts
  • Long Nov 95calls and 75 puts

We can discuss this topic here.Profitable trading, OP


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5 responses to “Go For Gold”

  1. Peter Roan Avatar
    Peter Roan

    Theres a good chance (I think) that GS will surprise on the upside. A long debit call spread makes sense to me.

  2. Rapheal Avatar
    Rapheal

    Gold has started the uptrend momentum on 1 Sept 07 already.

  3. OptionPundit Avatar

    I am taking the CAM Double diagonal off the table for almost break-even ($0.05/trade profit). The stock is breaking out and I don’t want to be in it’s way. Instead, I am deploying a different strategy to benefit from move-up.

    Profitable trading, OP

  4. stas Avatar
    stas

    GDX naked calls can be interesting as it just broke the resistance.
    I usually avoid complicated option spreads as its designed to male your broker reach. But this double diagonal seems ok.

  5. […] first started urging to buy Gold almost 3 years back when gold was around $728/ounce and it was about to make a new high. Now after 3 years, at almost […]

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