As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Trade Alert - (GDX)- BUY
Buy the Market Vectors Gold Miners ETF (GDX) February, 2016 $12.50-$13.50 in-the-money vertical bull call spread at $0.75 or best
Opening Trade
?RISK OFF?
1-8-2015
expiration date: February 19, 2016
Portfolio weighting: 10%
Number of Contracts = 130 contracts
This call spread has one of the best risk/rewards I have ever seen, with a five-week return of a hefty $3,750. And that?s figuring in two coming national holidays into the equation.
With a brief, $7 respite in the gold rally today, thanks to a blowout 292,000 December nonfarm payroll, this is an especially good day to add a position in the ?RISK OFF? precious metals space.
You are buying the (GDX) at close to a five year low.
Its upper $13.50 leg is just above a major support level that held for all of 2015.
It provides an excellent hedge for the rest of our portfolio of aggressive ?RISK ON? positions.
The only drawback is the large number of contracts, a function of the low share price, which will trigger a big commission bill. It is time to call your broker again and demand another discount. I guarantee you they will jump at the opportunity.
However, after trolling through several gold stocks, I found they ALL are at or near single digits in the wake of half a decade of viscous bear market action. This is the only way to play it.
You can pay all the way up to $0.80 for this spread and it still makes sense. To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you can?t do options buy the ETF outright for a 1 month play.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/. You must me logged into your account to view the video.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don?t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Buy 130 February, 2016 (GLD) $12.50 calls at?.?.??$2.20
Sell short 130 February, 2016 (GLD) $13.50 calls at??..$1.45
Net Cost:???????????????????.....$0.75
Potential Profit: $1.00 - $0.75 = $0.25
(130 X 100 X $0.25) = $3,250 or 3.25% profit for the notional $100,000 portfolio
