When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (GLD) – BUY
BUY the SPDR Gold Shares (GLD) June 2024 $207.50-$212.50 vertical BULL CALL debit spread at $4.20 or best
Opening Trade
6-3-2024
expiration date: June 21, 2024
Portfolio weighting: 10%
Number of Contracts = 25 contracts
Gold has just seen a nice 5% drop from its recent highs and is now positioned to take a run to new all-time highs. In addition, we have some support for this trade from the 50-day average at $216.88.
I am looking for a weakish June in the stock market and gold should catch a flight to safety bid. Interest rates continue to nudge down discounting a September rate cut which is very gold-positive.
This is all on top of a major rotation in the market underway, out of technology stocks that have been leading all year into commodity stocks. We have already seen major upside breakouts in gold and silver and copper is jumping on the bandwagon.
If you can’t do options, buy the stock. My long-term target for (GLD) is $300, up from today’s $216.88, sometime in 2025.
The bull case for gold is simple. Falling interest rates mean less yield competition for gold, which yields nothing. China and Russia have been stockpiling gold for years to avoid international financial sanctions. A global gold shortage is developing with new mine costs rising. Gold also offers protection against rising US debt, which is expected to hit $35 trillion shortly.
On top of all this, Chinese speculators have shifted their interest from real estate, which has crashed, to precious metals. This adds a large retail element that has never existed before.
Therefore, I am buying the SPDR Gold Shares (GLD) June 2024 $207.50-$212.50 vertical BULL CALL debit spread at $4.20 or best.
Don’t pay more than $4.50 or you will be chasing.
SPDR Gold Shares (GLD) is a play on physical gold. They are shares in a corporation that owns 400-ounce gold bullion bars held by a London trust. It is far safer owning gold through the (GLD) than through owning your own physical gold bars via a third-party custodian. If the custodian goes under, which is frequent, your gold is gone. With (GLD), your credit risk is with State Street, a highly-rated firm with a strong balance sheet.
For details about SPDR Gold Shares (GLD), please visit their website at https://www.spdrgoldshares.com.
This is a bet that the (GLD) will not fall below $212.50 by the June 21 option expiration in 15 trading days.
Here are the specific trades you need to execute this position:
Buy 25 June 2024 (GLD) $207.50 calls at………….………$10.00
Sell short 25 June 2024 (GLD) $212.50 calls at…...………$5.80
Net Cost:………………………….………..………….…................$4.20
Potential Profit: $5.00 - $4.20 = $0.80
(25 X 100 X $0.80) = $2,000 or 19.05% in 15 trading days.
If you are uncertain about how to execute a bear put options spread, please watch my training video by clicking here.
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.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
