Trade Alert – (GLD) September 10, 2012

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.

Trade Alert - (GLD)

Sell the (GLD) September, 2012 $155-$158 Call Spread at $2.95 or best

Closing Trade


expiration date: 9-21-2012

Portfolio weighting: decrease from 35% to 25%

($10,000/100/$2.95) = 45 Contracts

I want to protect my portfolio from the potential extreme market volatility this week. So I am going to pare back my largest position. That is in gold. So I am selling the (GLD) September, 2012 $155-$158 Call Spread. By selling this position, it cuts my overall weighting in the barbarous relic from 35% to 25%.

I have lots of confidence in the long term outlook for gold. With the November expiration, there is plenty of time to weather any corrections and for things to go right. Not so for the September position, which only has 9 trading days left until expiration.

By moving now, I also get to duck the risk of the Thursday decision by the Federal Reserve Open Market Committee meeting. If the Fed disappoints and fails to deliver on QE3, you could get a long overdue round of profit taking in the (GLD) in particular.

These are the trades you should execute:

Sell 45 September, 2012 (GLD) $155 calls at…………….……$12.95
Buy to cover 45 September, 2012 (GLD) $158 calls at………..$10.00
Net Premium Proceeds:……………………………….………...$2.95

Profit: $2.95 - $2.40 = $0.55

(45 X 100 X $0.55) = $2,475, or 2.48% profit for the notional $100,000 portfolio.

I am proud to report that this is the 23rd consecutive profitable closing position for the Trade Alert Service.:)