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)
Buy the (GLD) December, 2012 $157-$162 Call Spread at $3.75 or best
expiration date: 12-21-2012
Portfolio weighting: 30%
($30,000/100/$3.75) = 80 Contracts
There is an old Japanese expression; “When the fool is dancing, the greater fool is watching.” Ben Bernanke has spoken loud and clear. It is time to go back into the “RISK ON” trade in size and start dancing again. Gold will be a favorite target. But we have already had a great run, so any position you add here should have a lot of room for the inevitable round of profit taking.
The (GLD) December, 2012 $157-$162 Call Spread allows for a 5.4% decline in (GLD) and still expire at its maximum point of profitability. The $157 and $162 levels are also key support levels on the charts.
For the longer term fundamental case for owning the barbarous relic, please refer to my Special Gold Issue out this morning in the regular letter.
Keep in mind that these are ball park prices only. Spread pricing can be very volatile on expiration months farther out. These are the trades you should execute:
Buy 80 December, 2012 (GLD) $157 calls at…………$16.00
Sell 80 December, 2012 (GLD) $162 calls at………….$12.25
Maximum potential profit at expiration:
$5.00 - $3.75 = $1.25
(80 X 100 X $1.25) = $10,000, or 10.00% profit for the notional $100,000 portfolio for a three month position.