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.
Further Explanation to: Trade Alert – (GLD)
Buy the SPDR Gold Trust Shares August, 2013 $106-$110 in-the-money bear call spread at $3.35 or best
expiration date: 8-16-2013
Portfolio weighting: 10%
Number of Contracts = 29 contracts
My bet is that we’ve hit (GLD) bottom for the time being, and the downside risks from here are low. The cost of production for most companies these days is around $1,100 per ounce. As we approach this price an increasing number of companies will moth ball production taking pressure off the price. I also think we are getting near the end of the bond market route, which will take further downside pressure off of gold. August expiration gives us a 7 wk view during a normally quiet period to take in 1.85% in low risk money. It?s a good use of capital in an otherwise featureless period.
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.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months further out.
Here are the specific trades you need to execute this position will follow.
Buy 29 Aug, 2013 (GLD) $106 calls at?????$14.90
Sell Short 29 Aug, 2013 (GLD) $110 calls at.??.$11.55
Potential Profit at expiration: $4.00 – $3.35 = $0.65
($0.65 X 100 X 29) = $1,885 ? 1.90% for the notional $100,000 model portfolio.