Trade Alert - (GDX) August 11, 2017
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.
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Trade Alert - (GDX)- BUY
Buy the Van Eck Vectors Gold Miners ETF (GDX) September, 2017 $20.50-$21.50 in-the-money vertical BULL CALL spread at $0.85 or best
Opening Trade
8-11-2017
expiration date: September 15, 2017
Portfolio weighting: 10%
Number of Contracts = 118 contracts
Don't pay more than $0.90 for this position.
It is a bet that the (GDX) won't move below $21.50 over the next 24 trading days, compared to the current $22.98.
If you can't do options buy the (GDX) outright. It is going higher as portfolio managers rush to protect their portfolios in the present uncertain and highly volatile conditions.
Yes, it appears the worm is turning.
Normally, I would be buying gold outright here.
However, in the wake of yesterday's massive "RISK OFF" melt down, it has already run too far.
So I am going to be sneaky and buy the Van Eck Vectors Gold Miners ETF (GDX) September, 2017 $20.50-$21.50 in-the-money vertical BULL CALL spread instead.
It hasn't risen as much, but potentially has far more potential upside volatility than the barbarous relic itself.
This means I am increasing my net "RISK OFF" position. Call it going from "TRUMP ON" to "TRUMP OFF".
The reasons are very simple.
When the market believes that the new administration policies will have a positive impact on the economy, such as with tax cuts and deregulation, investors buy stocks and the dollar, and sell bonds, interest rate plays, and the currencies.
When the market believes that the new administration policies will have a negative impact on n the economy, such as with trade wars and immigration bans, investors sell stocks and the dollar, and buy bonds, interest rate plays, currencies and gold.
August is setting up to be a really negative month. It is time to pay the piper on many different fronts.
And the new Korean crisis just pours gasoline on this fire.
I am certain we are NOT going to have a new Korean War. (Major piece to come out next week as to why).
However, the president's relentless pounding on the table will trick us into thinking one is imminent, at least for the next month or so, for whatever his reasons.
Yesterday, it was "fire and fury." Today, it is "locked and loaded."
The good new will eventually come from Congress. But tax reform will take 6-9 months, and deregulation even longer.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers
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
http://members.
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.
Here are the specific trades you need to execute this position:
Buy 118 September, 2017 (GDX) $20.50 calls at...............................$2.80
Sell short 118 September, 2017 (GDX) $21.50 calls at......................$1.95
Net Cost:.............................................................................................
Potential Profit: $1.00 - $0.85 = $0.15
(118 X 100 X $0.15) = $1,770 or 17.64% in 24 trading days.
