Trade Alert - (GLD) June 20, 2024 - TAKE PROFITS - SELL

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) – TAKE PROFITS

SELL the SPDR Gold Shares (GLD) July 2024 $200-$205 vertical BULL CALL debit spread at $4.88 or best

 

Closing Trade

6-20-2024

expiration date: July 19, 2024

Portfolio weighting: 10%

Number of Contracts = 25 contracts

I am going to take the gift here and take profits on my long position in gold. The risk/reward of hanging on for a full month until the July 19 options expiration for the last 12 cents is no longer favorable, especially since you already have 81.53% of the maximum potential profit in hand.

Any moves up in precious metals you can still capture in your other profitable positions and LEAPS in (GLD), (GOLD), (SLV), (WPM), and (AGQ). This is one of the best-falling interest rate plays out there.

My long-term target for (GLD) is $300 sometime in 2025.

Therefore, I am selling the SPDR Gold Shares (GLD) July 2024 $200-$205 vertical BULL CALL debit spread at $4.88 or best.

As a result, you get to take home $1,325 or 12.18% in 7 trading days. Well done and on to the next trade.

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.

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 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 was a bet that the (GLD) would not fall below $205 by the July 19 option expiration in 28 trading days.

Here are the specific trades you need to exit this position:

Sell 25 July 2024 (GLD) $200 calls at…………..............………$20.00

Buy to cover short 25 July 2024 (GLD) $205 calls at……..……$15.12

Net Proceeds:........………………………….………..………….…........$4.88

Profit: $4.88 - $4.35 = $0.53

(25 X 100 X $0.53) = $1,325 or 12.18% in 7 trading days.

 

 

 

If you are uncertain about how to execute an 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.