Trade Alert - (GLD) March 9, 2015

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)- STOP LOSS

SELL the SPDR Gold Trust Shares (GLD) March, 2015 $107-$112 in-the-money vertical bull call spread at $4.08 or best

Closing Trade

3-9-2015

expiration date: March 20, 2015

Portfolio weighting: 10%

Number of Contracts = 22 contracts

 

You can sell this position down to $4.08 and limit your losses to only 0.59%. If you fold the (GLD) outright, sell for the short term but keep it for the medium to long term.

We are going a nice bounce in the price of gold this morning off of Friday?s extreme oversold levels.

We are now above our upper strike once again, and in the money. However expiration is only 9 trading days away, and the risk/reward is not longer favorable with the the near strike so close. There is not enough time the wheels to fall of this positions, and then put them back on it time.

So I am going to pull the ripcord on this position and take the small loss. Gold did not provide the hedge against our long stock positions that I had hoped for.

Instead, all asset classes went down in unison, which is extremely rare. The barbarous relic is now trading tic for tic with stocks, which is blowing up every risk control model out there.

It makes no sense, but it is there, and therefore, I am gone. Whenever I don?t understand what is going on, I get out. You should too.

I was never one to argue with Mr. Market.

That still leaves us up nearly double digits in a year where the stock market is unchanged, with a lot of volatility. That is not a bad place to hide.

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.

If the price of this spread has moved more than 5% by the time you receive this Trade Alert, don?t chase it. Wait for the next one. There are plenty of fish in the sea.

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

Sell 22 March, 2015 (GLD) $107 calls at?????$5.80

Buy to cover short 22 March, 2015 (GLD) $112 calls at..?$1.72
Net Cost:??????????????????.....$4.08

Loss: $4.35 - $4.08 = $0.27

(22 X 100 X $0.27) = $594 or 0.59% profit for the notional $100,000 portfolio.