Gold is in blast off mode, and the included chart looks like gold is closer to the beginning of a mini blow-rally versus at the end.  Therefore, our February $1175/$1225 ratio call spread could be in jeopardy in the short run.  I recommend attempting to liquidate that spread at a cost of around $9.00 per ounce.  That will result in a small loss, but I would rather do that than risk a sharply higher open on Friday or Monday that could make that loss bigger.  Remember that we already took profits earlier today on the $1100/$1130 call spread and we still have the $1140/$1180 call spread working.  So let’s try to take this risk off the table right now.  The risk of any ratio call spreads is if the underlying market rallies towards the upper strike price too fast without much time value erosion.  Gold is doing that right now, on this particular spread.  Eventually, I fully expect gold to have a nasty $100 + pull back, but that may not come until gold rallies $100 first.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

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