February Gold is up $12.60 per ounce this morning at $1194.90 as I write on a weaker dollar. February gold is testing near its contract highs made last week in the $1200 area. The included chart of gold shows a very strong trend this is in overbought territory. The problem with that is that strong bull markets can remain overbought for long periods of time. The directional movement indicators are bullish but the ADX line is still rolling over just slightly. It could be that last Friday’s hiccup in the market over the Dubai news could have just been a one off type of selloff. We shall see how gold trades today near its contract highs. If prices stall and reverse today, then the ADX may be telling us something about a potential correction that could be beginning. If prices storm past $1200, then that would give us more evidence that last Friday’s price action was just a blip inside this raging bull market. For today, I recommend buying one April Gold ($1550 strike) call option and sell 2 April Gold ($1700 strike) call options at a credit of $1.00, which is $100 gross credit. I am continually trying to add on more coverage on up from my expected target as long as I can do the trades for credits.
Don’t forget that we are still trying to buy back the four short February Gold ($935 strike) put options for $1.00 per ounce each.
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Long 2 February Gold ($960 strike) put options at $10.40 each.
Short 4 February Gold ($935 strike) put options at $6.20 each.
Long 2 February Gold ($970 strike) put options at $10.60 each.
Long 1 February Gold ($1140 strike) call option at $23.90.
Short 1 February Gold ($1180 strike) call option at $16.90.
Long 1 February gold ($1270 strike) call option at an average cost basis of $5.00 per ounce.
(February Gold options expire in 56 days).
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Long 1 April Gold ($1210 strike) call option at $33.00.
Short 2 April Gold ($1300 strike) call option at $17.50 each.
Long 1 April Gold ($1275 strike) call option at $17.80 per ounce.
Short 2 April Gold ($1400 strike) call options at $9.90 per ounce each
Long 1 April Gold ($1375 strike) call option at $11.80.
Short 2 April Gold ($1500 strike) call option at $6.90 each.
(April Gold options expire in 114 days).
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.
This newsletter is not intended for dissemination to the public without prior approval from David Hall.
