Buy Alert: August 18, 2015
Buy Alert: August 18, 2015
Option Strategies:
Buy Goldcorp $GG October 16, 2015 $14.00 puts for $0.95 or better.
Buy Silver Wheaton $SLW October 16, 2015 $13 puts for $0.95 or better.
Commodity Outlook: Precious Metals
After a meager bullish burst the past week, the price of silver is getting tarnished again. As I write, the metal is down $0.52 an ounce to $14.78- a 3.3% loss on the day.
Other precious metals are faring poorly as well. Palladium is down 2.5% on the day, while platinum is off by 0.85%.
The only one faring relatively well is gold. The yellow metal is down a mere 0.28% as I write.
Here’s the deal…
I wrote in recent trade alerts and weekly updates that gold and silver would likely experience a relief rally. We’ve seen that the past week. But now, with silver sinking like the Titanic again, the relief rally has lost steam.
That means it’s time to make low-risk/high-reward bets on additional downside in gold and silver miners.
Here are a few I think you’ll like…
Resource Trade #1: Goldcorp $GG
This gold mining heavyweight recently reported quarterly earnings that weren’t quite as horrific as investors were expecting. As a result, shares of the company are up 13% since the beginning of August.
But here’s the deal…
$GG shares are running into strong technical resistance at the $15.00 area. And since the stock is still in a steep technical downtrend, there’s a very good chance $GG retests the recent lows near $13.
And if gold continues lower like I believe it will, $GG could break to new yearly lows.
So here’s what we’ll do…
Buy the $GG October 16, 2015 $14.00 puts for $0.95 or better.
The current bid/ask spread for this contract is $0.84/$0.87.
Do not pay more than $0.95!
Our official entry price for performance tracking is $0.87. Your price may be higher or lower.
Exit Strategy:
As you can see, $GG is running into the down trend line from the early 2015 highs. A break above this line will trigger our risk control line. However, the odds favor another downturn for $GG, along with the price of gold.
Remember, we want $GG to trade lower. Our first profit target is $13.00 while our second target is at $11.00.
Our risk control line is $15.70. If $GG trades above that level, conservative investors should consider closing this trade to preserve capital.
Resource Trade #2: Silver Wheaton $SLW
$SLW is a glutton for punishment. Shares of the silver streaming company put together a meager bounce to the $14 area in recent days after its massive June/July selloff. Remember, we profited handsomely on that move lower.
With silver off sharply today, I suspect there’s additional downside for $SLW in coming months.
So here’s what we’ll do…
Buy the $SLW October 16, 2015 $13.00 puts for $0.95 or better.
The current bid/ask spread for this contract is $0.85/$0.88.
Do not pay more than $0.95!
Our official entry price for performance tracking is $0.88. Your price may be higher or lower.
Exit Strategy:
Remember, we want $SLW to trade lower. Our first profit target is $12.00 while our second target is at $10.00.
Our risk control line is $14.30. If $SLW trades above that level, conservative investors should consider closing this trade to preserve capital.
Category: Commodity Trading
