Buy Alert: June 4, 2015

Buy Alert: June 4, 2015

 

Option Strategy:

Buy Gold Miners $GDX July 17, 2015 $19.00 puts for $0.85 or better.

 

Commodity Outlook: Gold

Gold isn’t acting well…

The yellow metal is trading down $10 an ounce this morning and looks as though it will break through multi-week technical support at $1,170.  If it does, we’ll likely see a quick drop to the March 2015 lows at $1,150.

Here’s a great way to profit on additional downside in gold…

 

Resource Trade: Market Vectors Gold Miners $GDX

With gold acting weak, it should come as no surprise that the companies mining it aren’t acting so hot either.

As you may know, $GDX is a gold mining ETF.  It’s also a great way to play trends in the gold mining industry as a whole.

It just so happens $GDX has a bearish technical setup forming right along with gold.  If the mining ETF falls below $19 in coming sessions, there’s a very good chance it continues lower to $18, and possibly $17, in short order.

So here’s what we’ll do…

Buy the $GDX July 17, 2015 $19.00 puts for $0.85 or better.

The current bid/ask spread for this contract is $0.71/$0.77.

Do not pay more than $0.85!

Our official entry price for performance tracking is $0.77.  Your price may be higher or lower.

Exit Strategy:

Remember, we want $GDX to trade lower.  Our first profit target is $18.00 while our second target is at $17.00.

Our risk control line for this trade is at $20.10.  If $GDX trades above that level, conservative investors should consider closing this trade to preserve capital.

 

Category: Commodity Trading