Buy Alert: October 28, 2015

Buy Alert: October 28, 2015

 

Option Strategy:

Buy Market Vectors Gold Miners $GDX December 18, 2015 $16.00 puts for $1.50 or better.

 

Commodity Outlook: GOLD

Let me be quick…

The Fed came out hawkish in today’s FOMC meeting.

As a result, gold and silver are reversing sharply lower in this afternoon’s session.

Let’s establish a low risk short position in the mining space…

 

Resource Trade: Market Vector Gold Miners $GDX

Thanks to the past month’s rally in gold, this gold mining ETF is trading at important technical resistance.  But given today’s FOMC announcement, it’s unlikely $GDX will be able to punch through to higher prices.

In fact, the door is now open for a retest of the 2015 lows.

So here’s what we’ll do…

Buy the $GDX December 18, 2015 $16.00 puts for $1.50 or better.

The current bid/ask spread for this contract is $1.27/$1.31.

Do not pay more than $1.50!

Our official entry price for performance tracking is $1.31.  Your price may be higher or lower.

Exit Strategy:

Remember, we want $GDX to trade lower.  Our first profit target is $14.00 while our second target is at $13.00.

Our risk control line is just above the recent high at $17.10.  If $GDX trades above that level, conservative investors should consider closing this trade to preserve capital.

 

Category: Commodity Trading