Weekly Update: April 29, 2015

| April 29, 2015

Weekly Update: April 29, 2015


Big Picture Outlook:

After a decidedly boring month of sideways trading action, precious metals are seeing a sudden spike in bullish interest.  Gold has spiked $30 an ounce (2.5%) over the past two sessions while silver gained $0.75 (4.7%).

Of course, this is good news for our long-standing January 2016 call positions in the iShares Gold Trust $IAU and the iShares Silver Trust $SLV.

The real question lies in whether this precious metal’s upturn is just a temporary blip, or the start of something bigger.

At least one trader is betting the recent rally is the start of a larger bullish move.  Someone purchased 50,000 contracts of the June $120 strike calls for around $1.20 each in yesterday’s session.

Folk’s, that’s a $6 million bet for further upside in gold!

Obviously, this is something we need to pay close attention to.  However, with the Federal Reserve announcing their monthly meeting results this afternoon, I’m hesitant to make any precious metals bets just yet.

I want to hear the tone of Fed Chairman Janet Yellen’s announcement.

Will she be dovish or hawkish?

If the Fed decides to delay raising interest rates due to growth worries, we could very well see further upside for gold.  On the other hand, if the Fed announces interest rates will rise before mid-year, the yellow metal will likely remain stuck around the $1,200 area.

Regardless of the Fed’s decision, be on the lookout for additional trades arriving in your e-mail inbox tomorrow!

Let’s get to our position updates…


Portfolio Highlights:

Editor’s Note: I won’t update every open position in every update.  I focus on the positions with significant news or price movement.

. . . . Freeport McMoran $FCX May 15, 2015 $19 calls

Our FCX call trade has grown into a very nice winner!

With shares of the copper and gold miner exploding over our first profit target at $22, our calls recently jumped to a max bid of $3.70 per contract- a 227% gain from our entry!

With our first profit target in the bag, everyone should have taken at least partial profits.  If you’re aggressive, consider holding your remaining contracts for our second target at $23.50.

Congratulations on a great trade!

. . . . US Oil Fund $USO May 15, 2015 $19.50 puts

WTI crude is at an important decision point.  The commodity has spent the past week trading in a tight range near $57.50 a barrel.  In my opinion, the market needs further supply/demand information before making another substantial move.

As you know, we’ll get more information at 10:30am EST today with the EIA’s weekly inventory report.

Remember, we moved the risk control line for this trade down to $20.50 last week.

If the EIA reports a bullish inventory number, it may send USO above $20.50.  If that level is cleared, conservative investors should close this put trade.

Of course, if such a situation arises, our call positions in $MRO, $OAS, $OKE, and $WPX will likely benefit!

Until next time,

Justin Bennett

***Editor’s Note*** We’re adopting a new ticker display. Instead of a company’s ticker being surrounded by parentheses, it will be preceded by a $.

For example, Freeport McMoran (FCX) is now being displayed as $FCX.


Category: Commodity Trading