Weekly Update: November 11, 2015

| November 11, 2015

Weekly Update: November 11, 2015


Big Picture Outlook:

No doubt about it, precious metals have been demolished the past two weeks.  Ever since the Fed announced a December interest rate hike was not only still in the cards, but highly likely, gold and silver have succumbed to vicious selling.

Gold is down nearly $100 an ounce (-8.4%) from the October 28th intraday high, while silver has plummeted $2 an ounce (-12.2%).

Clearly, bears are back in control of the metals market.

But here’s the deal…

Both gold and silver are trading near very important long-term technical support, $1,080 and $14.00 respectively.  As a result, we may see a short-term bounce back to higher prices.

However, given the current fundamental backdrop, any bounce in gold and silver is best used as a selling opportunity.

Let’s check in on a few of our open positions…


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.

. . . . SPDR Gold Trust $GLD November 20, 2015 $111 puts

Anyone still holding these $GLD put contracts is getting paid handsomely.  As a write, our $111 puts are trading with a $6.90 bid.  That’s a 325% gain from our entry at $1.62 on October 23rd.

With option expiration just around the corner and gold trading at technical support, now’s the perfect time to close this trade completely.

Congratulations on a great trade!

. . . . Newmont Mining $NEM November 20, 2015 $18 calls

$NEM finally succumbed to gold’s abrupt price downturn. As I write, shares of the gold producer are trading at $17.67, which is out-of-the money for our $18 calls.

With option expiration approaching quickly, I suggest aggressive traders still holding these calls close them as soon as possible.

Remember, $NEM hit our first profit target at $19, giving everyone a chance to collect profits of at least 100%.

And keep this in mind…

Whenever a trade hits the first profit target or a gain of 100% (whichever comes first), you should resolve to never lose money on your open option contracts.

In other words, never let a winning trade turn into a loser!

. . . . Market Vectors Gold Miners $GDX December 18, 2015 $16 puts

$GDX plummeted through multiple levels of technical support the past week.  One of those levels was our first profit target at $14.  As I write, $GDX is trading at $13.59, which has our $16 puts trading with a $2.51 bid.  That’s a 91% gain from our entry!

We still have another month before expiration here, so aggressive traders may want to hold a few put contracts for further downside potential in $GDX.

. . . . ConocoPhillips $COP January 15, 2016 $57.50 calls

The big oiler breakout lost some steam in recent trading. Unfortunately, $COP tagged our risk control line at $53.90 in this morning’s trading session.

As a result, conservative traders should close this trade to conserve capital.

If you’re aggressive, keep holding these January 2016 calls for a rebound in $COP.  We have an abundance of time until expiration and there are still plenty of reasons to believe top-tier oil companies can return to higher prices by year-end.

. . . . Dominion $D and Southern Company $SO

Shares of these utility operators sank in recent trading thanks to the growing likelihood of a Fed rate raise in December.

However, both $D and $SO achieved their first profit targets at $74 and $46 respectively.  As a result, everyone should have collected some solid gains on our brief foray into the utility space.

Yet again, the recent pullback in $D and $SO highlights our rule of never letting a winning trade turn into a loser!

These trades are officially closed.

Until next time,

Justin Bennett

***Editor’s Note***  I am putting the finishing touches on a new report, which focuses on an integral part of successful option trading- trade management.

As a subscriber to the Options Profit Pipeline, you’ll receive immediate and free access to this valuable report when it’s ready for release!

Category: Commodity Trading