Weekly Update: 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
