FROM WOAT :
From: "Wealth Daily" <wd-eletter@angelnexus.com>
Date: Aug 25, 2011 7:21 PM
Subject: How to Trade Gold from Here...
To: <arshadtan@gmail.com>
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| How to Trade Gold from Here... By Ian Cooper | Thursday, August 25th, 2011 Editor's Note: A day after I wrote this article, gold pulled back some $60, confirming my downside call. While the fall may not be over, there's a simple way to profit no matter what happens over the next few weeks. I'm just as bullish on $2,000 gold as I was with these picks in early August 2011:
Advertisement 17 Straight Winners... 1,057% Gains... In Just 30 Days... It's never been easier to make money... Over the last 30 days alone, one star analyst raked in 1,057% in total gains in just 30 days, closing out 17 straight winners... all while the market lost 1,000 points. $5,000 invested in each position returned more than $49,807.19 in just a month. In these crazy times, don't you owe it to yourself to make easy money like this? Find out how we're doing it, here. And gold still has room to run... It's still pricing in a European version of Lehman. QE3 could be announced on Friday (unlikely). Demand is skyrocketing. Central banks around the globe are still buying. China and India are buying. Economic growth is stalling. There are signs of debt contagion in the euro zone. And rising tensions in the Middle East are still sending speculators into the safe haven of gold. But We Have To Be Realistic Here... Gold has simply run up too far, too fast. It's up close to 35%, or $500, since January 2011. And it's up close to 18% in just the last few weeks. Heck, it broke $1,900 the other night, less than two weeks after hitting $1,800.
Look, you can't be afraid of going short here – even if the herd suggests doing the opposite. Over the near-term, gold will face selling pressures. But you also want to be well-hedged for further upside off the dips. Because another parabolic move is likely as central banks are still buying gold, as money managers boost their gold allocations as high as 15%, and as global economic tensions persist. Do yourself a favor here. Stop chasing gold. Wait for the pullbacks to buy more. Don't do what the herd is doing. And in the meantime, hedge for gold's downside. Hedge for The Correction... If you're hedged for the correction, you're protected on the downside. And you're in good position to profit from the next leg up. Gold fell to around $712 in 2008 after peaking above $1,010. Any investor that was hedged could have exited the short side, and used the funds to increase their bullish position in gold, as gold would run to $1,900 from $712 in just three years. Of course, if you're too afraid of options, you could've walked with a 13% gain on the underlying GLD play mentioned above while missing out on a 203% gain on the option. I'm sure you'd rather take 203%... And here's how you would do it... You'd buy the SPDR Gold Shares (GLD) November 2011 175 calls (GLD111119C00175000), for example, while also buying an equal number of November 2011 170 puts (GLD111119P00171000). Note: Options readers are raking in big gains in under two days from a similar position. That's Also Known as a Strangle Like you do with a straddle trade, a strangle also involves buying a call and a put option, both of which have the same expiration month. But there are two main differences... Advertisement Better Than Oil? New Energy Technology Could Make Fossil Fuels Obsolete You knew it would happen, one day. A small tech firm outside D.C. just did the impossible. Not only did they harness the most powerful energy source on earth... they're only days from bringing it to the market. Don't take my word for it. See it for yourself, right here. The options have different strike prices. Unlike straddles, where you're picking at-the-money call and put options, strangles usually involve buying options that are out-of-the-money. And because they're cheaper, it means the cost of a strangle is less than a straddle. But this cost saving upfront does come with a catch: Like the straddle play, you're still looking for the underlying asset to make a big move, but because the options are already out-of-the-money when you buy them, you need to see a bigger move than you would with a straddle. The upside, however, is if that happens, you'll be looking at bigger profits. The main reason for entering a strangle trade is the same reason why you'd execute a straddle: You're not sure which way the asset will move next, but you are sure that when it happens, it will be a big move. Look, I know options seem scary. But they couldn't be easier. They couldn't be more profitable. Stay Ahead of the Herd, Ian L. Cooper | ||
Wealth Daily Blogs
Economic Releases for the week of Monday, August 22nd, 2011: Aug 23 - New Home Sales Aug 24 - MBA Mortgage Purchase Index Aug 26 - Michigan Sentiment Aug 24 - Durable Orders Aug 25 - Initial Claims Aug 26 - GDP You May Also Enjoy...Analysts Forecasting a Bad 2008 Rerun2011-08-23 - Andrew Mickey Beryllium Starts Making a Name for Itself 2011-08-22 - Nick Hodge Wealth Daily's Weekend Edition 2011-08-20 - Steve Christ The Last Time We Saw These Signals, It Wasn't Just the Markets that Came Crashing Down 2011-08-18 - Adam Lass Time to Bargain Hunt 2011-08-17 - Steve Christ | ||
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