Comments on: Should You Be Buying Gold?

By: EH

EH — Thu, 10 Dec 2009 23:19:02 +0000

Option Genius is a genius again. GLD crashed $5 two days later after his “get out” comment. All the spreads went OTM, I wish the correction waited until after December expiration! GDX held up better though.

By: Xueren Zhang

Xueren Zhang — Thu, 10 Dec 2009 22:42:10 +0000

OG,just a follow up for your GLD trade ( bull call spread of Jan 115-118).You have closed it or hanging on ? Dollar carry trade,and correction has come.

By: Genius

Genius — Thu, 03 Dec 2009 00:47:21 +0000

It’s fine to get out now. GLD is above our long strike and so if it keeps going higher we will not benefit.

By: EH

EH — Tue, 01 Dec 2009 20:33:30 +0000

To lock in profit, you would close the debit spread when its very close to parity (Dont go thru exercise-assignment as the fees are costly, even at Thinkorswim)
If you have a long call (naked), then roll it UP. (be aware that Delta shrinks, then wont make as much BUT wont lose as much either! Rolling up tightly really paid off during the Halloween correction.

By: Frank

Frank — Tue, 01 Dec 2009 20:05:00 +0000

GLD made another record high today, when is good time to get out of this trade? should we lock our profit now or pray for a home run?.
what is guideline to place an contigence order to lock the profit of this kind of debt spread?

thanks.

By: Genius

Genius — Wed, 25 Nov 2009 18:46:55 +0000

Srikant,

Optiongenius trades are option selling trades with a high probability of success. This trade is more of a gamble and not the same flavor as the site so I left it out and only posted it here. This trade might blow up and lose 100% if GLD goes down or stops going up.

The free trade ideas I post on the blog are to learn from and papertrade so you can see other trade strategies in action.

By: srikant

srikant — Wed, 25 Nov 2009 17:21:22 +0000

Al
just curious why you didnt publish this trade as a trade for November?

By: EH

EH — Tue, 24 Nov 2009 20:43:42 +0000

Right, normally you buy ITM due to concerns about delta and theta which you no doubt learned in that class. (Ron Ianeri of OU is the best) In this case, gold is obviously going higher so I buy otm PLUS I sell a call about 2-3 strikes higher to reduce the cost even further. As gold advances, add more debit spreads (like Laddering Bonds or CDs) Genius is right about selling options, you get the credit right away and keep it as long as the short stays OTM, while buying options, you got to be right about MANY things, hence it is somewhat a gamble. HAPPY THANKSGIVING TO ALL!

By: Genius

Genius — Tue, 24 Nov 2009 18:07:07 +0000

I went out of the money at 115 because I think gold is going higher and the 115 was cheaper so in case i am wrong I lose less, but if i am right, i make more.

And you can sell the 110/105 puts as well. With the credit spread your gain is limited but you have a much higher chance of making money. In this case i feel that gold is going much higher and so I took a gamble.

Buying options is always a gamble, unless you have some inside information. Selling options puts the odds in your favor.

By: Frank

Frank — Tue, 24 Nov 2009 17:21:42 +0000

what I learned from many option class is: when we long options, we need to buy in the money (ITM) or at least at the money(ATM)
when we short option we sell OTM.

why you bought OTM (on fri, GLD was around 113), why didn’t you long 113 and short 115 or 116?

another question is can we also sell vertical creadit spread (STO, 110P, BTO 105P)?
can anybody compair debit spread and credit spread for this case?