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This Trade Designed For Option Novices

Published 05/09/2012, 03:19 AM
Updated 07/09/2023, 06:31 AM
NDX
-0.44%
GC
0.33%
SI
-0.98%
OPIN
0.00%

We hold two June 65 calls (or a multiple thereof) after initially acquiring four of them within pennies of Monday’s hysterical, V-shaped bottom. Profit-taking during the sharp rally that ensued has lowered our cost basis to 0.84.

This trade was designed so that even option novices could take a crack at it. Now, with any luck, you’ll have an opportunity to turn it into a riskless vertical bull spread — riskless in this case meaning a position that will produce a profit of at least $200 per spread if QQQ is trading anywhere above 67 come June expiration, but no financial loss even if it should fall to zero. Accordingly, I’ll recommend offering June 67 calls short for 0.88, day order. Offer one for each June 65 that you are long.

Still No Washout in Gold and Silver

I’ve proffered some ugly targets for the bullion vehicles we track and trade, although, taking the  sleaze factor into account, I read the pounding that gold and silver are taking Tuesday night as mildly bullish — a shakedown, although, alas, perhaps not the washout of answered prayers.

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