spreadtrader said:

Great questions……and you have the answers (which we'll get to in a second ). I chose ABX because it jumped out at me. I didn't look at charts for the other miners you listed. Depending upon your own analysis you could definitely apply this trade to other stocks (not just metals, either). But remember, you have to be content with the possibility of owning whichever stock you select in whatever quantity and at whatever price you choose for selling the puts.

In order to be thorough, you should definitely compare the basic idea with other candidates. Let's focus on two of the three you mentioned…..GG and KGC. Between ABX, GG and KGC how do you tell which of the three would be the best choice of the three to do this trade presently, using P&F relative strength analysis????? (Ain't this fun? )

I'm no expert at P&F, so let's turn this into a teaser. Which of these three stocks would be the best bet from a RS perspective using the P&F method? (I know which one I'd pick ).

After we pick the stock, we'll do the options……we have some time.

ST:

We have picked the stock. Of the three GG is the strongest. Actually GRS is even stronger.

I had previously posted the following:-

GG's charts seems to hit resistance at 42/43 and has support at 37/38. Seems like this would be a candidate for a similar strangle strategy. Would  a Jan 45 call at $3.10 plus a Jan 38 put at 2.25 work? We can sell 5 Jan 34 puts to put some money in the bank.

Likewise, KGC's chart has resistance at 23 and support at 20. We can buy 1 Jan 26 call @ 1.35, 1 Jan 21 put @ 1.45 for a total cost of 2.80. To cover the cost of this strangle, we can sell 3 Jan 19 puts @ 0.80 to recover 2.40.

Finally, GRS options expires in Dec 09, or Mar 2010. Seems like either too soon or too far away.

Today, all three busted through their resistance line with gains ranging from 1.6% to 3.07%. From DWA, GRS is the strongest, followed by GG, ABX, and KGC. So shall we devise a strangle for all four.

For GRS, buy 1 Dec 12.50 call for 0.15 and 1 Dec 7.50 put for .30. Total cost of spread is 0.45. Sell 4 Dec 5 put for 0.10 each to cover the cost. (Actually, there are no bidders for this put so it may not work out).

I got into GRS back in the lower 8's. As much as I hate to see the decline of the USD… I have some student loans to pay off and some large gains would really help me out.

Silver–short-term decline?

http://seekingalpha.com/articl…..et-to-soar

http://seekingalpha.com/articl…..ut-to-fall

Post edited 7:12 pm – November 15, 2009 by Will

Despite efforts by Russia, Thailand, and others in buying up the greenback, gold continues to soar. On 11/15/09, it reaches 1125 on the 24-hour spot market. I think it is beyond just the weakness of the US $ that is causing gold to go up. I think a big portion of buyers are doing it as a store of value rather than mere investing so a few points up and down doesn't cause a panic selling and most of them are not interested in taking profit of 10~15 points.

Any comments?