Comment by phil

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phil
February 26th, 2021 at 12:02 pm

GOLD/Rookie – It's not a short-term bet but a long-term play.  As we recently discussed, they depleted their reserves while prices were high (raising cash) and now, when prices come back down, they will add reserves by buying mines from their competitors who need cash cheaply.  That's their job but you can't play them Q/Q, has to be Y/Y.  $15 is where we're always excited to buy them and the position in the LTP was net $400 so it's not like we spent our allocation yet.   We're not worried about the $20 puts that net us in for $17 on 1,000 shares ($17,000) and we'd LOT to roll our 30 $23 calls at $2.85 to the $18 calls at $4.25 for net $1.40 ($4,200), right?  That would put us in the GOLD 2023 $18/27 bull call spread for net $4,600 in the LTP – still not even close to bothering our allocation block but a $5 improvement on last month's entry.   

GOLD Long Call	2023 20-JAN 23.00 CALL [GOLD @ $18.83 $-0.53]	30	1/7/2021	(693)	$17,400	$5.80	$-2.94	$5.80			$2.87	$-0.19	$-8,805	-50.6%	$8,595
GOLD Short Call	2023 20-JAN 27.00 CALL [GOLD @ $18.83 $-0.53]	-30	1/7/2021	(693)	$-13,500	$4.50	$-2.25				$2.26	$0.01	$6,735	49.9%	$-6,765
GOLD Short Put	2023 20-JAN 20.00 PUT [GOLD @ $18.83 $-0.53]	-10	1/8/2021	(693)	$-3,000	$3.00	$2.08				$5.08	$0.23	$-2,075	-69.2%	$-5,075



If the stock drops another $5 and we have to roll to the 2023 $13 calls for another $4,200 do you think I'll be upset or thrilled?

FXP/Hicket – It's a 2x ETF at $28 so a 20% drop in China is a 40% gain to $39, so that's our target range.  As a new trade I'd go for: 

• Buy 20 FXP June $30 calls for $2 ($4,000)  
• Sell 20 FXP April $40 calls for 0.70 ($1,4000) 
• Sell 10 FXP June $25 puts for $1.60 ($1,600) 

That's net $1,000 on the $2,000 rollable spread and you'll certainly be able to sell 20 more June calls to make it free protection.