Good morning!
/TF rushed right up to 1,325 but rejected there and now we'll see what sticks. /RB at $1.38 and pausing there, S&P flying up to 2,190 and Dow just under 18,900 isvery, very strong with the Dollar down half a point at the 101 line. Oil tested $48 and failed, back to $47.50.
Gold/Selozi – I think we talked about last week how gold only looks weak because it's priced in Dollars. If you are in any other country, gold is doing great vs. your currency. So, rather than play gold, I like ABX or other miners (but I like ABX) on any weakness because they sell gold all over the World and their earnings don't correlate to the Dollar the way straight gold does. Overall, I think gold will be $1,500 by 2018 as inflation kicks in.
We love ABX and play them all the time but they are not in our OOP other than some short puts so let's add the following play:
- Sell 10 ABX 2019 $15 puts for $3.50 ($3,500)
- Buy 20 ABX 2019 $13 calls for $5.25 ($10,500)
- Sell 20 ABX 2019 $20 calls for $3 ($6,000)
That's net $1,500 on the $16,000 spread so we have upside potential of a $14,500 profit (966%) in two years and our worst-case scenario is having 1,000 shares of ABX assigned to us at net $16.50 and the ordinary margin requirement on the short puts is only $1,680 so very efficient way to make $14,500 – about $500 a month back on our investment if we're on track!
