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Gold To Heaven, Gold To Zero. Don’t Matter. We Win. (WPM/GLD)

Posted on November 19, 2020

You gotta forgive us.

We’re raising a dead horse again.

For a fifth time!

Like a Phoenix from the ashes.

Like Trump from the media-consigned loss column.

But without the orange.

It’s our bi-monthly venture back into the Wheaton/GLD realm, where we’ve managed to turn a buck with Swiss-watch regularity for nearly a year now.

Let’s see if we can push our luck just one more time.

Just to remind you, our past forays into the two-way straddle pairing of this duo has returned us 4560%, 872%, 613%, and 3506%.

So why not go there again?

And so we are…

A Jew and His Gold recommends you sell the GLD December 4th 175.50 straddle for $4.09 (2.04/2.05) and buy the WPM December 18th 42 straddle for $3.97 (1.89/2.08).  Total credit on the trade is $0.12.

Rationale: It’s been too good to be true thus far, so we don’t want to count our chickens…

But the set-up is almost too good to be true.

First, because of the price differential in the underlyings, we can buy a WPM straddle for a great deal less than the price of a GLD straddle.  So our initial outlay is nil (actually, a credit!).

Additionally, WPM has far more beta than GLD, so price swings in the PMs should offer much richer movements in the long WPM options.

AND best yet, we get two extra weeks on the long side after the GLD straddle expires.

Looking good!

May the holy month of Kislev bring you riches galore!

Many happy returns!

Matt McAbby

 

2 responses to “Gold To Heaven, Gold To Zero. Don’t Matter. We Win. (WPM/GLD)”

  1. Jim Rodgers says:

    What’s the max loss Mr McAbby?

  2. Matt McAbby says:

    bs’d
    This one’s not calculable, Jimmy.
    As anything might happen (e.g., WPM could go out of business in the next two weeks, and Gold could shoot to 20k), the maximum loss is infinite.
    Entirely unlikely.
    But absolutely possible.
    To frame it paradoxically.
    Matt

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