Posted on October 15, 2020
Not sure if it’s appropriate to offer an apology here; the trade we’re recommending today is one we’ve made before – numerous times.
That’s how it is, though, when things are working.
You just go with them.
And if the money keeps a’streaming… well, then, why cry boredom?
But before we get to the trade, we’re continuing with Alan’s work on the October expiry.
Let’s get to it.
But it was limited.
And that’s good news.
We closed the CALLs on September 25th and the PUTs will almost certainly expire OTM. Nothing great. But not a loss.
And that’s just fine.
Should we see anything egregious in this afternoon’s trade that affects any of the above, we’ll surely circle back to you tomorrow.
As you’ve seen over the last few months – and as our trade results have proven – our WPM/GLD pairing is a knockout.
To remind: the trade is predicated upon the unique pricing of the pair and WPM’s penchant to swing wider than GLD in both directions.
Have a look at the two since the beginning of 2020 –
By exploiting this relationship – and by timing our entry into the trade as we are today – we believe we can create a fourth slam-dunk winner.
And with that in mind…
A Jew and His Gold recommends you consider selling the GLD October 30th 178.50 straddle for $4.86 (2.32/2.54) and buying the WPM November 6th 50.50/51.00 strangle for $5.04 (2.59/2.45). Total debit on the trade is $0.18.
Rationale: because WPM carries more beta than GLD, we’re expecting one side of the straddle to pay off handsomely – if the precious metals trend even superficially over the next few weeks.
The trade should also do well because the long WPM options have an extra week of time value, and both sides of the WPM strangle are in-the-money.
We’re looking to close the whole affair on the occasion of the earlier expiry, though we remain open to other avenues should we see something crazy in the interim.
Many happy returns!