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More Trades Closing & BIG Precious Metals Winnings (WPM/GLD, MC, PG/VDC, SAM/MO, VALE, WKHS)

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.

Repeatedly.

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.

  • First up, Our MC adventure from last September looks poised to expire tomorrow OTM. We’ll take a loss of $0.25 on the affair.  A loss is a loss and it’s never fun.

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.

  • Our SAM trade also looks ready to close profitably upon expiration tomorrow.  Should price remain below 1100, we’ll see a gain of $1.70 on $0.75 spent.  That’s a take of 126%.

And that’s just fine.

  • On September 27th we issued a final reminder to maintain STOPs on WKHS at $26 at all times.  And if you’ve adhered to that injunction, you’re a happy camper.  The trade will most likely burn out tomorrow with your original credit in hand – of a nickel.
  • Finally, our VALE trade requires that you buy back the short 12 PUT that expires tomorrow for $0.69 and sell the November 20th 12 PUT for $0.97.  You thereby increase your credit on the trade to $0.70.

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.

Remember, our last three efforts produced 4560%, 3506% and 613% profits.

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!

Matt McAbby

 

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