Clive Maund
gold, silver, & oil shares


NYMEX GOLD, GLD, IAU and NEM URGENT STRADDLE OPTION update...

originally published September 7th, 2009

Our straddle trades on the NYMEX and in the iShares Comex Gold Trust organised just before the gold breakout, and in Newmont Mining and SPDR Gold Trust (GLD) have paid off handsomely, with the Calls soaring and their gains vastly eclipsing the losses in the Puts. However, as we know, profits in options can evaporate almost overnight once the tide turns, and as made clear in the latest Gold and Silver Market updates, it is now looking like gold and silver are about to react, based on their current overbought condition and bearish looking COT data. It is therefore considered prudent to bag our huge profits in the Calls at once and let the Puts ride. Even if gold is indeed destined to break out to new highs over a short to intermediate-term time horizon, a near-term reaction here will savage Call prices, so by selling the Calls without delay we could find ourselves in the enviable position of having taken huge profits in the Calls, and then going on to recoup most or even all of our comparatively modest losses on the Puts. The percentage figures shown after each option are the latest prices expressed as a percentage of the price at time of purchase.


Gold straddle

Nymex Gold Calls

October 1100 at 0.80 is now 2.60, gain of 1.80, 325%
October 1125 at 0.50 is now 1.60, gain of 1.10, 320%
November 1075 at 4.50 is now 15.10, gain of 10.60, 335%

Nymex Gold Puts

October 900 at 2.30 is now 0.90, loss of 1.40, 39%
November 900 at 7.20 is now 6.30, loss of 0.90, 87%
November 890 at 5.40 is now 5.30, loss of 0.10, 98%


Newmont Mining (NEM) straddle

Calls

Sept Call 42.50 at 0.65 is now 4.27, 656%
Dec 42 Call at 2.55 is now 7.00, 274%

Puts

Sept 37.50 Put at 1.12 is now 0.07, 6%
Dec 38 Put at 2.26 is now 1.54, 68%


SPDR Gold Trust (GLD) straddle

Calls

Sept 100 Call at 0.25 is now 1.00, 400%
Oct 94 Call at 2.13 is now 5.30, 248%
Dec 93 Call at 4.30 is now 7.84, 182%

Puts

Sept 89 Put at 0.65 is now 0.10, 15%
Oct 89 Put at 1.20 is now 0.60, 50%
Dec 88 Put at 2.71 is now 1.90, 70%


iShares Comex Gold Trust (IAU) straddle

Calls

October 95 Call at 1.95 is now 4.50 bid, plus 2.55, 230%

Puts

October 90 Put at 1.70 is now 0.55 bid, minus 1.15, 32%


All prices are for the close of trading on 4th September.