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MoundReport.com's Trade
Of
The
Month
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***Special
Offer to 321gold.com readers*** |
Trade description:
Buy one June Gold 420 put and sell one June Gold 400 put for
a cost of approx. $400-$450. Margin and max risk is the cost
of the trade. Options expire on 5/25/2005.
Explanation:
Gold broke the long term arc (see recent gold article "Gold's Pending Collapse") and
is showing signs of weakness as the dollar tests the recent highs.
The market is in a mid-range looking for a clear direction, and
the technicals say a breakdown in gold is more than likely. A
bear put spread reduces cost, risk and margin while getting a
great risk to reward ratio on a breakdown in metals without the
exposure to the upside that a futures contract would create.
Weekly
Gold Chart Courtesy of Gecko Software's TracknTrade
Profit Scenarios:
Max profit is $1,600 (assuming a $400 cost) and occurs at expiration
with the market trading at or below $400/oz. Profit is reduced
by $100 per point above 400 up to 416 which is breakeven at expiration.
Risk Scenarios:
Max risk is the cost of the trade ($400) and occurs at expiration
with the market above 420. Loss is reduced by $100 per $1/oz
below 420 to 416 which is breakeven at expiration.
|
***Special
Offer to 321gold.com readers*** |
Apr 4, 2005
James Mound
JMTG's Head
Analyst
email: info@Moundreport.com
Open a commodity trading account with JMTG Brokerage, the firm that brings you the MoundReport. Contact a customer service representative at 888-744-8866 or by email at info@Moundreport.com for more information.
Charts Courtesy of Gecko Software's TracknTrade
Disclaimer: There is risk of loss in all commodities trading. Please consult a James Mound Trading Group Broker before you trade for the first time. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. James Mound Trading Group, or anyone associated with JMTG or moundreport.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (clients or otherwise). Past results are by no means indicative of potential future returns. Information provided are compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.
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