Gold Stocks Selling-Off, A Buying Opportunity Around The Corner
Gold stocks are in a correction. I have been talking about how overbought they looked for the past couple of months (see previous posts) and a sell-off or a consolidation is likely. The gold bull is looking tired and needs to rest before running up higher.
ASA, the proxy for Gold stocks (closed end fund) is down to 59 from about 69. The Gold market is volatile-I think it might come down a bit more before finding support.
Oil stocks are behaving very similarly. There has been some selling in commodity markets, and both these commodities, which were looking overbought after the tremendous run up in the last 8 months, have come down a bit.
For people who trade options, buy-writes in volatile markets like Oil and Gold present great opportunities when they sell-off like this. The volatilities remain high, and you can bring in decent premiums selling calls on your holdings.
Options spread on ASA are very high (can't wait for an ETF!) but still, they are the best bet for buy writes. The Bullion price proxy ETF GLD doesn't have options listed on it.
Sanjay John G.
ASA, the proxy for Gold stocks (closed end fund) is down to 59 from about 69. The Gold market is volatile-I think it might come down a bit more before finding support.
Oil stocks are behaving very similarly. There has been some selling in commodity markets, and both these commodities, which were looking overbought after the tremendous run up in the last 8 months, have come down a bit.
For people who trade options, buy-writes in volatile markets like Oil and Gold present great opportunities when they sell-off like this. The volatilities remain high, and you can bring in decent premiums selling calls on your holdings.
Options spread on ASA are very high (can't wait for an ETF!) but still, they are the best bet for buy writes. The Bullion price proxy ETF GLD doesn't have options listed on it.
Sanjay John G.
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