Trading Idea: GOLD STOCKS at support/resistance

If there’s one thing that we can agree, it’s that time flies and magically we seem to have come to the end of the month of February. All that really means is that we are now entering into the “sweet spot” of market trading: the so-called “Super 8 days” during which stocks (and markets) tend to do better because money managers re-jig their portfolios by selling losers and buying some winners. Anyway, one trade idea we are considering is playing some options on GOLD STOCKS because many of them have come down to the support/resistance areas. Look below at the chart of AEM.to:

RSI is turning up, MACD is turning up, but price has poked through its 50 DMA. Looks good! Looks bad! And that’s where we might be able to play this trade using two different option strategies, a STRADDLE(buy one CALL and one PUT at the same strike price) or a STRANGLE (one CALL at a higher strike price and one PUT at a lower strike price). We’ll lose on one, gain on the other… unless the stock price just moves sideways in which we’d lose both.

To test this out, we’ll PRETEND to buy a CALL at 60.00 for 1.36 and the PUT at 58.00 for 1.31, both for March 17. We’ll see how these play out over the next few days and track our progress.

Just heard that Warren Buffet bought some more AAPL and some SPX fund. Something to watch.

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