Gold Fields Follow-up

On October 17, 2006, I put Gold Fields (GFI) under the microscope. I wrote a detailed plan of how I would trade the stock using put and call options.

click to enlarge

If you had waited until January, when the stock price next dipped below $16, and wrote the $15 puts for say 3 or 4 months out, and bought the $15 calls then, you would be a happy trader today.

The stock dipped only to $15.75, which was 25 cents above my earlier stated purchase target, so you would have just done the options trades.

You would have written the 15 April puts for about $1.25, which are now $0.05, and will expire worthless. The $15 calls would have been bought for about $1.75, and now are trading at $4.30 bid, after hitting a high of $6.20.

Comments

[Nova Law]

Cara gets one right for a change! Woo hoo!

A stopped clock is right twice a day.

And even Mario Mendoza got a base hit once in a while.

Still waiting for Cara to explain what people should do with their UXG (formerly USGL.OB), which has dropped by nearly half since he suggested loading up on it as a safety vehicle in July 2006:

www.billcara.com/archi...

When you lose half your safety money on an astonishingly bad recommendation, making up nickels and dimes on risky options trading seems cold comfort.

2007 Apr 05 09:27 AM