Option Traders Bet on Sell-Off in Gold Miners [View article]
Tough Crowd....
Never said I was rich..although I have plenty of money to do whatever I want, no boss, work from my own home office, and have clients paying me good money for investment advice...so I can't complain...especially being someone that does not need money because I prefer a day out in the woods, or fishing on a lake over anything else.
Stand by what I said...long term managers strive for 7 to 10% returns a year, which is an absolute joke.
I set up high probability trades in options for basically easy money, trading FDA Decisions, Earnings, etc., not just speculation. I could trade 1 week a year and generate better returns that long term holders.
As for taking advice from me...I never forced anyone to read this, do as you will, but I would not be betting against me...
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The straddle is not pricing in a 10% move on earnings, as you are forgetting about residual volatility, considering there are 4 weeks of trading remaining in November options. IV vs HV is about a 19% Spread, or 41% of the current IV, so the actual move being priced into just the earnings move is closer to 4.5%.
Short Interest alone is not an indication that the move will be bearish, although it has grown 20% in 2 months, so there are more shorts coming into the name, but high short floats can also lead to short squeezes, and create a bullish move on any positive results.
Recent earnings gaps have not been on average 10%, closer to 6.5% on average, and being short the FSLR straddle into earnings has worked 3 consecutive quarters and IV has been overpriced, likely the reason for the smaller IV/HV spread this time.
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The JAZZ straddle was pricing in around a 25% move and was exactly the move seen. Based o Analyst price target and the fact there are competing drugs the move in ARNA is likely to be a lot more subdued than ITMN and DNDN. ITMN had much a higher short ratio going into the event (not short float, but short ratio). ARNA's short interest is misleading because the float is massive. DNDN was the most hyped drug ever into an event and the move was actually a lot smaller than priced in on the actual FDA date, and immediately faded.
Manulife saw active call buying in Dec. and March contracts Monday and with shares beaten down, this is the type of contrarian activity I like to see (7X average call volume as 3,900 traded), so I would agree that shares have likely seen lows at this point, as the smart money is playing for a bounce.
Option Traders Bet on Sell-Off in Gold Miners [View article]
All of the action I was seeing told me that the Panel would not approve due to safety issues. Also, I sold calls that were far enough out of the money to expire worthless even on approval, because shares were already over-valued as two other companies have similar drugs (OREX and ARNA). The trade was structured with being long further OTM calls in Sep., so the net credit trade had a 97% chance of profitability, a trade worth taking every time.
It is all about structuring the trade based on expectations and the implied move being priced in the options.
Option Traders Bet on Sell-Off in Gold Miners [View article]
lil papi - tough to take much from a guy that can't comprehend the English language (hence, if Gold goes down you will want to BUY more, not BY more)
Art65: You obviously know nothing about trading options, because you can design strategies to take advantage of mispricings in option volatility (I would say more but I do not want your small mind to explode)
For example, ahead of the Vivus (VVUS) FDA Panel I sold July 16 Calls and Bought August 20 Calls in a Diagonal Spread for a $0.55 Net Credit ($55 Per Spread and Opened 200X = Easy $11,000 as July 16's expire worthless, and August $20's as well)
When designed the trade had a 97.6% Probability of Profit, so I will take that any day of the week.
I am done with you 2 haters - you obviously have a feeble understanding of trading and try to put down people that can actually make money in up and down markets....good luck to you.
As for everyone else, I feel silly even arguing with these 2 fools, and hope you can see the intent of this article was not to bash Gold as an investment, it was to present the facts that Gold is in a short term bubble and is due for a pullback, and traders are betting against the miners.
Today, there were massive buys of GLD August puts, which makes me even more confident that Gold is heading down.
Option Traders Bet on Sell-Off in Gold Miners [View article]
Simply looking at PUT and CALL Open Interest is Useless as it does not tell if the puts/calls were bought or sold to open, so you really have to follow the larger trades to get a better reading.
Gold Miners (GDX) August $49/$46 put spreads bought around 2,500X today
As for Art65, you have issues, and America is the least of the global worries...China is a BUBBLE and Europe is on the verge of collapsing and the Euro will be at Par with the USD within a year
Option Traders Bet on Sell-Off in Gold Miners [View article]
Gold demand in Industrial and Jewelry has declined steadily since 2007, currently 30% less demand. Meanwhile, supply is steadily rising.
It is a simple supply/demand story.
Also, your stats are misleading about Gold as a % of global assets. The truth is that Retail Investment in Gold is up 800% in 5 years, and total investment demand is up 100%.
When retail is starting to pile money into an asset, whether it be Tech Stocks or Gold....you have signs of a bubble.
A bubble is when an investment is no longer based on numbers but on greed or fear......BINGO = GOLD
Option Traders Bet on Sell-Off in Gold Miners [View article]
Trade was not tied to shares - you would not hedge a long share position with a 3 legged spread, inefficient and I can see when shares are tied to option positions.
Saying the Gold trade is not crowded is just foolish...15% of commercials on TV are trying to sell Gold coins, etc. Hedge Funds have loaded up on Gold the past year and will be unloading.
Technicals point to a move lower, not higher.
Long Term Investors? Ha, they have faired well the past 15 years...right...I can make more in a single trading week swing trading options than long term money managers can make in a year
Is it more likely the trader bought the calls as protection and went short 960K shares. I see the shares traded on an uptick, but for this size of a trade and the liquidity it could easily be a short equity position. I think that would make more sense as a trade....0.56 delta on the calls offers protection, but not perfectly hedged. There does not appear to be much reason to be long shares int his over-valued REIT nearing all time highs.
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On Jun 10 09:14 AM buoy wrote:
> This is sort of a "no-brainer", being that the rest of the world
> is in the process of modernizing. You should have included GE in
> your list.
Option Traders Bet on Sell-Off in Gold Miners [View article]
Never said I was rich..although I have plenty of money to do whatever I want, no boss, work from my own home office, and have clients paying me good money for investment advice...so I can't complain...especially being someone that does not need money because I prefer a day out in the woods, or fishing on a lake over anything else.
Stand by what I said...long term managers strive for 7 to 10% returns a year, which is an absolute joke.
I set up high probability trades in options for basically easy money, trading FDA Decisions, Earnings, etc., not just speculation. I could trade 1 week a year and generate better returns that long term holders.
As for taking advice from me...I never forced anyone to read this, do as you will, but I would not be betting against me...
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Playing First Solar's Upcoming Earnings With Options [View article]
Short Interest alone is not an indication that the move will be bearish, although it has grown 20% in 2 months, so there are more shorts coming into the name, but high short floats can also lead to short squeezes, and create a bullish move on any positive results.
Recent earnings gaps have not been on average 10%, closer to 6.5% on average, and being short the FSLR straddle into earnings has worked 3 consecutive quarters and IV has been overpriced, likely the reason for the smaller IV/HV spread this time.
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Option Traders Bet on Sell-Off in Gold Miners [View article]
It is all about structuring the trade based on expectations and the implied move being priced in the options.
Option Traders Bet on Sell-Off in Gold Miners [View article]
Art65: You obviously know nothing about trading options, because you can design strategies to take advantage of mispricings in option volatility (I would say more but I do not want your small mind to explode)
For example, ahead of the Vivus (VVUS) FDA Panel I sold July 16 Calls and Bought August 20 Calls in a Diagonal Spread for a $0.55 Net Credit ($55 Per Spread and Opened 200X = Easy $11,000 as July 16's expire worthless, and August $20's as well)
When designed the trade had a 97.6% Probability of Profit, so I will take that any day of the week.
I am done with you 2 haters - you obviously have a feeble understanding of trading and try to put down people that can actually make money in up and down markets....good luck to you.
As for everyone else, I feel silly even arguing with these 2 fools, and hope you can see the intent of this article was not to bash Gold as an investment, it was to present the facts that Gold is in a short term bubble and is due for a pullback, and traders are betting against the miners.
Today, there were massive buys of GLD August puts, which makes me even more confident that Gold is heading down.
Option Traders Bet on Sell-Off in Gold Miners [View article]
Gold Miners (GDX) August $49/$46 put spreads bought around 2,500X today
As for Art65, you have issues, and America is the least of the global worries...China is a BUBBLE and Europe is on the verge of collapsing and the Euro will be at Par with the USD within a year
Option Traders Bet on Sell-Off in Gold Miners [View article]
It is a simple supply/demand story.
Also, your stats are misleading about Gold as a % of global assets. The truth is that Retail Investment in Gold is up 800% in 5 years, and total investment demand is up 100%.
When retail is starting to pile money into an asset, whether it be Tech Stocks or Gold....you have signs of a bubble.
A bubble is when an investment is no longer based on numbers but on greed or fear......BINGO = GOLD
Option Traders Bet on Sell-Off in Gold Miners [View article]
Saying the Gold trade is not crowded is just foolish...15% of commercials on TV are trying to sell Gold coins, etc. Hedge Funds have loaded up on Gold the past year and will be unloading.
Technicals point to a move lower, not higher.
Long Term Investors? Ha, they have faired well the past 15 years...right...I can make more in a single trading week swing trading options than long term money managers can make in a year
Rayonier Attracts Unusual Options Trade [View article]