Loading ...Are u thinking about how o.s. they are? about the deep black pessimism towards that sector? maybe u recall how triple bottom breakouts break thru briefly and then reverse up-that’s called a bear trap…heck, it’s happened the past 3 times gold was in this area…
when one buys a situation like this he is not buying because he expects G&S to hold and go across the page for 3-6 months-he buys with an expectation of a strong bounce in a bear mkt–or if he’s really lucky, catching bottom tick and a new bull mkt…
but how do u take a stab with minimal risk…? let’s take SLV fer instance @ $14.42-say ya buy 10K shares at $142,420 and by the end of just today it’s $14–yer out $2400…[why SLV and not NUGT, u may ask–here’s why=if gold goes silver will go–and NUGT call options are waaaaay more expensive]
on the premise that u expect G to rally out of this hole and not just hold in this area for months, u can buy 100 slv Sept $16 call options for $1500–that way u have a 10,000 share exposure just in case-a bit out of the money, true-but not way out-but why buy closer and increase your total risk? if u set a mental stop loss at 50%, then u’re out only $750 and commissions-Sheeeet! That’s Saturday night boogie money! …and even if u just ride it out, $1500 isn’t the end of the world–and 60 calendar days till expiration in trading is an eternity-lots can happen….
Personally I expect G&S to break to new lows and am not buying any long side exposure–even for a “what if” trade-but for anyone with heavy short side exposure this could be a cheap partial hedge–or just for anyone who fancies themselves a contrarian–DYOD