Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Gold Prices
Gold Price
[Most Recent Quotes from www.kitco.com]
Our RSS Feed

Gold Updates by Mail

Enter your email address:

Follow Us on Twitter
« The Week of the Record Gold Price | Main | Gold at All Time High »
Thursday
Oct082009

Randgold Resources Limited: A Few Call Options

Randgold Chart 09 Oct 09.JPG


Today we took the plunge and purchased a few Call Options on Randgold Resources Limited (GOLD) they are the December 2009 series with a strike price of $80.00 (GUDLP) and we paid an average of $4.70 per contract for them. Todays trading range was between $4.30 and $5.00 per contract.

Our rational is based on gold itself having broke through its old high of $1033/oz putting it into unchartered waters where it really could go anywhere, as we write it is trading at around $1056.00/oz. The driver behind gold is of course the plight of the dollar which is struggling to hold its own at the moment.

We chose Randgold as the vehicle for this play as it is fairly sensitive to any movement in gold prices. Taking a quick peak at the chart we can see that Randgold is trading at $74.00 and is close to its previous high of $76.08, if it can get above its previous high then it too is in unchartered waters and could move higher quickly. The other point of note is that the MACD is very close to making a golden crossover, where the black line crosses the red line in an upward motion, which is usually very positive for the stock.

On the downside we would prefer the technical indicators to be starting from a lower point on the chart to feel more comfortable with this trade, but it is difficult to find the perfect set up. We also need to be weary of the gap that has opened up between the stock price and the 200dma, again we would prefer this gap to be lot smaller.

If you follow us into this sort of trade then make sure that you can live to fight another day should things turn to custard, as always go gently as this is a highly speculative and dangerous play.

Any thoughts or comments on how we could do better are always welcome so please let us know.

Have a sparkling day.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.






















PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments (4)

That's a pretty gutsy move. I know it's easy to say in hindsight but the time to have made the trade was when the STO was below 20% a few days ago. You're in no-mans-land right now and, even though I think the trade will work eventually, I reckon you may have a few anxious days ahead. Will you bail or hang in if things go the other way?

October 9, 2009 | Unregistered CommenterPaul Dransfield

Paul,

Yes indeed, a white knuckle week ahead, if it goes pear shaped then we may cut and run, the market being stronger than our wallet. If the dollar recovers it will cap gold prices momentarily, however that would damage this position as the time premium erodes the value faster than a speeding bullet.

As you know we are about 85% invested so we are risking small amounts on these trades and have tried to stress just how dangerous they can be to ones financial health. If we cant sleep then we have put too much in, so we do go gently.

We take your point especially about the STO, but we were hoping that a crossover on the MACD would outweigh the STO and send the stock higher.

Thanks for your comments and please keep em coming as they are very much appreciated.

October 9, 2009 | Unregistered CommenterGold Prices

Hi

How do I know which option holdings you have right now OR which one should I buy now?

Thanks

October 12, 2009 | Unregistered CommenterN

These are the only contracts that we have open at present on gold prices however we do have some contracts on SSRI which is on silver-prices.net, go gently with them and bide your time.

Best wishes,

October 12, 2009 | Unregistered CommenterGold Prices

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>