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« Buy Gold, Be Smart, Diversify | Main | Gold Bullion ETF in Switzerland: SGOL »
Tuesday
Dec012009

Randgold Resources Limited Options Trade Up 100%

Randgold chart 02 dec 09.JPG


We are pleased to report that today we closed our position in Randgold Resources Limited (GOLD) by selling our Call options at a profit of 100%.

On 8th October 2009 we purchased Call Options on Randgold Resources Limited (GOLD) they were the December 2009 series with a strike price of $80.00 (GUDLP) and we paid an average of $4.70 per contract for them. Today our sell order was triggered at $9.40 as gold prices traded as high as $1200/oz and Randgold gained over $3.00 per share.

This trade took almost two months to mature being hampered along the way by persistent calls for a rally in the dollar and also by the fallout from the Dubai property problems. However, we kept our sell orders in place, perspired a little and were finally rewarded today when our position was closed out.

We now have a little more cash in the trading account and will look to deploy it shortly so stay tuned as we search for another undervalued stock which is ready to move.

The week started very well with the New Zealand All Blacks rugby team thumping the French in Marseilles which bodes well for the upcoming Rugby World Cup in 2011.


As always go gently as options trading is highly speculative and dangerous to our financial health, but for now enjoy the ride and keep smiling.

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

Have a sparkling day.

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Reader Comments (10)

Bob,

Thanks for writing. Keep up the good work. I read every one of your columns. You helped me make money on some options. Thanks.

Pete

December 1, 2009 | Unregistered CommenterPete

Thanks Pete,

Today was a good day but we do get hammered from time to time so we are looking at ways of improving the overall return on funds invested.

December 1, 2009 | Unregistered CommenterGold Prices

I make a point to always check my emails from your site right away and find them insightful and concise....you send them when there is something to say. Your work is greatly appreciated.
Comment: For me, it would be quite interesting and helpful to see a list of outstanding positions at a glance, perhaps even a list of open and closed positions. Though you publish your entries and exits, it would be easier to follow them if some kind of list was available with each email. I don't know if that is in the scope of your free emails, but I would follow it to help learn from your work. Many thanks again......

December 2, 2009 | Unregistered Commentergreg spivey

OK ,but if we hold the stock as well should we sell?

December 2, 2009 | Unregistered Commentergold bug

Greg,

We usually only have one or two open positions at any one time so we didnt see the need for a list. At the moment we have call options on Agnico-Eagle and Silver Standard.

Our core holdings are in the portfolio section which we try to update every month or so, although we are a tad behind with this exercise as there has been just too much to work on, but we will get to it shortly.

December 2, 2009 | Unregistered CommenterGold Prices

gold bug,

We sold this option because it had achieved its objective, if we owned the stock in our core holdings then we would probably keep holding onto it. However its really up to you to decide when you buy or sell any stock, all we can do is let you know what we are thinking and doing.

December 2, 2009 | Unregistered CommenterGold Prices

Hello,
I am a very interested reader of your Gold Prices Newsletter and have been for quite some time. The coverage of large, intermediate and small size gold miners is substantial, but I never see any discussion on why there is such a difference in the price per share of small gold mining companies over medium and large producers. As gold increases in value, large producers increase their share price accordingly, as do medium size producers. But small producers are different, it seems to me at least. Some small producers, such as Jinshan Gold mines (ca:jin) increase in share price almost constantly, while other small miners such as Rusoro Mining Ltd. (ca:RML) that mine more gold than Jinshan, own more of their assets themselves and have many more operating mines and valuable holdings, are worth less in share price and seem to not gain nearly as often in share price. Do you think that condition in the small producers will improve as the gold market increases to become of interest to the public?

I very much enjoy your insight in the precious metals market and thank you for your informative newsletters in gold, silver and uranium.

Yours sincerely,

December 2, 2009 | Unregistered CommenterRobert

Where do we find the portfolio on the website?

December 3, 2009 | Unregistered Commentergold bug

Under categories on the right near the top.

December 3, 2009 | Unregistered CommenterGold Prices

Robert,

As the gold market matures all the boats will rise with the rising tide, however some are going to outperform and those are ones we try to identify and purchase. There are many writers who are very keen on the juniors but we think it is a little early in this cycle to move into them and we prefer the larger companies.

You may have spotted an underperforming gem with your observations of Rusoro so we wish luck with it, please let us know how you get on with it.

December 4, 2009 | Unregistered CommenterGold Prices

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