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« The Gold Storage Solution: Switzerland | Main | Healthcare seen as a drag on the American Economy »
Monday
Jun152009

Randgold Resources Limited Options Trade Up 41% in 5 Days

Randgold Chart 16 jun 09.JPG


Chart courtesy of Stockcharts

The September $65.00 PUT contracts in Randgold Resources Limited (GOLD) that we purchased on the 11th June 2009 for $5.00 per contract have continued to improve and closed at $7.20 today up 41% in 5 days.

Randgold fell again $1.62 or 2.39% to close at $66.05 as we can see on the above chart.

Randgolds fall today was on the back of falling gold prices and a rising dollar to the benefit of our PUT contracts. The technical indicators appear to have peaked and are heading south so its a case of so far so good.



Randgold Resources (GOLD) was downgraded today by analysts at BMO Capital Markets,the brokerage reduced GOLD to Market Perform from Outperform.




Also note that instrumental in giving the dollar a boost was this remark by Russian Finance Minister Alexei Kudrin:

NEW YORK, June 15 (Reuters) - The U.S. dollar rose broadly on Monday after Russia expressed confidence in the greenback as the world's reserve currency, while concerns about the euro zone economy undermined the euro.


The single European currency fell below $1.38 to its lowest level in more than three weeks after the European Central Bank said euro zone banks will probably need to write down another $283 billion.

Speaking on the sidelines of a Group of Eight finance ministers meeting in Italy, Russian Finance Minister Alexei Kudrin said the dollar's role as the world's main reserve currency is unlikely to change in the near future.

The comments followed statements from a top Russian central bank official last week that it would cut the share of U.S. Treasuries in its reserves. But Kudrin's comments alleviated concerns that major emerging market countries may be diversifying away from the dollar ahead of a summit of leaders of Brazil, Russia, India and China (BRIC) in Russia on Tuesday.



Gold itself closed at $928.00 registering a fall of $10.00 on the day adding more downward pressure on the precious metal producers.

Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.
Have a sparkling day.

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Reader Comments (6)

This is more up-to-date.

http://news.yahoo.com/s/ap/20090616/ap_on_re_eu/eu_russia_summit_talks_7

What's going on? Russia can't make up its mind?

June 16, 2009 | Unregistered CommenterEP

Maybe the Russians are trying to put on a positive front to help the dollar decline more slowly – a bit late now that the cat is out of the bag!

June 17, 2009 | Unregistered CommenterGold Prices

There is an old saying "more than one way to skin a cat". I too was looking for a way to protect my metals. Similar to your GOLD, I held PCU. On 6/11 I bought the Jul 20 puts for $.44 - now at $.775. I sold the Jul 25 calls and collected $1.16, today I bought the calls back for $.25. The options don't fully compensate for the fall in the stock, but they do significantly mitigate it, and I will look to again sell calls against the stock.

June 19, 2009 | Unregistered CommenterBC

BC,

From what you have said you are selling calls against the stock that you hold which is usually termed 'covered' calls as you can deliver the stock should the market go against you.

Just for some of our newer readers there are 'naked' calls whereby you sell the call option without having ownership of the stock itself. We strongly recommend that you avoid this type of trade as it is extremely dangerous. For instance, if a take over bid appears from out of the blue and the price of the stock rockets you would take a financial bath – avoid naked calls.

June 19, 2009 | Unregistered CommenterGold Prices

Yes covered calls. I held PCU and in order to protect against the down side, I bought $20 puts and sold $25 calls (received cash in hand). When the stock fell, the calls went to single digit, so I bought them back. The puts have gone up in value so I wait and watch.

I agree 100% that people should be very wary of the extreme high risk of naked calls. Covered calls on the other hand are much lower risk and can even be used in an IRA. Within constraints covered calls can serve as a type of insurance or can create ongoing income.

Great place to learn about options is at my broker www.thinkorswim.com (the best options broker I have found). They provide free practice accounts and a variety of option friendly resources (most of them free).

June 23, 2009 | Unregistered CommenterBC

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