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« John Embry Discusses Gold and Silver on BNN. | Main | The US Dollar Opens the week down 0.66% »
Tuesday
Jan122010

Agnico-Eagle Mines Limited Options Trade Closed

Gold Chart 13th Jan 2010.JPG

As we can see from the above chart gold prices fell out of bed today rather dramatically dropping around $30.00/oz to trade at $1129.60/oz, which in turn scuttled our options play on Agnico-Eagle.

At one time they were up 81.46% and on reflection maybe we should have taken those profits as they appeared almost instantly.

However the price deteriorated quickly and so we decided to average down by purchasing more of the same Call Options at an average price of $0.90 just before the close on Friday thus reducing our average price to $1.28, writing at the time that it is a real gamble when trying to predict the price movement of a stock over such a very short time frame. Again these options started well enough to trade as high as $1.80 before falling back so we then reduced our exposure and commented as follows:

Team,
Sold around 50% today at about a $1.00 as the market faded. There were opportunities to sell earlier at higher prices but we decided to wait. Lets see what tomorrow brings.


Tomorrow arrived and gold falls taking our options down with it so today we sold the remainder of our contracts for around $0.20 per contract, registering an overall loss on this trade of approximately 50% of the cash put into it.

In hindsight the opportunities were there to register a profit but we held out for a bigger profit and missed out on those opportunities. The lessons we must learn from this is to take some profits when they are presented to us and also to use 'stops' to protect our position once a reasonable gain has been achieved.

As we write gold appears to be stabilizing at $1125/oz lets hope that it can hold at this point and then resume its trek north.

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Reader Comments (2)

What's your next technical buy price for AEM? The first buy price was great.
Frank
Chicago

January 13, 2010 | Unregistered CommenterFrank M.

Frank,

Thank you.

Gold has been hit and we now expect it to move higher in a series of short steps taking the stocks with it.

As for AEM we need to do some work, but we will be back shortly.

However, dont be put off by us or our lack of movement on AEM, we were too optimistic when waiting for Randgold to correct further and missed the buying opportunnity completely.

January 13, 2010 | Unregistered CommenterGold Prices

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