On the 4th November 2009 we bought a few Call Options on Agnico-Eagle Mines Limited (AEM) they were the JAN 2010 series at a strike price of $60.00, symbol AEMAL, for an average price of $5.10. We were of the opinion that Agnico was grossly undervalued at the time but the market didn't agree and these options, although they started well they soon fell out out of bed.
At one time they were up 81.46% and on reflection maybe we should have taken those profits as they appeared in quick time.
Fast forward to time now and we tracking the price at sub one dollar. So, firstly we looked at the chart again and as we can see there has been a positive crossover on the MACD and the RSI has improved but still has some room for further upward progress. Also note how AEM is back filling the gaps created by a drop in price. Now the stock price is heading north and today it closed at $59.38, so an increase of $0.70 or so will put these options into positive territory. We think that this can be achieved next week. This is not an investment it is a straight out bet for gamblers only. Anyway we bought at an average price of $0.90 just before the close today thus reducing our average price to $1.28, but we must repeat that it is a real gamble when trying to predict the price movement of a stock over such a very short time frame.
It now remains for Agnico to blow through the $60.00 level early next week, no doubt keeping us on our toes.
Any thoughts or comments on how we could do better are always welcome so please let us know.
Have a sparkling weekend.
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