Agnico-Eagle Mines Limited: Stopped Out of Call Options

Just a quick note to let you know that in todays trading session in NYC our Call Options position was closed by a trailing stop that we had placed to protect ourselves in the event of the market moving against us.

We had purchased, on January 25th, 2010, more stock of Agnico-Eagle Mines Limited (AEM) at an average price of $53.24 and we also acquired a few Call Options and they are the MAY 2010 series at a strike price of $60.00, symbol AEMEL for which we paid a price of $2.85 per contract.

At the close of trading in NYC yesterday the last price for these Options was $3.40 so we placed a trailing stop at $0.40, on our Call Options, meaning a fall at any time of $0.40 and we are out and so it happened. Gold prices managed to stick around $1080/oz in the UK but then got the chop in NYC falling to below $1065/oz, thus triggering our trailing stop as per the above chart.

If you are still holding them then smile because they have recovered and as we write gold prices in Hong Kong are standing at $1077.40, good luck with them.

So its back to the drawing board for us, however we have lost nothing and our powder is still dry so we live to fight another day.

All the best.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

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Comments

[Ryszard]

Isn't it strange how one system produces a STOP , (we all must use stops), whereas I have been using the parabolic SAR, and to my good fortune has produced profit. Just a thought, next time it will be interesting to see how the parabolic SAR performs. Regards Ryszard

[Mark]

Too bad about the AEM CALLS trailing stop being triggerd...
Always trying to better oneself at trading and was wondering what the best approach to implement for future trades to increase the % of winning option trades?
Keeping individual tolerance to risk and option volaitlity in mind, should a 30%, 40% or 50% or even higher trailing stop be used?
Nothing is more frustrating than having one triggerd and then watching the market take off - especially after all the hard work done to pick a stock option.
I have heard that market makers have the ability to see these stop losses and then "pick them off", particularly in a rising market??
Any assistance you can provide is appreciated.
Thanks, Mark

[ep]

Mark,

"I have heard that market makers have the ability to see these stop losses...."

Yes, I feel that too.

[ep]

I want to add - maybe for thinly traded stuff only???

[Gold Prices]

Team,

Well, we still think that it is a buy and so we have re-purchased them today.

[chuck]

What do you think of the now touted "Silver Shots"?

[Gold Prices]

Mark,

The trailing stop was there too protect us and it did its job,so we are relaxed about it.

[Gold Prices]

Chuck,

Do you mean 'shots' or 'shorts'and who is touting them?

[chuck]

Shots. I believe a group called Taipan daily. Think I saw it only a link on Kitco.

[John Ell]

Ditto on the stops.

John

[Gold Prices]

Chuck,

We dont understand this one, sorry we cant help you, may be one of our readers can enlighten us.