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« An Insider’s View of the Real Estate Train Wreck | Main | Randgold Resources Limited: Bought a few Call Options »
Tuesday
Feb092010

Agnico-Eagle Mines Limited Call Options Up 18% in 18 Days

AEM logo 20 feb 09.JPG

On January 25th, 2010, we purchased 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 today the last price for these Options was $3.40 so we finished in positive territory by about 18%.

The stock is up slightly since we made this purchase and closed at $54.61 today (up 4.44% today) in response to gold prices climbing to around $1075.50 as we write. It is important that gold trades above this level for the next week or so to give us some confirmation that it is indeed heading much higher. We will do more on the charts later.

On our silver-prices site we recently wrote the following:

Sticking our necks out we don’t expect to see the dollar go much higher than ‘80′ however as the broader market sells off the dollar strengthens. As a currency we think that its future is bleak, but the alternative currencies especially the Euro appear to be performing just as badly with problems in Greece and Spain grabbing the headlines. As currencies go its a race to the bottom with the occasional upward spike to keep us all on our toes.

Fortunately the dollar has come down a tad from Fridays high of 80.60 on the US Dollar Index to trade at 79.78 as we write.

Gold is still a ‘dollar’ play so keep at least one eye on it.

We have also placed a trailing stop at $0.40 in order to protect ourselves and lock in a small profit should things turn to custard.



All the best.

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Reader Comments (1)

Team,

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 which was placed at $0.40 on our Call Options, meaning a fall at any time of $0.40 and we are out.

Gold has recovered since and so has AEM lifting the options back to the $3.50 level, thats life in the options lane.

We believe that the strategy of placing a stop was correct as we came out of it intact and live to fight another day.

Good luck with it if you are still in there and let us know how you get on.

February 10, 2010 | Unregistered CommenterGold Prices

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