Team, a quick note to update you on the Call Options we purchased on the 9th February 2010 on Randgold Resources Limited (GOLD) they are the Jun 19 ‘10 $75 Calls with a strike price of $75.00 for which we paid $5.50 per contract for them. The traded today at $8.60 so we are placing a stop at $6.50 to protect our position from any sudden fall in value.
The choice of just where to place a stop is entirely up to you, our strategy is one based on protection against a fall rather than locking in the maximum profits. A stop too close to the trading price could be triggered fairly soon due to the volatile nature of these contracts. However, we will be moving the stop up accordingly should gold prices continue to head north. When we are of the opinion that this play has run its course we will move the stop much closer to the trading price and possibly get stopped out when the stock takes a breather. If you have followed us in to this trade and have a different exit strategy, then please drop us a line and let us know just how you intend to play your position as this would be of great benefit to all of readership and not just the team here, thanks.
Below is the chart of Randgold at about the time when we made the decision to make this trade.
All the best.
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