Yesterday we saw the precious metals take a bit of a pounding resulting in some gold producing stocks dropping about 7%, such as Kinross Gold Corporation.

During the carnage we looked for a way to generate a profit from such a volatile day and we chose an options play on Kinross Gold.

For this trade we placed orders to purchase the Jan 09 Call options at both a $20.00 and $30.00 strike price, as they appeared to offer value to us. Unfortunately our orders where not filled, so we took aim, fired and missed!

Today saw a bit of bounce back in precious metals and Kinross closed up 2.29% at $19.18, so had our orders been filled they would have been heading in the right direction.

We could enter the market today and buy these options at the asking price but we were looking for a bargain and do not wish to chase the prices higher. However we will monitor the market in an attempt to identify other such trades.

We have stressed on many occasions that this bull market will be volatile and we are comfortable with this characteristic of the precious metals market. On days were an aberration forms we will look to capitalise on it by employing our ‘opportunity cash’ on such trades. These trades will not suit everyone and should be limited to risking only a small portion of the funds in your trading account.

Well tomorrow is another day so it will be back to the drawing board for us. If any of you jumped into the options market recently do let us know how you are doing, as our readers are a curious bunch that often enquires about options trading on both the metals and mining stocks.

Have a good one.

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