Buy Call GDX

April 13, 2024
Sell your GDX January 33/50 Bull Call Spread for $3.10 or more

As I’ve written recently, the market continues to send very mixed signals. On the one hand, the Nasdaq and S&P 500 look rock solid as the indexes soar to new highs. However, most of that rally can be attributed to AAPL/NVDA and a smaller and smaller list of the best-performing stocks.

Also, under the surface, the market breadth has been dreadful for weeks, and more and more stocks are chopping around or breaking down. This is concerning (at least for now).

Because of this choppy environment, and FCX and GDX losing their momentum as of late, let’s exit our successful FCX position, as well as our GDX trade that is mostly a breakeven after our initial sale weeks ago.

To execute these trades you need to:

Sell to Close your FCX November 56 Calls

Buy to Close your FCX November 70 Calls

And

Sell to Close your GDX January 33 Calls

Buy to Close your GDX January 50 Calls

Stepping back, hopefully the under-the-surface selling that we are seeing will be a short-lived situation and breadth improves. However, until we see that happen, let’s raise some cash and prepare to move this capital into fresher ideas.

May 21, 2024
Adjust Existing Position: Against GDX January 33 Calls, Sell the January 50 Calls (exp. 1/17/2025) for $1 or more.

Today we are going to adjust our GDX call position that is working well and turn it into a bull call spread (similar to TSM and FCX trades recently) by selling a far out-of-the-money call to lower our cost basis on the trade.

To execute this trade you need to:
Sell to Open the GDX January 50 Calls

After this adjustment our position will be:
Long GDX January 33 Calls
Short GDX January 50 Calls

This adjustment will drop the cost basis on our position to $3.50 approximately.

Please note, two items about this trade …

First, despite selling a call today, there is no question that we want the GDX to trade higher. Bull Call Spreads are a bullish position.

Second, this adjustment will be a mistake if the GDX trades well above 50 on January expiration as I will have capped our upside potential. That being said, that is a scenario we could live with as our position would be at an approximate profit of 385%.

April 12, 2024
Sell a Third of your GDX January 33 Calls for $5.30 or more.

Very quickly our GDX calls that were purchased last week are at an approximate profit of 20%. And while I think gold (and silver) plays look great, commodities can get red hot, but also ice cold, very quickly. For that reason, and because we have a profit-taking system in place, we are going to lock in a quick profit today.

To execute this trade you need to:
Sell to Close a Third of your GDX January 33 Calls.

As is always the case when we take partial profits, we hope this initial sale is a mistake and the stock and our calls trade much higher in the weeks and months to come.

April 9, 2024
Sell a Third of Existing Position: Sell a Third of your GDX January 33 Calls for $5.30 or more.

Very quickly our GDX calls that were purchased last week are at an approximate profit of 20%. And while I think gold (and silver) plays look great, commodities can get red hot, but also ice cold, very quickly. For that reason, and because we have a profit-taking system in place, we are going to lock in a quick profit today.

To execute this trade you need to:

Sell to Close a Third of your GDX January 33 Calls.

As is always the case when we take partial profits, we hope this initial sale is a mistake and the stock and our calls trade much higher in the weeks and months to come.

April 4, 2024

Buy the VanEck Gold Miners ETF (GDX) January 33 Calls (exp. 1/17/2025) for $5 or less.

Let me start here … I am not a gold and silver “bug.” What I mean is I don’t own gold bars in my basement as a hedge should the world end. However …

There is no question that gold and silver, and really all commodity plays, have been attracting wild call buying the last week. Here is just a small sample of some of those trades:

Today - Buyer of 10,000 Gold Miners ETF (GDX) June 34/38 Bull Call Spread for $1.10 – Stock at 33.2

Today - Buyer of 3,000 Barrick Gold (GOLD) January 20 Calls for $1.25 – Stock at 17.5

Yesterday - Buyer of 13,500 Barrick Gold (GOLD) June 17 Calls for $1.19 – Stock at 17.3

Yesterday - Buyer of 4,000 Pan American Silver (PAAS) October 20 Calls for $1.20 – Stock at 16.5

Monday - Buyer of 5,000 Newmont Mining (NEM) January 60 Calls (exp. 2026) for $2.08 – Stock at 36.25

This is just a small sample of the call buying, which also could include the countless trades in FCX, which we already own, and which has a gold/silver element to it as well.

Let’s get involved with this theme with a January call in the GDX, which is a Gold Miner ETF, which also has some silver exposure as well.

To execute this trade you need to:

Buy to Open the GDX January 33 Calls

The most you can lose on this trade is the premium paid, or $500 per call purchased.

The risks I see in this trade are pretty straightforward …

Gold can get RED hot but also turn ICE cold very quickly. So, there is a chance we are top-ticking the commodity.

Also, with FCX already in our portfolio, we will have quite a bit of commodity exposure.

That being said, option activity in Gold/Silver and FCX has shown no signs of backing down, and for that reason, I am going to add the GDX to the portfolio today.