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Gold/Mining/Energy : Gold Price Monitor
GDXJ 98.59-2.8%Nov 13 4:00 PM EST
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To: Bobby Yellin who wrote (44291)10/29/1999 9:29:00 AM
From: Lightning  Read Replies (1) of 116762
 
Covering calls you foolishly wrote when gold was $255 per ounce and volatilities were low becomes very expensive when gold is $340 per ounce and volatilities are high. Some companies may also be strapped for cash to buy back the calls and they may not have great lines of credit or creditworthiness for issuing bonds. Unless the company thinks that gold is going much higher, it might be better to simply sell that portion of future gold production at the strike price and write off the opportunity cost of the potentially higher POG as the cost of buying insurance.
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