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Gold/Mining/Energy : BRE-X, Indonesia, Ashanti Goldfields, Strong Companies.
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To: Jwalker who wrote (19703)4/30/1997 11:04:00 AM
From: Tim Van Leeuwen   of 28369
 
Hi J,

I've thought all along that you're better off going for a later expiration date. I watch for significant drops and then go fishing for September calls. That allows me lots of time for this whole mess to clear up and for the share value to go back to its original value(there is going to be a lot more testing required to allow investor confidence to push the stock back to $25, and may take several months). Of course, I'm one of the people that believes that there is well over 71million oz's. I guess it all depends on how much gold you think is there. I purchased 5000 Sept $5 calls for $0.65 when the stock dropped to $1.75. I then sold 2000 when they trippled and bought 6500 Sept $15 calls. The further you are willing to go out of the money, the more leverage you buy: If the stock goes to $30(I'm an eternal optimist) those 2000 $5 calls would be worth approx $50 000 (30-5x2000=50000) Yet, the 6500 $15 calls would be worth approx $97 500 (30-15x6500=97500) It all depends on how greedy/optimistic you are. Looking at the bid/ask on the September calls right now, I'd say that you won't find any bargains today. What you need is a really nasty rumour to surface in the next day or two(which will undoubtedly happen), and then have low-ball bids in. Just remember--if the strike price does not look like it will be reached, those calls are worth zero.
Sorry for the lengthy post. Tim.
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