A Deadcat Bounce Message Board

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Gold/Mining/Energy : A Deadcat Bounce

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To: Ed Pakstas who wrote (65)	12/4/1997 12:58:00 AM
From: Tommy D	of 97

Ed-Price of Gold down again this evening;touched 290 briefly. Have you ever looked at the Leaps on some of the majors like Placer or Barrick. Yesterday, it looked like you could get a Jan. 99 Placer @$20 for $2.30. Gives you 13 months for a recovery, plenty of leverage if price goes up but limited downside risk. In the past, I believe that gold stock prices have gone up about 4 to 4% for each 1% increase in gold itself. If we rise back to $330, this should translate into into $25 to $27 and a nice move in the option. The one problem is it is an all or nothing propostion with options but hopefully the time is sufficient for a recovery. One other problem is liquidity in the options market. I looked at an purchase stock, sell put dividend play on the Banks a few years ago and found there was no liquidity in the option market which made the transaction scary. Too bad because the returns were phenomenal given the performance of the big 5 Banks in the past few years Regards Tommy

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