Rational options, while the market is loosing its mind and there is blood in the streets.
Well I guess we can panic, hide under the desk or just pull the covers over our heads. The news of POG's big washout today was front and center in all of the main stream talking heads. I am guessing that could bring another wave of panic selling tomorrow as many dump in disgust.
The questions is with such a BIG drop will any bargain hunters emerge? If so how much of a counter trend rally can they sustain, before shorts jump back in and pound things down gain?
I dunno, but the -12% drop in ABX today looks like a move to a 3 or 4 sigma level -3 or -4 Keltner Channel level.
So what can we do?
Here is a couple of ideas.....
1. For the VERY aggressive trader, and those with a stainless steel pair, this the kind of place where we could sell deep ITM puts. We get a ST bounce, one buys back into strength. Wouldn't you love to own ABX for under $16? [It's low in 2008 was 16.26] Oct 17Ps selling for 1.21. 17-1.21 = 15.79.
2. For anyone who might still "believe" in the sector and its LT prospects, wanna think dividend?
Now it is possible with POG in the 1300s Mine Company's will be cutting their dividends? NEM has its Divi tied to the POG and GORO's Divi is 1/3rd of Profits, so both of those could be expected to see a "cut."
If not, there there are some attractive returns offered up here on 4 stocks. Also if anyone wants to think that way, perhaps dividend can act as a floor to these some of these share prices? er, once the beating of POG is finished.
Just thinking out loud here, fwiw.
**BTW - the yield data is from Morningstar and NOT Y! |
