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Strategies & Market Trends : TATRADER GIZZARD STUDY--Stocks 12.00 or Less..... -- Ignore unavailable to you. Want to Upgrade?

To: TATRADER who wrote (20336)	1/25/2001 3:48:19 PM
From: GTC Trader	Read Replies (2) \| Respond to of 59879

<< if my view on gold market is correct >> Yes, TA, I copy. We ARE on the same wavelength (WAVC). Regarding your view on gold. I took a look at XAU a couple hours ago when it was just under 49. It looks to me like 48.50 is holding, so I bought some March 50 XAU calls for 3.25. I see the XAU plunged almost .5 in the hour after my purchase, but it still looks like 48/48.5 will hold. I am looking forward to seeing XAU reverse tomorrow. Let's hope it behaves. I don't play options much, but for what it is worth, I will share my strategy. March 16th is 7 weeks away, so I have some time to work with. I didn't want to pay an extra dollar to extend them to April 17th. If the Naz plunges in Feb (with or without the SP500, NYA, and Dow), some speculative money will be seeking a refuge. I think a percentage of this could make it into gold stocks by mid-March. I bought 6 calls at 3.25 for roughly $2K total. I placed a GTC to sell 4 at 6.50 (a quick double) which should correspond to the XAU hitting ~53. If the XAU dies and the other 2 expire worthless, I am still up $600, or 30%, for the trade. On a successful retest of 48, I would then redeploy the initial $2K in April calls, pocketing the $500. If XAU reaches 60 by mid-March, my other 2 calls should be worth $12-$13 ($10 inherent value plus momentum value and any remaining time value). I have a GTC to sell those for $15 which might execute on a sharp move up to 60. If so, that is another $3K, or 150%, profit on my $2K risk capital. Even if I only get $10 for the last 2, that would still be another $2K, or 100%, profit on my initial investment. If XAU breaks below 48 and doesn't return within 8 weeks, I am out $2K, but the risk reward ratio seems to be in my favor. I guess I may know better tomorrow !!! ; ' ) Anyway, I am still holding NEM bought at 26 and again at 18, and a couple other gold stocks which are under water (on Tuesday, I sold AEM at 6 9/16 for a 5/8 profit, so it can be done <ggg>), so while I think XAU will go up from here, I didn't want to add to my long stock position. This $2K risk capital will give me the potential of a decent gain on the next move without giving me another unintended "long-term investment". Anyway, any thoughts on ELNK at this point? It has had a nice run from 5 and ADX(14) has just moved through 30. If ELNK can hold above 8/8.5, then I think we might have a shot at breaking through 10. If successful, I see a possible attack at 20, probably dieing out around 18, if not sooner. I would probably put my GTC in just under 15 for a nice $6 profit. This may be too optimistic based on my pessimistic view for the Naz, but the short-term indicators look strong, so I am thinking of balancing my shorts with a few select longs, like HSAC, WAVC, and possibly ELNK. Sorry for the profusity of my verbiage. Any comments welcome. Go XAU! GTC - HB