Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: SliderOnTheBlack who wrote (16278)	3/17/2009 11:56:39 PM
From: jmiller099	4 Recommendations Respond to of 50291

Excellent post. I am relatively new here, I saw roguedolphin's links elsewhere and had favorable impressions of both him and you. Regarding the strategy on Gold, I can align myself to parts of it, but want to throw a few additional cautions into the picture. Preface: Currently I am in a naked puts position on the GLD ETF. I wrote them the last time gold had weakness below 800 and wrote them at a strike that is roughly inline with your trend channel lower line. I do not expect to be assigned in a few days. I will not be writing the next month expiry on GLD until there's some clarity. Within the channel is a H&S top being shown. While it is not ominous, it does give room for a pause on writing cash-backed naked puts with plenty of air for it to resolve under 800. I am not advocating that will happen, just advocating that there's some care due for a long oriented approach. While, the straddle and strangle would be lucrative if that H&S top does play out, it is unnatural to me to enter that play in times like these. I do not know how they have fared thus far and since business week dot com removed their historical options pricing data and graphs, I am unable to go back and see. The caveat I am alluding towards is the high volatility premium in the purchase of options (the $VIX). A straddle and a strangle both require the purchase of the inflated time value and volatility. At these present high volatility levels it is an unnatural act to me. I am aware we are far from the peak volatility, but lately I have been a seller of options than a buyer. These mainly are built out of covered calls or naked puts.