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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: m.philli who wrote (4826)	3/25/1999 7:27:00 PM
From: Zardoz	Read Replies (3) \| Respond to of 81016

No I don't see the POG even climbing to $320 this year, just like last time when GOLD was at $314, and I said it would NOT get to $320. Gold has lost it's shine as a arbitrage hedge. "With gold at $290, how much would it cost for a couple of options to buy at say $4-5 hundred, 12 months out." Why go that far out? In fact, you may have problems getting them far above $360 He's an example, see what you thnik?: So you believe gold will climb above say $320 within 12 months? Start your company this way: Person invests $100,000 cash equivalent {as a group} you buy bonds $94786.73 at 5.5% for 1 year take the other $5213.27 and buy April 2000 Calls for $320. GC J0C32000 4.3 {assume the data is correct} futuresguide.com You can buy 12 options at $430 per contract. $43012 := $5160 And should the POG climb above $320 to $324.3, you are in the money. This is a first order approximation. What's your risk in the above? Loss of return on the option going bust. Which means that you loose the return on the 5.5 bond, and only get your principle back... BUT if you believe gold will go to $360 you'd be up: $100,000 + (360-320)(100)*$12 := $148,000 ($48,000 profit) Now a variation of this, and you can call yourself a hedge fund. {LTCM wasn't a hedge fund}