Options Mastery Phase One: Unveiling the Secrets of Pro Trading with Keith Harwood
Thursday, October 19th at 4:30pm ET
Dear Traders,
Are you determined to elevate your trading game? The universe of options trading, with its potential for high returns, beckons. Yet, it's a world where expert guidance can make all the difference. Enter Keith Harwood, our acclaimed trading guru.
Two Decades of Expertise: Keith brings to the table nearly 20 years of unparalleled experience as a market-maker, proprietary trader, and hedge fund trader.
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In fact, depending on what happens in the Middle East, the yellow metal could easily push past $2,000, even $2,500 in the near term.
All with Iran now warning of further escalation, and the U.S. sending another carrier to the region. Not helping, Iran just issued a threat the U.S. would see “heavy losses” and gave Israel a deadline to end its military actions.
"The situation in the region is very dangerous and open to all possibilities, including direct Iranian and American involvement. Neither side wants a head on confrontation, but they might nonetheless find themselves there as we go up the escalatory ladder of tit for tat," Firas Maksad, director of outreach at the Middle East Institute, told Newsweek.
"Investors are fleeing to safe havens as the risks of Middle East tensions grow," said Edward Moya, senior market analyst at OANDA, as quoted by Reuters. "If the geopolitical situation gets gloomier, there is a good chance that gold prices could go to the $2,000 levels this year. We have come from mid-$1,800s to mid-$1,900s, $2,000 is just a fraction of that."
With that, investors may want to consider:
VanEck Vectors Gold Miners ETF (GDX)
One of the best ways to diversify at less cost is with an ETF, such as the VanEck Vectors Gold Miners ETF (GDX). Not only can you gain access to some of the biggest gold stocks in the world, you can do so at less cost. With an expense ratio of 0.51%, the ETF holds positions in Newmont Corp., Barrick Gold, Franco-Nevada, Agnico Eagle Mines, Gold Fields, and Wheaton Precious Metals to name a few.
Sometimes an option’s premium is high enough that it would be worthwhile to buy the stock and write an at-the-money call with a strike price at the same price you bought the stock. The reason for doing this is because the premium paid will be greater. You will almost assuredly be called out, unless the stock drops below the strike price. When doing this type of play, it’s extremely important to take commission fees into consideration. You must be sure a profit will be made when you are called out. Remember that if you are called out there will be another commission fee for exercising the option. This fee will be charged at the rate of an option transaction, which is higher than an equity transaction fee.
For example, let’s say that the stock of Ames Department Store is at exactly $15. The option for June, four weeks away, with a $15 strike price, is paying $1.81. That’s a nice premium. If you buy the stock, sell the call, and get called out, your return on investment would be:
$1.81 x 100 = $181.00 - $15.00 commission = $166.00 profit from writing a covered call
If called out, another $15.00 commission is charged, so final profit = $151.00
(profit / cost) x 100 = ($151.00 / $1,508.00) x 100 = 10% in four weeks
As long as you are not interested in holding on to the stock, and you believe the price will remain stable or increase slightly, this play which makes 10% in four weeks, is a very good covered call play. As always, the risk is that the stock could drop.
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