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Buying into gold is Tulipmania
one day. when we see the man on the street buying gold and not selling it, it's time to exit.
Agreed. Been long for a while and just waiting for my exit signal.
To OP: Why calls instead of buying the underlying? If you are going to sink such a significant % of your net worth into a single investment, why not use the least volatile method?
you were probably one of those saying that at 1k.....
No doubt. The mania that pervades gold is contagious...thats not to say its not fundamentally overvalued. People are purchasing it as a hedge. It is no longer trading as a typical commodity.
Not saying the gold bubble is gonna pop soon...just saying that when it does the downside risk is tremendous...
Putting a large chunk of your saving in OTM calls is definitely a good trade. Makes much more sense than just buying the underlying.
It's bold. I'll give you that.
I'm not sure anyone can put a quantitative answer whether it is a good trade or not however:
I'm curious why you'd do this with 30,000 of your own money but not any of your firms (i'm assuming you're a trader).
If you dont believe it works, then don't do it. If you do believe it will work, you wil undoubtedly recoup significantly more, you could even speak to your company and say you want to use the first 30k to cover losses in return for a higher % return than usual.
If this isn't possible then ignore the above. Ultimately it's your money, and you wont get bailed out if you lose it all, but you can't lose more than that so have fun.
Not sure how much you're making off this trade without checking the current numbers, but given that gold is used as a haven against the dollar, so you may want a hedge against that, probably not sometihng you care about but had to consider all options.
I think gold could make a large move in either direction. I would consider using a spread if i were you. Got to protect yourself on the downside.
bet all of it on red
^^^excessive leverage
well you have a couple of enemies arrayed against you:
gotta know yourself and know your enemy as sun tzu said.
as for your iran thesis: oil has already detached from the commodity complex. maybe you should just momo this thing and buy front month calls on USO instead.
I like the trade, but up to 25%. 50% even more gold is just too much bud.
It is impossible to be certain if gld hits 200, and although I tend to assume this trend will continue forever I'm not too comfortable with the lack of risk control with your directional bet. Instead of having a bullish view and just leaving your money up for grabs in the options market, why don't you actively trade around your bullish gold outlook in the GC futures markets with strict risk control trading one contract at a time? Sure, you might not hit that gld @ $200 home-run, but you could potentially achieve similar returns with much lower risk. Putting on a spread trade isn't a bad idea either.
Didn't take that bet after reading the prospectus.
Good, cause things would have gone really bad.
Maybe this site isn't full of chimpanzees after all. Seriously, I would have been pissed. I made some money buying LULU puts for earnings and buying BAC at 5.09 instead.
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