Call Options on GLD on 2/7/2013

GLD, The investment seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the trust terminates and liquidates its assets, or as otherwise required by law or regulation.

Stockwinners is bullish on this name for the following reason:

1. I bought outright calls because I think the move higher could be quick given the compression in the chart.  I’d rather not cap my upside with a call spread given the low level of implied volatility and the chance of a substantial move in the next month.it initially sold off on Euro weakness, but quickly rebounded after the open, on quite large volume.  Normally, dollar strength should be a negative for GLD, but the strength of this morning’s buying indicates healthy demand for the precious metal.  With GLD trading right at its 50 day ma, I’m going to pull the trigger on the long side.

Trade Buy 1 March $165.00 Call at $1.37 For a net debit of $1.37 Profit/Loss Analysis Breakeven at $166.37 Maximum profit is unbounded Maximum loss is ($137.00) at strike of $165.00 Closing Summary Sold 1 March $165.00 Call at $0.00

Position closed on 3/15/2013 at price of $0.00 with a -100.00% loss in 36 days.

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