Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Strategic trade
Trade view / 02 November 2016 at 14:37 GMT

Strong trend developing in gold — #SaxoStrats

Global Head of Listed & OTC Derivatives Sales / Saxo Bank
Instrument: GLD:arcx
Price target:
Market price:

The GLD gold ETF is giving us a strong weekly buying signal in term of the stochastics. Let’s buy a simple long call option and capture the trend with a potential mid-term objective of 137.53, or the 61.8% of projection of the last weekly bullish wave from 100.23 to 131.15.


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Source: Saxo Bank 


Entry: buy Nov16 124 Call (expiry November 18) at $2.24 or $224/option.

Maximum profit unlimited : if market goes to $137.53 profit at expiry will be Spot price – Strike Price – premium paid, or $137.53 – $124 - $2.24 =$11.29 or $1,129/option 

Maximum loss is limited : maximum loss at expiry limited to the premium paid 
maximum loss = $2.24 or $224/option

Return on Investment at expiry if the market closes at $137.53 :
= profit/premium X 100
= $11.29/$2.24 X 100
= 504%

— Edited by Michael McKenna

For more on contract options click here.

Non-independent investment research disclaimer applies. Read more


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