Trade Alert: GDX

By Stephen Leeb • December 13, 2017

Buy to open VanEck Vectors Gold Miners ETF (NYSE: GDX) March 16, 2018 $22.50 call option.

The gold-stock indicator is becoming more bullish, and warrants taking a short-term leveraged position on gold stocks via GDX. More detail about the indicators to come in a Weekly Update.

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Gompps

12/15/17 ‐ 1:52pm ET December 15, 2017 at 1:52pm ET

GDX 03/16/2018 22.50 C BTO @ 0.76 at Schwab

Ajax

12/20/17 ‐ 1:02pm ET December 20, 2017 at 1:02pm ET

Greetings!

I am a new member as of today. I have two questions about this GDX alert:
1) the alert indicated the March 16, 2018 $22.50 call, but the update letter “Jumping on a Move in Our Gold-Stock Indicator” mentions a strike of $25.50. Which is correct?
2) Regardless of the answer to #1, is this trade still viable 7 days later? I can see from the post by Grompps below that the purchase price a few days ago is about half what it is today for the $22.50 strike.

Thank you.

P.S. I enjoyed the introductory video.

Scott Chan

12/22/17 ‐ 1:28pm ET December 22, 2017 at 1:28pm ET

Dear Ajax,

Welcome aboard!

The strike price is $22.50. The update must have contained a typo. Sorry for causing the confusion. In the future, when in doubt, please check the Portfolio section of the website for which option is recommended.

I spoke to Steve a few minutes ago. His gold-stock indicator still flashes a “buy” signal. However, he also noted there’s a chance he will decide to take the profit on the trade even with the bullish signal.

So if going strictly by the indicator signal, GDX is still a buy, but we could exit to take gains. I will have to leave it at your discretion whether you want to buy in.

Ajax

12/22/17 ‐ 1:43pm ET December 22, 2017 at 1:43pm ET

Understood. Thank you for clarifying good sir.

Derek: Las Vegas, NV

12/21/17 ‐ 6:43pm ET December 21, 2017 at 6:43pm ET

FYI, for those in the GDX trade. Tonight on Mad Money, Cramer noted he is bullish on gold and says it looks ripe to run. Great news for us, reassurance is always good…

Derek

Jeffrey Forman

12/21/17 ‐ 9:51pm ET December 21, 2017 at 9:51pm ET

Now that our GDX option is IN the money….doesn’t it’s future appreciation as GDX continues to increase (we hope) slow versus an option strike price that is higher than the current $22.50 strike price?
If so, is buying an option with a higher strike price better than holding on to our current option?

Scott Chan

12/22/17 ‐ 1:36pm ET December 22, 2017 at 1:36pm ET

Dear Jeffrey,

Yes, an out-of-the money option usually offers higher leverage than an already in-the-money option. However, we have to consider the trading costs of selling the $22.50 call and buying a new one. Depending on how many contracts you are trading, the commission cost could be negligible in percentage terms, but it’s still something to consider.

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