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GLD is breaking out of a flag formation which looks poised to test and possibly make new all time highs.
– stock has rallied 8.5% since late Jan so u want to be careful playing this breakout as the stock has sold off about 6% on avg after not getting through that level on its last 3 tries since Oct (see chart).
–Recent move obviously has to do with dollar weakness and geopolitical concerns, but in a lot of ways, despite the rally it is hard to find reasons not to want to own it here, especially relative to other assets….
PROCEED WITH CAUTION: I have a hard time suggesting to anyone to jump into a stock, commodity or anything for that matter that has appreciated the way gold has in the last year or is as crowded a trade as gold is…..
EXPRESS BULLISH VIEWS BY DEFINING RISK THROUGH CALL SPREAD PURCHASES……
TRADE: BUY THE APR 140 / 148 CALL SPREAD for ~$2.00
-Buy 1 APR 140 CALL for 2.80 and
-Sell 1 APR 148 CALL at .80
Break-Even on Apr Expiration:
Upside: btw 142 and 148 can make up to 6.00, above 148 u make $6 or a ~4.5%
Downside: btw 142 and 140 lose up to $2 in premium u paid, below 140 u lose all $2.[/private][/private]