Wednesday, August 24, 2011

Trade of the Day: Gold Miners (GDX) Bullish Spread

The Trade
Trader executed the December $60/$66 call spread 29,449x for a $2.20 debit, $6,478,780 total, and sold the December $50 put 44,176x for a $1.90 credit, $8,393,440 total. Total credit for spread is $1,914,660.

Maximum loss is $218,965,340. Profit potential is limited to $19,584,060 at $66. Break even for the trade is $49.57. Graph below shows risk profile of the spread.

Trade is a bet on the continuation of gold's uptrend, GDX looking for a bounce to $66 from current levels near $59. Chart below highlights profit potential for the spread.


Special thanks to Option Radar, BMO Capital, MEB Options, Bloomberg, Reuters, Optionistics, LiveVolPro, CBOE, AMEX, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow!

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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