There is very limited ability to change the supply of gold, since there is only so much in the ground and mines cannot readily change their output without extensive capital expenditures and time to implement. This is why so much effort is spent on tracking demand for gold. China, for instance, along with India, is always one of the top 2 consumers for gold. With the Chinese Lunar New Year at an end, a typical high demand period, the physical demand for the yellow metal will likely wane as cyclical lows have a propensity to appear in March and April. The potential for this seasonal tendency to reoccur points to an attractive opportunity with limited downside. Consider a bear put spread to capitalize on this event.
**TRADE ALERT**
Buy 1 April Gold 1310 put option, sell 1 April Gold 1280 put option. Bid 4.5 points for an option strategy cost of $450 plus commissions and fees, with a target objective exit of $3,000 collection. Get out on a close over 1350 on April futures. Major trend line support at 1290, which is our target. Risk 2.5 points from entry or $250 with our initial target to 12 points or $1,200.
If this trade interests you or to discuss more trade ideas, please give me a call.
Bullion on Bullion.
** Call me for a complimentary consultation on any of your future and futures needs **
Michael Bullion, CAIA
Senior Technical Analyst
Walsh Trading, Inc.
Direct: 312.985.0156
888.391.7894
Fax: 312.256.0109
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.