It has been a tough morning for the market as the three major indexes are mixed. Wall Street is still nervous on just how effective the stimulus plan will be but Tech has suddenly turned positive. The Nasdaq is up 2 points to 1,532 while the Dow is down 111 to points to 7,828. The S&P 500 is off by 13 points to 820.
Despite the uncertainty, the trades we are following are doing rather well. Akamai Technologies (AKAM, $17.41, up $0.15) has managed to claw its way into positive territory. The March 17.50 calls (UMUCW, $1.25, up $0.05) are still trading at entry level prices and have traded as high as $1.75 this week.
The Spider Gold Shares (GLD, $93.31, up $1.02) continue to hold steady as gold is up another $9 today to $949 an ounce. Here come the trumpets for gold going to $1,000 and only time will tell if we get this super breakout that gold bulls have been calling for. A year ago, the same gold bulls said gold would be at $1,500 an ounce by now. Don’t get caught in the hype just trade the trends and keep tight stops.
I say that because if you had bought a block of gold for $950 last year in anticipation of it going to $1,500…you would still be waiting while your money has been tied up for a year.
The March 99 calls (GLDCU, $2.40, up $0.15) and the March 100 calls (GLDCV, $2.15, up $0.25) have gotten us 15%-20% so far from our entry prices. If gold continues higher then hopefully our positions in the Spiders will continue to climb as well. If gold runs up to the $1,000 level and then pulls pack, we will have stops in place to protect our profits.
Although the market is struggling, we have found a couple areas of strength with the Spiders and Akamai Technologies. We might only make 20% or so on the trades but all the singles you hit in options trading can add up to be homeruns in your trading account.
Rick Rouse
Rick@OptionsMentoring.com
