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Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

NYMEX Gold (GC) Options Trade Entry Alert

Commodities / Gold and Silver 2010 Jan 11, 2010 - 11:28 AM GMT

By: Patrice_V_Johnson

Commodities

Best Financial Markets Analysis ArticleThe J.E.D.I. Way will be buying the following call options on Nymex Gold at the Market: (1) 1 - Nymex Gold April 2010 1700 Call Option (Ticker Symbol: GCJ11700C) (2) 1 - Nymex Gold June 2010 1700 Call Option (Ticker Symbol: GCM11700C) (3) 1 - Nymex Gold August 2010 1700 Call Option (Ticker Symbol: GCQ11700C)


The J.E.D.I. Way will also be selling the following put options on Nymex Gold at the Market: (1) 1 - Nymex Gold August 2010 950 Put Option (Ticker Symbol: GCQ1950P) (2) 1 - Nymex Gold August 2010 1000 Put Option (Ticker Symbol: GCQ11000P)

Below is The J.E.D.I. Way's "SET-UP CRITERIA" and "ENTRY-ALERT" for the above listed options on the April 2010, June 2010, and August 2010 Nymex Gold:

SETUP: HEAD AND SHOULDERS PATTERN

Buy Call Options on the April 2010, June 2010, and August 2010 Nymex Gold Options (GC) when the following conditions have been satisified:

(1) The 50 Day Moving Average is trading above its 200 Day Moving Average on the WEEKLY CHARTS for the April 2010, June 2010, and August 2010 Nymex Gold Futures (GCJ1, GCM1, and GCQ1) contracts.

(2) Prices on April 2010, June 2010, and August 2010 Nymex Gold Futures (GCJ1, GCM1, and GCQ1) trades above both their 50-Day Moving Average and their 200 Day Moving Average.

(3) Prices on the April 2010, June 2010, and August 2010 Nymex Gold Futures (GCJ1, GCM1, and GCQ1) close above 1050 and trades above this price level for at least three consecutive weeks.

CHART 2:

ESTIMATED COST:

$2580.00 credit

ESTIMATED BREAKEVEN (w/$20.00 commissions per round turn):

$60.00 (or 0.60) for the April 2010 Nymex Gold 1700 Call Option $190.00 (or 1.90) for the June 2010 Nymex Gold 1700 Call Option $610.00 (or 6.10) for the August 2010 Nymex Gold 1700 Call Option 936.50 for the August 2010 Nymex Gold 950 Put Option and 976.10 for the August 2010 Nymex Gold 1000 Put Option

ESTIMATED UPSIDE TARGET FOR 2010 NYMEX GOLD FUTURES: $1700/oz ESTIMATED DOWNSIDE TARGET FOR 2010 NYMEX GOLD FUTURES: $1000/oz MAX GAIN FOR DOING THESE TRADES: Unlimited MAX LOSS FOR DOING THESE TRADES: Unlimited PROTECTIVE STOPS FOR THE CALL OPTIONS: None for the April 2010 Nymex Gold 1700 Call None for the June 2010 Nymex Gold 1700 Call 2.95 for the August 2010 Nymex Gold 1700 Call

PROTECTIVE STOPS FOR THE PUT OPTIONS:

The J.E.D.I. Way will cover the August 2010 Nymex Gold 950 Put when Nymex Gold Futures (Ticker Symbol: GCM1) trades at 950.00

The J.E.D.I. Way will cover the August 2010 Nymex Gold 1000 Put when Nymex Gold Futures (Ticker Symbol: GCQ1) trades at 1000.00

EXITS:

The J.E.D.I. Way will exit the April 2010 Nymex Gold 1700 Call Option at breakeven or better, otherwise take a loss of $60.00 for this options contract.

The J.E.D.I. Way will exit the June 2010 Nymex Gold 1700 Call Option at breakeven or better, othewise take a loss of $190.00 for this options contract.

The J.E.D.I. Way will exit the August 2010 Nymex Gold 1700 Call Option at breakeven or better, othwise take a loss of $280 for this options contract.

The J.E.D.I. Way will exit (or cover short position on) the August 2010 950 Put Option when Nymex Gold Futures trades at or below 1000.

The J.E.D.I. Way will exit (or cover short position on) the August 2010 1000 Put Option when Nymex Gold Futures trades at or below 1000.

EXPIRATIONS:

The April 2010 Options on the Nymex Gold expire on March 25, 2010. The June 2010 Options on the Nymex Gold expire on May 25, 2010. The August 2010 Options on the Nymex Gold expire on July 27, 2010.

CONTRACT SPECIFICATIONS FOR NYMEX GOLD FUTURES OPTIONS:

Price Value of Option Point:$100

CONTRACT SPECIFICATIONS FOR NYMEX GOLD FUTURES:

Contract Specifications:GC,COMEX

Trading Unit: 100 troy ounces
Tick Size: $.10/oz. = $10.00
Quoted Units: US $ per troy ounce
Initial Margin: $4,300 Maint Margin: $3,250
Contract Months: All 12 months.
First Notice Day: Last business day of month preceding contract month.
Last Trading Day: Third last business day of the month.
Trading Hours: Open outcry trading is conducted from 8:20 A.M. until 1:30 P.M. Electronic: 3:15 P.M. on Mondays through Thursdays and concluding at 8:00 A.M. the following day. Sundays, the session begins at 7:00 P.M. All times are New York time.
Daily Limit: $75.00 per ounce

REMINDER: NEXT WEEK THE J.E.D.I. WAY WILL BE COVERING THE MINI-DOW FUTURES CONTRACTS AND POSTING SETUP CRITERIA AND ENTRY ALERTS FOR THE MARCH 2010, JUNE 2010 AND SEPTEMBER 2010 FUTURES OPTIONS CONTRACTS.

Until next time...

Thanks for listening, and good luck with your trading.

Best Regards,

Patrice V. Johnson

E-mail : Patrice@stockbarometer.com if you have any questions about this trade or any other questions or comments.

If you are interested in continuing to receive our advice as your free trial, please click the following link to subscribe.
http://www.stockbarometer.com/pagesJEDI/learnmore.aspx

Important Disclosure
Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.
Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.
In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.
For a complete understanding of the risks associated with trading, see our Risk Disclosure.

© 2010 Copyright Patrice V. Johnson - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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