Time waits for no one. Will it wait for us? After months of heading in the wrong directions, gold and crude oil are finally started to converge, putting the synthetic “long gold / short crude oil” option spread package we suggested establishing back in mid-July (Alert #26) into the black for the first time in months.
We would love to stick with our positions, but with less than 3 weeks left until expiration our December put options in crude oil are running out of time. Our gold options have 9 days of more life but that is not enough to warrant holding. Let’s go ahead and exit the entire position and look to re-establish it using June options on a correction.
Step 1– Exit December Bull Put Spreads In Gold: consider placing an order to exit (buy back) the December short 2013 1,300 / 1,325 bull put spreads in gold we originally recommended selling (shorting) for $1,300 or more. Current price is $900.
Step 2 – Exit Bear Put Spreads In Crude Oil: consider placing an order to exit (sell) all remaining December $90.00 / $95.00 bear put spreads in crude oil we originally recommended buying for $1,100 or less in back in July. Current price is $850.
Cover Short Puts In S&P
The government is back at work and all our debts will be paid. The dreaded taper – now on hold due to Washington’s political shenanigans – is not expected to be a factor until 2014.
So it’s party time in the stock market, right?
Not so fast… There are too many bulls chasing too many bad deals. A big unexpected selloff would not surprise us at all. Let’s go ahead and try to buy back the short 1625 put leg of our November 1675 / 1625 bear put spreads and leave our low cost bearish position uncapped for now.
Buy Back November 1625 E-mini puts: consider placing an order to buy back (cover) the short leg of your November 1675 / 1625 put spreads for 2 points ($100) or less.