Poor platinum. Once the king of precious metals, it has spent the last eleven years wandering in the wilderness, losing value in nearly every year to both gold and sister-metal palladium. We’ve written about platinum twice in 2019. The first was in early February when we suggested buying platinum futures and July call options to take advantage of a potential snap-back in the ridiculously-stretched platinum-gold and platinum-palladium spreads.
The last time we weighed-in was in late February when these spreads reached their respective nadirs. We examined the possibility that automakers would retool their operations to use platinum in their catalytic converters rather than the increasingly expensive palladium/rhodium combination that has been popular since platinum fell out of favor in 2008. Could this retooling finally be in the planning stage? Today’s price action in certainly encouraging.
Data Source: Reuters
Platinum is having a big day, breaking impressively over its old swing high of $881 per ounce and breaking the $900 level for the first time since June. It is doing this while all the other precious metals are down sharply. This is good news for RMB Group trading customers who own platinum futures and/or the July $900 calls we suggested buying for $600 or less in early February.
If you own the futures you may want to consider placing a mental stop at your original entry point. If you own more than one of the $900 calls, you may want to consider exiting half at twice your original entry price (or higher!). Hold the balance for a potential run to our near-term price targets of $940 and $1,010 per ounce. These calls are currently trading for $1,450. If filled, you take your original risk “off-the-table.”
Please be advised that you need a futures account to trade the markets in this post. The RMB Group has been helping its clientele trade futures and options since 1991 and are very familiar with all kinds of option strategies. Call us toll-free at 800-345-7026 or 312-373-4970 (direct) for more information and/or to open a trading account. Or visit our website at www.rmbgroup.com.
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The RMB Group
222 South Riverside Plaza, Suite 1200, Chicago, IL 60606
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