Whew! Well I guess there might come a point where too much volatility is not such a good thing, but for us options traders I am loving every minute of this action! With GCA, as with RTA in the past, I recommend options for a number of reasons, but being able to play in a volatile world like this is certainly one of them. Where else can you have a $300 gold call rally to $1,800+ in a matter of a few days?

It just goes to show long term options provide staying power in wide volatile trading environments and give you an opportunity to stay in the game so to speak. With gold’s nearly $110 one day rally today (including tonight’s move) it puts us in an amazing position to exit the $1,000 gold calls that were recommended when I was editor of RTA. For everyone that participated in that recommendation I wanted to follow up as a courtesy with my thoughts on how to handle the trade at this point.

Now this is not an official trade recommendation and it is only my opinion on the trade.

In this time of extreme volatility it is important not to be greedy…as you know, when I was at the helm of RTA I always stressed being smart and not to look any gift horses in the mouth…Well a $90 move in gold is a gift and will allow us to grab second half profits on our gold after very solid profits on the first half. I highly suggest grabbing these profits and closing this gold position. If you did take my suggestion (and then later Matt Insley’s) to cover the short leg of the spread then that’s excellent. However if you did not cover the short leg, that is ok too. Regardless I suggest you grab the remaining profits on the entire gold spread and/or the long gold call.

The $1,000 call for December settled at over $1,800 and the spread settled at more than $550. Gold is up even more as speak – another $50 an ounce over settlement (making a $110 plus move!). This should open this trade up to some serious price spikes tomorrow morning and I advise that you price this option out first thing and place a fair price inside the bid and offer. Both the straight call and the spread should be much higher in the morning based on tonight’s move, but you never know what happens from the time you hit the pillow and the time the sun rises.

Therefore don’t panic but look to get out at a fair price first thing in the morning. This will free up new capital for more solid trades in GCA and take advantage of this volatility while it is still there for the taking.

Our 2009 silver spreads are recovering ground nicely too and since that is such a long term trade this volatility is a good reminder of why spreads are sometimes the best strategy for longer dated plays.

Lastly, while RTA remains without an official editor at the helm I will continue to advise on those former positions in RTA until I help you close them. Simply that is just the right thing to do in my book. I have no idea when they will actually start having someone qualified manage that portfolio but I certainly hope it is someone who does not ‘pretend’ to be qualified to handle markets that are this extreme.

As for GCA, I have another trade I am working on now for our portfolio and please stay alert. I may be in Europe but that just puts me 8 hours ahead of many of you, not all but most.

Please let me know where you are getting filled by emailing me at kevinkerr@futurespress.com . Also, I am leaving Sweden today for Estonia so please keep checking my blog for more updates, photos, and even video.

All the best,

Kevin

Disclaimer: Risk of loss exists in all trading. Futures Press, Inc., Kevin Kerr or its principals do not assume responsibility for errors or omissions that may occur in this report. It is the subscriber’s responsibility to verify all information through appropriate channels prior to executing any recommendations.