I expect GDX to continue falling to as low as $45 if not more. I also plan to keep rolling the trade by selling puts every month (Dec and Jan). With these short sales, I expect to capture 30% of the long put's price. If GDX rises or stays constant, I will just sell more OTM puts to become delta neutral and get more premium.
For my overall strategy on diagonals in general, please refer to this article. Otherwise this is a fairly bearish simple trade on gold.
2 comments:
I've heard a couple of people say they expect GDX to drop to $45 if not further. I'm curious why the $45 level might be a sticking point. Is it some kind of retracement level or..? Thanks.
It is the 50% retracement to the current uptrend and also the middle of the bollinger envelope. Finally it also happens to be the very close to the 21 day MA.
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