{"id":6159,"date":"2017-09-01T07:30:00","date_gmt":"2017-09-01T07:30:00","guid":{"rendered":"https:\/market-minute\/dont-ever-do-this-with-an-option-order\/"},"modified":"2017-09-01T07:30:00","modified_gmt":"2017-09-01T07:30:00","slug":"dont-ever-do-this-with-an-option-order","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/dont-ever-do-this-with-an-option-order\/","title":{"rendered":"Don\u2019t Ever Do This With an Option Order"},"content":{"rendered":"

\tHappy Friday.<\/p>\n

\tLet’s get right to the mailbag…<\/p>\n

\n

\t\tWith the dollar probably strengthening, is this the time to take profits in gold and silver mining stocks?<\/p>\n

\t\t–<\/strong> Don<\/strong><\/strong><\/strong><\/strong><\/strong><\/span><\/p>\n<\/blockquote>\n

\tThanks for the question, Don.<\/p>\n

\tGold stocks and the dollar do tend to move in opposite directions over time. But the moves aren’t always immediate.<\/p>\n

\tFor example, the dollar popped a bit higher this week, but gold stocks rallied pretty well too. So, I wouldn’t suggest dumping all of your gold stocks just because the buck might bounce<\/a>.<\/p>\n

\tOf course, I did mention on Tuesday that I was trimming some of my exposure to the gold sector<\/a>. There are still plenty of reasons to be bullish on gold stocks. But after such a strong move higher over the past month, there are now a few reasons to be cautious, too. Here’s how I see it…<\/p>\n

\tThese things are bullish…<\/p>\n

    \n
  1. \n

    \t\tSeasonal patterns for gold stocks are bullish until late September.<\/p>\n<\/li>\n

  2. \n

    \t\tThe Gold Sector Bullish Percent Index<\/a> (BPGDM) is in an uptrend and is only at 35 – which is far from overbought levels (above 70).<\/p>\n<\/li>\n

  3. \n

    \t\tThe GDX\/Gold ratio chart<\/a> is still trending higher.<\/p>\n<\/li>\n<\/ol>\n

    \tThese things are cautious\/bearish…<\/p>\n

      \n
    1. \n

      \t\tThe VanEck Vectors Gold Miners Fund (GDX) is bumping into resistance near the April highs. And GDX is now quite extended above its 9-day exponential moving average<\/a>.<\/p>\n<\/li>\n

    2. \n

      \t\tAccording to the most recent Commitment of Traders report, the “smart money” is now short 220,000 gold futures contracts. That’s approaching a level that often corresponds to peaks in the price of gold.<\/p>\n<\/li>\n

    3. \n

      \t\tThe dollar looks poised for a bounce.<\/p>\n<\/li>\n<\/ol>\n

      \tTaking all of these conditions together, it seems reasonable to me to trim some profits on gold stocks and tighten up protective stops.<\/p>\n

      \n

      \t\tYou usually suggest a target price of “about” $1.25 or “about” 95 cents. Can you define ABOUT? Plus or minus 2%? 5%? 10%?<\/p>\n

      \t\tThanks for your help.<\/p>\n

      \t\t–<\/strong> Charles<\/strong><\/strong><\/strong><\/strong><\/strong><\/span><\/p>\n<\/blockquote>\n

      \tHi Charles, thanks for your question.<\/p>\n

      \tOption prices can be volatile. So, in every trade recommendation, I provide a price where I think most subscribers should be able to execute the trade. I use the word “about” to allow some wiggle room if the price moves between the time I write the recommendation and the time you receive it.<\/p>\n

      \tBut, and this is really important, I also write – in every recommendation – the maximum price you can pay (or minimum price you can receive) and still have a good risk\/reward setup.<\/p>\n

      \tFor example, in the trade recommendation I made on Tuesday, my advice was to sell the option for “about $0.95.” But, I also wrote – in bold print – “As long as you receive at least $0.90 for the option, this is a worthwhile trade.<\/strong>”<\/p>\n

      \tI provide those trading parameters specifically so subscribers don’t chase a trade and get burned by doing so.<\/p>\n

      \tAlso… please don’t ever enter an option order “at the market.” Always specify a limit price when trading options. That will prevent you from getting a bad price on a trade.<\/p>\n

      \tBest regards and good trading,<\/p>\n

      \t<\/div>\n

      \tJeff Clark<\/p>\n

      \tP.S. <\/strong>If you have a question about option trading you'd like to be featured in one of our Friday Mailbag issues, send me an email right here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

      This week, some questions about gold against the dollar\u2026 and the best way to secure an option order.<\/p>\n","protected":false},"author":28,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-6159","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/6159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/28"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=6159"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/6159\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=6159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=6159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=6159"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=6159"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=6159"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=6159"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=6159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}