Option Iceman 12:49 pm on Wednesday, February 3, 2016
Tags: ContangoETFs ( 446 ), ShortCalls ( 979 )

$NUGT #ShortCalls – Sold 1…

$NUGT #ShortCalls – Sold 1 NUGT Mar 18 2016 45.0 Call @ 2.10

#contangoetfs

Michta 4:00 pm on Wednesday, February 3, 2016

At what point to you use a stop or roll? Gold is in full blown bull mode since Dec. 17th.

Asking since I am currently contemplating a few rules based stops/adjustments for all my vxx and gold etf positions to make it all mechanical.
- Jeff 5:25 pm on Wednesday, February 3, 2016
  
  Keep in mind that these 3x products are dragged to zero due to daily tracking error (explained in my recent webinar on #ContangoETFs). Even if some will go ITM, you can rely on an eventual collapse. Many of us faced this with NUGT back in October, and made quite a pile of money riding short calls through the spike above 50.00 and back down. Look at the monthly chart and see how lucrative it can be to be short this name.
  
  If Gold does continue a bull run for some time, then I suggest rolling NUGT up when any option becomes ATM. What I often will do is sell some puts as well, but only sparingly, only on pullbacks, and only quite far OTM, and only fairly close to expiration, to avoid that eventual collapse.
  
  Iceman may have some additional insight as well.
  - Michta 6:01 pm on Wednesday, February 3, 2016
    
    Nmy NUGT calls will be fine over time. My DUST 10 puts that expire in Feb, however, will need some adjusting. The DX plunge caught me lol.
    
    Thanks for the feedback.
    - Jeff 6:18 am on Thursday, February 4, 2016
      
      Dust 10 puts not so scary because 10 is so close to zero. Even if DUST drops another 50%, your options will only be 5.00. DUST is dropping further today, and the puts will probably be only 1.50. If I were in those DUST 10 puts, I would consider rolling them into a NUGT strangle. Try June 70 calls and March 18 puts. Something like that. Or you can just wait, as Gold is likely to have some pullback before Feb 19th.