Tuesday, December 30, 2014
Just got my little toe wet with TRX
I own quite a few options short on the general market (mostly GE 2016 and those of course I don't trade). So I want to hedge with some long option plays that again I won't trade. If the markets go up from here then inflation expectations will be ruling the day (for now) and in the case the junior miners will be the biggest winners. JNUG has time value associated with it so it is difficult to buy and hold. So I decided to pick up a 2K TRX in the AH trade @ .64 in order to begin building what is essentially a non-expiring call option in gold and silver. TRX is one of the weakest players (meaning leverage is highest) so I don't want to go very deep into it. If we get more weakness then I will pick up some DRD as well. I don't plan to trade this given the low dollar value of the holding.
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6 comments:
Cap'n,
"JNUG has time value associated with it so it is difficult to buy and hold..."
I'm buying and holding JNUG, and buying more and more on dips. Is this not a good idea? How does the time value affect the price?
Regards,
Steven B.
The leverage of JNUG is implemented using options and options have time value. If this were not at or very near a very important bottom in metals then I would advise against any kind of "buy and hold" strategy. But since my models indicate we are due for a very significant bounce at the very least, I think accumulate on the dip will pay you very, very well in the next 4-6 months. But this is not something that you can hold indefinitely as the options value goes to zero over time.
Again, due to the timing that you are doing this you will be not just OK IMO but very well compensated for the risk you are taking with your money. In other words, it might not turn out to be a safe bet but without knowing the future the odds say that it is at least a good one. But not all good bets always pay off so of course it is all still just gambling. If it helps any, I am holding a pile of JNUG right now as well.
Yes, Cap'n, it does help to hear that... thank you!
Btw, would you predict where you see JNUG in the next 4-6 months?
Steven B.
After a bottom is put in, and we cannot say for certain that this has happened yet, my target price is $200. That is the level of the prior 4th wave. It may sound like a lot but it really isn't in terms of percentage for anyone who was foolish enough to hold it through the collapse.
Wow, $200 in the next 4-6 months? I'd be thinking about an early retirement! From your lips to God's ears....
Steven B.
Careful man, it might not be straight up. You might have to get to the sidelines unless we get a breakout real soon. Look for my next post on GDXJ.
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