Grab gains on GLD put options …

SCT Issue #235

It’s a tough call here: Gold is very weak and as I showed you in my latest cycle chart yesterday, could easily slide more.

Yet, it’s also deeply oversold and sentiment is at historic lows – just the type of environment that can lead to a violent short-covering rally.

So what should you do? You have open gains of roughly 81 percent on the December GLD put options, strike price 110.

Should you bag them and risk missing a further slide in gold? Or, should you let them ride?

At times like these, and even though my models say gold is heading lower into early August – that does not preclude a rally first.

So the best course of action is to be conservative. After all, 81 percent gains are nothing to sneeze at.

Therefore, my recommended course of action is the following:

A. Grab gains on the GLD put option position. But then …

B. Reinvest the proceeds in a lower strike price for December.

By doing so, you can grab gains off the table, reinvest less in the new set of put options, and thereby reduce the amount of capital at risk, yet stay in the market, in the event gold continues its wicked collapse.

NOTE: The above only applies if you own the December 2015 GLD put options with a strike price of 110, symbol GLD151218P00110000.

For the inverse ETF on gold, the DB Gold Double Short ETN, symbol DZZ, I recommend holding, with your good-till-cancelled protective stop in place at $6.43. This position is up roughly 13.7 percent as of yesterday’s close.

If you do not own the above put options or DZZ, or you are a new subscriber, please wait for my next new recommendation.

Here are the specifics of what I recommend today for the GLD put options:

Hold all other positions and stay tuned …

Best wishes,

Larry