I am thinking of building a nice options board here for folks to learn and share their ideas on different plays with DD on why. SLV is obvious. It was overshorted and oversold and will get a nice bounce and fill the gap. The stock is not cheap, like $28 so the options are another way to play the move and they provide returns returns similar to penny stocks but much more often and with much more liquidity. You have to know what you are doing so I always recommend paper trading options before you get started. Owning stock and writing covered calls is 10 times more conservative then just owning the stock by itself. Writing of calls provides limited downside protection on your big boards. The pattern needs to be sideways to utilize this strategy. AUY is entering a sideways pattern so they way to do it is to look to buy the stock on a pullback say as low as $11 to $11.50 in PPS, when the stock runs up on volatility in the gold markets, you write covered calls against your stock. Say you own 1000 shares of AUY at $11, when it runs up to $12, you can write $12 calls in June and collect the premium of say 75 cents per call or $750 (1 call = 100 shares of stock, 10 x 100 = 1000, 1000 x 0.75 = $750). Now you have three possibilities. Profit Possibility #1: If the stock drops back down to the lower channel near $11, you can buy back those 10 calls for as little as 15 cents and pocket $600 minus commissions. Profit Possibility #2: if the stock drops under $12 near expiration date, you keep the $750 and your 1000 shares of stock and write the calls for July when it runs again. Profit Possibility #3: If the stock stays above $12 at expiration, you keep the $750 plus the person you sold the calls to calls you out on expiration and buys your stock from you at $12 and you also make $1,000 in profit on the stock itself.
The key is to find stocks that have a predictable sideways pattern (rolling stocks) and buy the stock on the lower channel and sell the calls on the upper channel !
PC
My Favorite Paid chat room with amazing chart setups is The Trading Stock Lounge http://www.thetradingstocklounge.com/
