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I took the gamble of getting out of the hedged position on the gold index, GOX, and it went parabolic on me. Today (Friday) it lost a few cents. I believe that it will come under some profit-taking; when I say "it" , I really mean the gold shares that the index represent.
I still show a profit of $1700. The one thing that does concern me is the weak dollar, as the US Dollar index fell below 80 today. Technically there's no support below 80. A weak dollar is generally bullish for gold.
Feeling that the GOX has recovered too far and too fast, I covered my sold puts today, taking a $6,030 profit.
This leaves me with 5 Dec 160 Puts, meaning I'm no longer hedged, and will lose my profits if the GOX continues to rise.
Many option traders would buy and sell their hedged positions simaltaneously. That's just not the way I'm wired. My trading models suggest an 8-day bearish indicator, and I feel the index is tired after its run.
Posted by David at 9/05/2007 12:26:00 PM