Thursday, October 2, 2014

RGLD – Royal Gold (Last:65.37)

– Posted in: Current Touts Rick's Picks

After seven days of trying, albeit barely, an excruciating uptrend has produced a bullish impulse leg on the lesser charts. We shouldn't necessarily be jumping for joy here, but neither should we let a potential bullish opportunity go unexploited if it pans out. Accordingly, if the point 'C' low holds, a buy signal would come at 65.69.  I'll recommend looking for the signal on a chart of lesser degree -- perhaps the 3-minute -- to create an initial stop-loss smaller than the implied 41-cent stop associated with the pattern shown.  If you want to go for it, however, try doing so with a modest 100 shares. The goal, as always, will be to get to p=66.10, where profit-taking (on a multi-lot position) and dynamic risk management (via a trailing stop or impulse leg) would come into play. ______ UPDATE (October 7): Too much work! I'm giving up on this dog, at least for now.

DIA – Dow Industrials ETF (Last:167.90)

– Posted in: Current Touts Free Rick's Picks

I'm tracking four Oct 10 167/169 put spreads for a 0.05 CREDIT, based on subscriber feedback left in the chat room. Traders were able to leg on this position at very favorable prices using a rally target at 171.10 sent out Monday night. It precisely nailed an intraday peak on Tuesday at 171.10, triggering a recommendation to buy the 169-strike puts, and then to spread them off yesterday morning by shorting 167-strike puts after DIA had fallen sharply. We'll put the position on autopilot for now, since it cannot lose -- will in fact produce a profit of $20 no matter what DA does, but with potential to serve up an $820 gain if DIA is trading below 167 come next Friday. For your interest, and to help you determine whether you could have followed my instructions, here is the recommendation exactly as it went out: "We’ll monitor this vehicle more closely for low-risk shorting opportunities in the days ahead. Let’s warm up with an order to buy four Oct 10 169 puts if and when DIA gets within 0.04 of the 171.10 target shown. I estimate that the puts will be trading for around  0.75 then, but you can refine the bid as warranted by training on the bid/asked when DIA gets to 170.90.  We’ll risk a theroretical $80 on this one, stopping ourselves out of the puts if they trade 0.20 below where bought."  _______ UPDATE (October 6, 2014): Friday's short squeeze has gutted the spread, but it could have been cashed out for two thirds of its maximum potential value last week when DIA briefly dipped below 167 to a low of 166.43.  Reports, anyone?

TLT – Lehman Bond ETF (Last:118.79)

– Posted in: Current Touts Free Rick's Picks

We hold the Nov 22 117/Oct 3 117 call spread 40 times @ 0.80, and although the underlying stock (ETF) is rising more steeply than we might have expected, the position is most surely going our way.  We'll want to roll the spread up to a higher strike eventually, but not while TLT is moving steeply higher and could pull back sharply at any moment. For now, let's stick with our game plan, rolling the spread forward on Friday by selling the October 10 117/October 3 117 calendar spread 40 times. This will effectively substitute short calls with an October 10 expiration for the Oct 3 calls we are currently short. The premium we take in will reduce the 0.80 we paid for the original spread by the amount received.  With rally targets in the 116-122 range, our spreads have been leveraging small segments of TLT's bull market. However, the chart shows how high this vehicle could go over the short-to-intermediate-term. Longer-term charts project even higher. Notice that yesterday's blitzkrieg rally smashed through the midpoint pivot at 117.28 as though it didn't exist. This implies that a further rally to at least D=121.82 is all but a done deal.  Finally, here's an important note:  Be certain you are not still short the October 3 117 calls when Friday's session ends, since the calls will be exercised with TLT above 117. If this were to happen, you would come in Monday short at least $468,000 worth of TLT.  If in doubt, check with your broker to determine their deadline for closing out the short side of the position to avoid exercise. ________ UPDATE (October 3,  4:21 a.m. EDT):  The Oct 3 calls were still holding about 35 cents of time-premium Thursday, but it'll evaporate on Friday, especially if TLT moves moderately