The LEAPS Option Trader
105 W. Monument Street
Baltimore, MD 21201
Tuesday, November 2, 2004
Email – #208
** Cover Your Placer Dome Spread for Profits of 250% to 300%
Gold is trading close to its 52-week highs. While no one can predict the price of gold and where it will be in a week or a year, it does appear that arguments for disposing of gold are now gaining favor. Chief among these arguments is the rise of interest rates worldwide. Canada just raised rates, the UK is raising rates, Australia is raising rates and even China just raised rates.
These rate hikes mean that it is actually more expensive to hold gold, a non-interest-bearing investment. Two years ago when gold made its run, rates were low and the opportunity cost for holding precious metals was low. Now the opposite is becoming true.
Let’s add the removal of uncertainty to the pie in the form of the U.S. election, and we may see a short-term decline in the price of gold in the coming weeks.
We may have another opportunity to buy gold in the coming months at lower levels. For now, sell you Placer Dome January 2006 $20 call option (YDI-AD) and buy back your January 2006 $25 call option (YDI-AE). The net result should be close to a threefold return on your investment.
Regards,
Karim Rahemtulla
——————————————————————————–
Current Portfolio:
Company / Symbol: Intel (Nasdaq: INTC)
Option / Symbol: Jan. 06 $22.50 call (WNL-AX)
Date Purchased: 10/19/04
Current Price: $3.10
Comment: Hold
Company / Symbol: Forest Labs (NYSE: FRX)
Option / Symbol: Sell Jan. 06 $55 call (WRT-AK)
Date Purchased: 10/6/04
Current Price: $3.00
Comment: Hold. Sold call against Jan. 06 $50 position.
Company / Symbol: Forest Labs (NYSE: FRX)
Option / Symbol: Jan. 06 $50 call (WRT-AJ)
Date Purchased: 10/6/04
Current Price: $4.50
Comment: Hold. No TS.
Company / Symbol: Interactive Corp. (Nasdaq: IACI)
Option / Symbol: Jan. 07 $25 call (VSW-AE)
Date Purchased: 9/14/04
Current Price: $3.50
Comment: Hold. No TS.
Company / Symbol: Lucent (NYSE: LU)
Option / Symbol: Jan. 06 $5 call (YXL-AA)
Date Purchased: 5/25/04
Current Price: $0.35
Comment: Hold. No TS.
Company / Symbol: Dynegy (NYSE: DYN)
Option / Symbol: Jan. 06 $5 call (YNY-AA)
Date Purchased: 5/25/04
Current Price: $0.95
Comment: Hold. No TS.
Company / Symbol: Placer Dome (NYSE: PDG)
Option / Symbol: Sell Jan. 06 $25 call (YDI-AE)
Date Purchased: 4/1/04
Current Price: $2.20
Comment: Buy back call. See instructions above.
Company / Symbol: Placer Dome (NYSE: PDG)
Option / Symbol: Jan. 06 $20 call (YDI-AD)
Date Purchased: 1/23/04
Current Price: $4.10
Comment: Sell. See instructions above.
Company / Symbol: Nokia (NYSE: NOK)
Option / Symbol: Sell Jan. 06 $30 call (WIK-AF)
Date Purchased: 2/9/04
Current Price: $0.10
Comment: Hold. Sold call against Jan. 06 $30 position.
Company / Symbol: Nokia (NYSE: NOK)
Option / Symbol: Jan. 06 $22.50 call (WIK-AX)
Date Purchased: 8/29/03
Current Price: $0.35
Comment: Hold. No TS.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Sold Jan. 06 $15 call (WZY-AC)
Date Purchased: 11/6/03
Current Price: $2.85
Comment: Hold. Sold call against Jan. 06 $12.50 position.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Jan. 06 $12.50 call (WZY-AV)
Date Purchased: 7/28/03
Current Price: $4.60
Comment: Hold. No TS.
Company / Symbol: S&P 500 MITT (AMEX: MCP)
Date Purchased: 7/18/03
Current Price: $10.26
Comment: Buy under $10. No TS.
——————————————————————————–
Bio:
Karim Rahemtulla is the former Investment Director of The Oxford Club. The editor of The Smart Options E-Report, The Income Trader – A Covered Call Strategy and The LEAPS Option Trader, Karim is also a regular contributor to The Oxford Club Communiqué. His highly successful trading systems use covered calls and LEAPS to boost returns on blue chip stocks, and during the bear markets of 2000 and 2001, his picks outperformed the major market averages. Educated in England, Canada and the U.S. and fluent in several languages, Karim travels the world to find the best investment opportunities for our members.
——————————————————————————–
Copyright – 2004 Mount Vernon Publishing. Mount Vernon Publishing does not act as an investment advisor or advocate the purchase or sale of any security or investment. Mount Vernon Publishing expressly forbids its writers from having a financial interest in any security recommended to its readers. All of our employees and agents must wait 24 hours after an Internet publication prior to following an initial recommendation. And for hard-copy-only publications, 72 hours after the publication is mailed. Investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Mount Vernon Publishing provides its members with unique opportunities to build and protect wealth, globally, under all market conditions. The executive staff, research department and editors who contribute to recommendations are proud of the reputation Mount Vernon Publishing has built since its inception in 1984. We believe the advice presented to its members in our published resources and at our meetings and seminars is the best and most useful available to global investors today. The recommendations and analysis presented to members is for the exclusive use of members. Copying or disseminating any information published by Mount Vernon Publishing, electronic or otherwise is strictly prohibited. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time.
