GDXJ (Market Vectors Junior Gold Miners ETF) Short Strangle

GDXJ Implied Volatility @ upper end of range.  Looking to sell premium.
Note: Price down over 16% in the last 2 weeks.
SELL -5 STRANGLE GDXJ 100 MAY 14 44/30 CALL/PUT @1.05 LMT  (# of contracts to be tailored to match desired position size)
Note: Might have to lower the amount of credit collected (possibly .98 to 1.00), since spreads are a bit wide.
Short Strikes =~ 84% or next higher strike OTM
Probability of profit for strangle =~ 78%
Expected return on capital over a 48 day period (if held to expiration) = 510/1,864.50 =~ 27% (using mark value of 1.05 for credit received).
Worst case ROC with current price (0.9 ask) = 435/1,939.50 =~ 22%
This entry was posted in Commodities, GDXJ, Gold, Misc. Underlyings, Options, Short Strangle. Bookmark the permalink.

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