A Way to Buy Gold and Silver with Minimal Downside Protection

The trade:  Buy GLD  at  173.5 or better and buy to open the Nov 174 put  at 5 .5 or better  also buy SLV at 34 or better and buy to open the Nov 34.5 put  at 2.25 or better for downside protection.

If you missed the latest run up in gold and silver but still want to participate here is a trade idea you can take with minimal risk. The example below shows the cost of protection at the maximum prices recommended. The charts show prices as of the close of Monday 10 -1 -12 so if you can get in at better prices your cost could be less expensive.

This protection is good for 46 days into the Nov cycle so if the metals rise take into account the total cost for breakeven price.

GLD example:  GLD $ 173.5  (cost of ETF)

                                       + 5.5 (cost of Nov 174 put)

                                     $179 (total cost)

                                      -174 (Nov 174 put)            

                                   $5.00 at risk or 5% of trade

With a total cost of $179 for the trade – you are guaranteed to sell GLD @ 174 through the Nov option cycle.

Basically risking only 5% on the trade.  If GLD moves up, trader can take profit after breakeven point or sell covered calls to enhance return.  

SLV example:  SLV     $  34     (cost of ETF)

                                       + 2.25 (cost of Nov 34.5 put)

                                     $ 36.25 (total cost)

                                      - 34.5    (Nov 34.5 put)            

                                     $   1.75 at risk or 5% of trade

With a total cost of $36.25 for the trade – you are guaranteed to sell SLV @ 34.5 through the Nov option cycle.

Basically risking only 5% on the trade.  If SLV moves up, trader can take profit after breakeven point or sell covered calls to enhance return.

If you like this idea and would like more options trades please visit my website at www.marketfy.com/product/options-scout.