Looking to short Gold, question

Discussion in 'Metal Futures' started by Optionpro007, Aug 13, 2005.

  1. In the past when I have looked into shorting a commodity, currency or sector index using options I have made mistakes.

    As in the case of not understanding the correlation between individual stocks in a sector which might trade different than the commodity they represent.

    Gold is a good example.

    I checked GLD and it has no options.

    If I put any of the indices, GOX or HUI I fall into the trap of iliquidity and huge spreads, and still they don't follow GC to the T.

    If I short the futures option contract I am playing the futures contract price and have the same issues of iliquidity.

    Any opinions, guidance ?

    Thanks.
     
  2. yabz

    yabz

    You could try options on NEM. They have better liquidity than the indices.
     
  3. Yabz:

    Thank you for your reply.

    The issue I have is that NEM @ $41.00 is already 20% lower from it's 2004 highs.

    Gold (or GLD) the commodity is trading close to it's 2004 high and I think it is ripe for a short position.

    I find taking a position on any gold stock as too risky since the move in them already happened.

    Unless, if I knew that by Gold taking a dive it would automatically take the stocks in the sector with it.

    So I'm lost.....
     
  4. you can't be serious ... what months / strike prices

    are you trying to execute ? you will need a futures broker that gives you COMEX pit traded options
    but I am sure there is better liquidity there
    that you indicate


    -If I short the futures option contract I am playing the futures contract price and have the same issues of iliquidity.-
     
  5. You are correct I was looking into 2006 contracts. My bad.

    My experience trading pit option futures contracts is limited.

    Is it possible to get a better fill than just being filled at the ask? With higher commisions and large spreads trading these contracts is not very speculator friendly.

    GTC orders are not accepted, should I expect to hagle price for a few days ?

    Thank you for any comments or advice on this subject if you have any.