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.
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.....
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.-
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.