This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Quick Take: Dollar and Gold Trade

NEW YORK ( TheStreet) -- Gold popped above $1,300 per ounce and the U.S. dollar continues to decline. Discussing how to play the move is Alan Knuckman, chief market strategist of Trading Advantage, with TheStreet's Jill Malandrino.

Knuckman said gold prices have been stalling lately, but could be putting in a bottom as the U.S. dollar continues to decline after making 2 1/2-year highs in July.

To take advantage of the move, he was long the December 1,300/1,350 call spread, which has double since being initiated. He still believes over the long-term that gold can get above $1,400 per ounce.

With gold appearing to form a bottom near $1,300, the outright metal might not be the best way to play the impending rise. Instead, the miners could outperform.

According to Knuckman, the Market Vectors Gold Miners ETF (GDX) is the way to go. The decline in miners is about twice that of gold in 2013, and therefore, should rebound harder when gold does move higher.

He said traders could buy the March 2014 $20 call options, which have 7.5 months until expiration. The ETF currently trades near $25, which puts the call deep-in-the-money. Should a rally ensue, the position will track the price at a very high correlation and will break even when the GDX is at $26.25.

The ETF hasn't been below $20 since 2008, making it a favorable risk-to-reward trade.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GDX $17.05 0.00%
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs