Rolling Puts in Precious Metals




Rolling Puts in Precious Metals

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(Video Transcript)

Good afternoon. This is James Cordier of with a market update for August 20th. Today I thought what we would do is go over our positions in our investment accounts. Looking into the grain market, I think we’re positioned extremely well right there. We have a soybean position on that puts and calls will probably not come close and certainly not be exceeded over the next several months as volatility from the trade wars going on with China have created a great deal of volatility in many markets, including grains.

In the coffee market, we’re extremely well positioned there, we have call positions on for most clients over the $2 level and currently coffee is trading at new 36-month lows around $1 a pound. In the energies, we feel we have extremely good position there in natural gas and in crude oil and we think those will pay good dividends throughout the rest of the year and beginning of 2019. In the precious metals, practically 12 months ago people were certainly claiming all the benefits of being long gold and the gold market was going to go to $1400, $1500, and $1600 an ounce. We then were taking quite a contrarian view. All the BlackRock and Goldman Sachs of the world were touting gold’s good value in being long and we took a contrarian view and we were selling calls with both hands.

After the gold market fell some $100 an ounce, we then thought it was fair valued and we put both premium on the up-side and bottom-side of gold, selling both puts and calls in gold and silver. Approximately a month ago, we felt that gold’s value was going to continue to fall and the U.S. dollar would continue to rise and, of course, with no inflation, we started vacating gold positions on the downside. We got out of the way just about right in time. In the silver market, we did keep our strangles; in other words, our calls and puts that we sold premium on both sides. The silver market has now fallen more than we thought it would. It was trading in the $16-$17 an ounce range. It is now all the down to under $15 an ounce, which is certainly quite a move considering the fact that silver was trading at $30, $40, and $50 an ounce over the last several years.

We did get caught being long some silver by selling put premium. We are going to be moving those put positions down over the next several days. Instead of being long from some $13 we’re looking at being long from $11.50 and $12 an ounce. It does have value and, once again, now this is another contrarian view that precious metals are going to continue to fall. We’ll see how we do on that. We think we’re going to be right. It did create a draw down in accounts… sorry about that, but those do happen and we do feel that the rest of our positions are going to do quite well. We’ll just have to wait and see. As always, it’s a pleasure chatting with you and looking forward to doing so again in 2 weeks. Thank you very much.

  1. Thank you for sharing your comments about the market shown above. Could you please explain what you mean when you say “we did get caught being long some silver by selling put premium?”
    Thank you.

    • Michael Gross Says:
      August 24, 2018 at 4:06 pm


      It means we closed out some puts at a loss but rolled them to further out strikes to recapture the premium.

      I hope that helps.


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