Wednesday, January 12, 2011

Buy SPY (sell puts)

Buy SPY via selling Mar 105 puts, SPY @128.3. This brings my net position to ever slightly long. My bearish Feb vertical put spread was ill-timed. I quickly hedged by selling Jan puts and that brings it to about break even. The stock market remains overdue for a 5% to 10% correction, so I don't want to unwind the Feb position. A bigger 20% correction seems unlikely, as money continues to flow into the market.

As for gold, Hulbert reports a positive sentiment environment for gold bulls. At a minimum, it means there are buyers at lower prices (link).

Bonds continue to churn, and my play continues to be to sell rallies by selling puts on TBT. I may evolve to a short strangle by selling puts on TLT on further weakness.

Long GDX, GLD, SPY, TBT

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