Sunday, November 06, 2011

Trading without live quotes and a Bearish GLD chart

Most of the time, I place an order to sell at the bid, or buy at the ask, and most of the time get a fill within seconds. The last few weeks I haven't had access during market hours. This means placing orders before the open. Market orders on options often get the shaft at the open. So I am trying to guess a theoretical option price based on the opening bid and ask indications, and the possible low and high for the day.

Trading without a live bid/ask quote has made me more patient, even more cautious. I haven't tried any spread orders or backratios during this time period.

I can make a quick comment on the GLD chart, it looks about as bearish as I have seen it in recent memory. I remain long term bullish on gold, so am reluctant to short it. Those without that bullish gold bias might take a look at the short side. If I were to take a short position, my choices tend towards a bearish calendar put spread, or a bearish vertical put spread. I dislike straight buying of puts, though there are pluses and minuses to each choice.

Here is the 6 month chart for gold (GLD @170.8 Friday). The modest rally off support, moving into resistance on lower volume looks like a text-book example of a rally ready to fail.

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