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Yamana Gold, Inc. Message Board

  • awrhodes84 awrhodes84 Oct 11, 2007 12:07 PM Flag

    Is now the time to sell covered calls?

    Thinking of selling Jan '08 15.00 calls for $1.00. I see our 1Y target is $15 and we're almost at $14. I wonder how long we can maintain this push up before we pull back some.

    Honest non-pumping/bashing advice?

    Thus, what factors will keep gold heading up/send it down?

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    • 15 looks like "the target," but remember where gold was the last time we were in this range.

    • No. Don't cap your upside. Unless you do it on a partial basis, then may be ok. But I would leave most of your position on. AUY has a long way to run from here. Especially with gold soaring. It isn't even up over the last 6 months. This goes to the 20's soon, with gold over 800 which will happen in the next month.

    • It all depends on your cost basis, comfort zone.

      Also, if you are looking for a covered call as a means of protecting your downside, that may also be an option (depending on what strike you play).

      The stock price has definitely risen quite extremely over the past few days. The impending close, plus short covering (other than the fact that gold has been rocking) has a lot to do with it.

      It would be healthy/nice to see a little retracement, if not go sideways, before resuming its uptrend, and as a writer, you would definitely benefit with time decay (depending on what strike you select).

      As for the price of gold, it depends on how the dollar plays out. It also seems to be rising with the price of oil.

      Also, don't forget key numbers coming out tomorrow (retail) and next week's inflation data.

      Finally, the all important upcoming fed meeting.

      Put all that in your calculations and only you can determine if it is right to write a call.

      • 1 Reply to chriva
      • I'm in at around 14 and have written calls several times to make some extra cash.

        I'm very interested in limiting my downside, however, I don't really have any set time horizons so I'm thinking that I may want to look at some 17.50 contracts since it seems this stock has a bright future if this deal is digested well.

        On the other hand, I have no problem playing the swings over a long term period. I'm a student so my tax bracket is not much of a concern.

 
AUY
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