Watching AUY stock price over the course of the last couple of weeks is causing me to go bi-polar. Elated one day, crestfallen the next. Consequently, I exited my shares about 2 weeks ago and now sit on the sidelines simply watching and holding my breath. AUY is destined to go up over the long term but I suspect June and July may see some nasty gyrations.
The "sell in May, come back Labor Day" slogan should be condensed to sell...hopefully during some peak in May and come back late July or August. Of course a sovereign default or two could change all that but most serious state budgets in the U.S. will probably not get much notice until sometime after July 1st (beginning of fiscal years for states) when state legislators find it impossible to address budget shortfalls.
And then you have massive refunding of sovereign debt rolling over for several of the European "PIGS" in July.
But let's not forget the devasting economic effects of the gulf oil spill will become more pronounced during the next couple of months. (lets hope and pray the hurricanes stay away).
AUY/PM's should look fairly good come late July...August. I'll probably jump back in after mid-July. Until then, I watch the roller coaster.
Nothing wrong with buying AUY under $10, waiting for it to move near $11 and sell an ITM $10 call. Wait a few weeks and watch the option got to zero or damn near zero at expiration.
I owned $11 calls, sold them when it got near $11, made nice money. My mistake was that I didn't buy puts right away to make even more money.
Pill up an AUY chart, the past few months they brought it to $10 for options expiration. It has nothing to do with gold prices, hedge funds are making a killing selling options against their AUY shares.