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HL Trade Entry

HL (Hecla Mining Co) is breaking down below the steep rising wedge covering in yesterday's mining stock video. As such, the stock offers an objective entry here & will be added an an official short trade. Some potential targets were covered in the video but a follow-up post will be published asap detailing the suggested stops & price target levels.

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Aug 19, 2016 12:55pm|Categories: Completed Trades - Short, Gold & Commodities|Tags: |2 Comments

2 Comments

  1. j1persi August 19, 2016 1:18 pm at 1:18 pm

    In December puts 6 strike @.52 . Do you think decemeber is plenty of time?

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    • rsotc August 19, 2016 1:40 pm at 1:40 pm

      j1persi- Yes, I do think that HL will see at least the second target (5.69) long before December & quite likely T3 but that’s just my opinion so take it fwiw. Be very careful when trading options, particularly without a hedging strategy to minimize/quantify your losses if wrong. If your buying puts, they way that I would look at it is an all-or-none bet: This trade will either play out, at least hitting T2 well before those puts expire in Dec, causing the price to soar & likely providing a triple-digit return OR it won’t, in which case you will likely watch the value of those puts melt down to the point where it’s hardly worth closing them out to cut your losses by the time it become apparent that the trade isn’t playing out as expected, thereby just watching the puts expire worthless.

      If that is the case then one approach would be to calculate how much you would be willing to lose if you shorted the shares & were stopped out. e.g.- If you might normally short $10k with an 8% stop allowance (for a $800 loss), then you could buy $800 (or maybe even just $400) of puts, thereby losing the same amount if they expire while quite likely making as much, possible more, than you would have if you shorted the shares & that target was hit.

      The main difference between buying puts & shorting the shares (beside the leverage factor) is that timing is crucial on options & not so much with shorting, as the stock could trade sideways for many months without being stopped out & finally going on to hit your target. I’m sure you know that but just wanted to share for the board as I would normally encourage newer traders & investors to stay clear of options unless they have don’t a lot of due diligence & fully understand the risks. Best of luck on the trade!

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