by John Jagerson | May 27, 2011 9:57 am
In a webinar this week TurboTrader’s John Jagerson offered three ideas for options trading investors as the markets turn increasingly to commodities and metals for profit opportunities. Witness the tremendous spike in activity in iShares Silver Trust (NYSE: SLV), the SPDR Gold Trust (NYSE: GLD), the US Oil Fund (NYSE: USO) and other products.
Jagerson offered an overview of his presentation.
“Commodities have dropped to support, which is ideal for us at Turbo Trader Live. We looked across the sector and picked three of the best trades available for entry during the webinar. We discussed how to profit from a rise in gasoline prices this summer, why a bounce in silver following the “flash crash” offers huge upside and how a very strong position in soft commodities is set to rally as demand outstrips supply this spring.
“Each of the three positions we entered is likely to benefit from a falling dollar and other economic issues investors are facing globally — and each has a great shot at racking up sizable gains very quickly.”
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Traders should double check the option chains for the current prices on each of these trading ideas. TurboTrader opened all three of these trades on May 25.
The U.S. Gasoline Fund (NYSE: UGA) is an exchange-traded fund that tracks the spot price of gasoline as measured by changes in the futures contract for gasoline. It closed Thursday at $49.91. Its trading volume is much smaller than that of the popular USO but some strategists suggest the UGA more closely reflects the price of gas.
This week the pump price has dropped but there is no guarantee that will continue for the rest of the summer, the busiest driving time of the year. Additionally, there has been no change in the demand for fuel worldwide. That suggests an options trade a few months out when pump prices will probably rise again.
Buy to open the UGA Oct 52 Calls for $3.45 or less.
The PowerShares DB Agriculture Fund (NYSE: DBA) is designed to track the changes of a diversified agricultural portfolio, including corn, soybeans, wheat, sugar, cocoa, coffee, cotton, cattle, and hogs. It closed yesterday at $32.80.
Commodities as a whole have been rising in price due to cost increases for farmers, primarily in fuel. The DBA should be moving upward in the next few weeks to challenge its 52-week high of $35.58.
Buy to open the DBA July 34 Calls for .50 or less.
Silver is regaining its footing after its sell off to the lower 30s, setting a base for a move back up again. Much of the focus has been on SLV but there are other underlyings out there that offer trades to take advantage of this rise. Silver Wheaton (NYSE: SLW) is a miner that buys the precious metal from producers in Central and South America and the Caribbean. SLW has sold off this month from a high over 42 just as silver declined.
Buy to open the SLW July 38 Calls for 1.87 or less.
TurboTrader will issue follow-up instructions on these three trades via its daily trading service, Turbo Trader Live.
Investors are invited to sign up now for a FREE 30-day Turbo Trader Live trial to keep up with any important updates on the three free trades. As an added bonus, those who sign up will have access to the live daily Trading Room and all the new Turbo Trader Live trades for the next 30 days.
Source URL: http://investorplace.com/2011/05/3-option-trades-oil-silver-and-an-ag-etf-uga-dba-slw-slv/
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