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My indicators are giving bullish readings this week, unchanged from last week, and I believe the market will continue to rally — at least over the short term. However, the S&P 500 is still in a somewhat bearish trend, as the index has been making lower highs since peaking in January, so caution is still warranted.
It does look like there is a lot of support at the recent lows around 2,580, and that level has held strong so far, but I wouldn’t be surprised to see the index test that level one more time before breaking out in one direction or the other.
The big factor that’s affecting the market this week is the increase in geopolitical tensions in the Middle East, and that’s impacting oil prices as well. I was expecting the price of oil to start rolling over after it jumped above $65 per barrel, but the threat of conflict in Syria has been keeping prices up. Gold has also been rising recently, and I think it will continue to be strong as long as tensions remain high.
In this environment, I’m recommending a bullish play on mining company Kirkland Lake Gold Ltd (NYSE:KL):
Buy to open the KL Jul 17.50 Calls (KL180720C00017500) at $1.35 or lower.
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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.