Sold 3 ABX 10OCT Puts 46.00 @ $4.15, Mark $43.97, Breakeven exit

My Barrick Gold short isn’t working as I hoped. My puts premium is moving closer to breakeven to my purchase price of $4.00. Furthermore, the market is cracking above resistance levels today. In particular, ABX.TO is marking a bullish engulfing candlestick pattern after a test of its 50-day moving average support (Figure 1).

Yes I know, there’s a massive resistance at $44.00 for ABX.TO. But…

As much as I’d like to believe in the bears, this short position is not safe anymore. I can’t let a positive trade turn negative. It’s better to miss an opportunity than lose money. So I’m ditching this now to reduce my risks at above breakeven seeing that I have another smaller short position in play. Which is underwater at the close, by the way.

My return on this trade is ($4.15 – $4.00) * 100 * 3 contracts = $45 – $12.95 x 2 commissions = $19.10

I’m just lightly short now and mostly in cash.

Barrick Gold (ABX.TO)

ABX.TO intraday

Bought 3 ABX 10OCT Puts 46.00 @ 4.00, Mark $44.67

Right on the heel of my oil short loss, I am taking another stab at shorting the market. This one is Barrick Gold (ABX.TO). I am moving away from shorting financials because the puts premium are almost doubled that of the calls! It seems that too many people are betting the banks will take a hit in the next fall.

In the long term, ABX.TO appears to be in an up trend. However, the intermediate trend is turning negative as shown in Figure 1. $45 is an obvious resistance for ABX.TO. Even with today’s positive market moves, ABX.TO fail to catch on the bullish wave and only touched $44.86 in the morning optimism (Figure 2). Who knows, perhaps it might break it sooner than later. But the reward/risk is decent to short ABX.TO seeing that the $45 resistance is right above.

Barrick Gold (ABX.TO)

I will give it a month’s time to move below $44.00. Worst case stop loss is $2.50 on the premium. That is ($2.50 – $4.00) x 100 x 3 = -$450 – $12.95 x 2 = $475.90 = 5% of account total. My mental stop is $3.00 on the premium. Which is about 3.3% of my account total.

ABX.TO intraday