CHICAGO, Aug. 24, 2011 /PRNewswire/ -- Zacks highlights commentary from People and Picks Trader "JaiH".
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Following DiviMO in the Gold Sector
Following up on DiviMo's ideas I am following a buy write (covered call) strategy to generate income. I am also buying some puts to limit my downside risks. I decided to invest in the gold sector. The gold sector is volatile, so option premiums are very high. Even though the gold stocks don't pay much of a dividend, the option premiums more than make up for that. Gold is also in a bull market, so chances of making capital gains are higher.
I have found an ETF from Horizons alpha pro (Canadian ETF) which does the covered call strategy for precious metal stocks. Some of my money is invested in physical Gold with a Claymore ETF. The ETF is currency hedged, so I make money even when the US dollar goes down.
To limit my risk I have bought GLD puts, so that if there is a deep correction in Gold, I have some protection.
The objective is to generate 15% annual return on average while reducing the volatility of my portfolio. The volatility is low, for example Gold went down about 4% today, but I lost only 1.56%.
The most recent picks by «JaiH» are:
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