The Rude Awakening
Wall Street, New York
Thursday, May 11, 2006

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• Pocket some Vegas-like profits playing volatility in
  a record breaking bull market,
  
  
• Options strategies for beginners and seasoned players
  alike,
  
  
• The "car of the future," your daily market data and
  more...

--- Special Investment Alert ---

Warning: This Is Not for the Timid or Profit Shy!
 
Starting with just $400, a pizza delivery boy created a
$200 million fortune. He then taught his secrets to 14
lucky average Joes and Janes. Just five years later, the
Wall Street Journal reported they had racked up $150
million in profits!
 
Now you can benefit from the same kind of secrets - for
your chance to make the same extreme gains. It's so simple,
you will barely lift a finger doing it. If you have the
courage and fortitude for this kind of trading, you can get
in on this virtually effortless opportunity.
 
http://www.isecureonline.com/Reports/RTA/ERTAG508 
 
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The Road to Gold $3,000
By Eric J. Fry

While awaiting that delightful Armageddon that might propel
gold to $2,000 or $3,000 an ounce, we gold bulls will
certainly endure a large number of "down days." We will
suffer through harrowing price declines that will produce
large mark-to-market losses...and anguish.

The True Believers among us will "buy the dips," but many
of our weaker brethren will panic and sell.

Happily, there may be a middle road: Selling naked or
"covered" options. Naked refers to selling options without
any other related position – e.g., selling calls on Newmont
Mining without also owning the stock. Selling covered
options is exactly the opposite – e.g., selling calls on
Newmont Mining while OWNING the stock.

Selling options, either puts or calls, can provide SOME
protection against loss, while also dampening portfolio
volatility. Most individual investors simply buy puts or
calls, as a means of leveraging their bets, while strictly
limiting their potential losses. And this tactic works
exactly as advertised: winning option trades can produce
sizeable gains, while losing options trades can produce no
worse that the cost of the option itself.

Buying stock options, therefore, is as sexy and thrilling
as playing a Vegas craps table...But it can be almost as
dangerous. Some craps players win big, but the vast
majority lose. Only the House wins consistently. The same
is true in the options game. But there's a big difference
between betting on a roll of the dice and betting on
options. In the options markets, any player can become "the
House." Any investor, in other words, can choose to SELL
options rather than buy them.

Selling options is even sexier and even more thrilling than
buying options, but can also be much more dangerous, which
is why very few individual investors dare to attempt it. 
But selling options in limited quantities and in selective
situations can reduce a portfolio's overall risk.

Option-selling strategies function best amidst very
volatile market conditions. That's because high volatility
produces high option prices, which is exactly what an
option-seller loves to see.

The gold market has been quite volatile of late, which has
created high volatility among gold stocks, and boosted the
implied volatility of call options on gold stocks. In other
words, the price of options on gold stocks is rising
because the EXPECTED potential price movements of gold
stocks is also rising.

Not surprisingly, therefore, placing a bullish bet on the
HUI Index of gold stocks has become a very pricey
proposition. The September 400 calls on the index cost more
than $38, even though the index itself is only trading at
the 394-level. Therefore, based on intrinsic values, the
index must soar to 438 by the middle of September for the
buyer of this option to break even. That would be an 11%
advance. Given that the HUI has already rallied 40% so far
this year, another 11% may no be so difficult to achieve.
On the other hand, it might be.

The timorous gold bug, therefore, could buy the HUI Index
(or a comparable basket of gold stocks) and sell the
September 400 calls, pocketing $38 in the process. If gold
stocks continue to rally, the option seller would make up
to 11% in four months, but no more than that. On the other
hand, if gold stocks faltered, the option seller would
still keep his $38, as a partial protection against the
loss on his falling gold stocks.

A much gutsier – and much more dangerous – means of placing
a bullish bet on gold stocks would be to SELL put options.
Since we consider such strategies suitable only for the
most sophisticated of investors, we will not even describe
the tactic in detail today. Rather, we would merely point
out to those who already execute such trades that put
option prices on many gold stocks are quite high right now.
Do with this information what you will...and Godspeed to
you. [Tomorrow's column will provide a brief primer on
naked option-selling, and illustrate the tactic with one or
two high-flying resource stocks].

Throughout the 1990s, as many Rude readers may recall, the
gold market was a tranquilized lion. The world's central
banks and bullion banks fired so many sell orders into the
poor beast that it barely retained a pulse. But the
tranquilizers are wearing off...and the sellers are running
out of darts. As this ferocious feline continues shaking
off her stupor, she will roar very loudly (and she might
even maul those who have been holding her down). As the
volatility increases, so will the opportunities to sell
pricey options.

[Joel's Note: "I've never seen anything like it," remarked
a Rude colleague just a few days ago. "And it's not like
the guy is long only...he's played both up and down and
made all the right calls, at the right times." Selling
silver calls just off their recent high gave Kevin Kerr's
readers the chance to bank some very handsome profits. For
the last two years he's been trailblazing the commodity
markets, using call and put options to deliver Vegas-like
returns on crude, gold, silver, corn, sugar...you name it.
Now you can take advantage of the recent volatility in the
commodity markets and increase your profit potential by
investing just four minutes a week. Learn how right here:

Increase your exposure to profits
http://www.agora-inc.com/reports/RTA/ERTAFB23

--- Special ---

America's Top-Ranked Financial Newsletter Says:

The Petroleum-Free Car of the Future WON'T Run on Hydrogen
or Ethanol
 
Whatever you do, don't follow the Wall Street crowd into
the hydrogen fuel cell myth. Forget ethanol, too. Getting
rich from the end of cheap oil means investing in the REAL
solution to America's oil addiction. Buy in now -- before
investors realize the mistake they're making and come
flooding in. Readers who followed similar advice had a
chance to rake in average gains of 64% last year... and 62%
the year before that. But even bigger profits could lie
ahead.

http://www.isecureonline.com/Reports/OST/EOSTG562

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