December Gold- Our charts are showing that the market could and should attempt to take out the 1,000 level in the next few weeks or at least months. We like the December 970/1000 call spread with an 870 put as the naked leg. The trade is currently looking like a small credit of $200 which means that as long as the market stays above 875 the risk is minimal. The risk under 870 is unlimited while the profit potential is limited to $3,000, plus the credit minus transaction costs of three legs.
December Silver also looks as if it could and should be making a run for the highs or at least attempt to fill the huge gap on the chart from 1445 to 1486. We are buying the December 1450/1550 call spread and selling the 1250 put as the naked leg. The trade is a $500 credit which means that the reverse breakeven is at 1240, so from 1240 up your risk is limited, below 1240 you have unlimited risk. The profit potential is limited to the call spread which would be 5k plus premium minus commissions. If the risk of selling the 1250 put makes you nervous, sell the 1200 or the 1175.