Hedging Strategies: At a Time of Record Gold Prices, This Simple Option Play Will Protect Your Profits

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Gold has made a lot of money for savvy investors over the past few years, but now it’s time to think about safeguarding profits. Money Morning Contributing Writer Larry Spears – the author of several books about options strategies – shows investors how to do just that with a quick options tutorial.

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If investors bought gold at any time during the first 10 months of 2010, they’re sitting on some pretty healthy profits.

And thanks to renewed inflation fears and the growing unrest in Egypt, Libya and other Middle Eastern nations, most forecasters believe the “yellow metal” still has lots of room to run.

But if those same investors watched gold struggle during January 2011, they may also be worried about keeping those hard-won profits – even with the rebound and run to record highs that gold prices have made.

Not to worry: Gold investors don’t have to just sit around chewing their nails and worrying gold prices will suddenly plunge. In his latest article for Money Morning, options expert Larry Spears discusses a few simple strategies investors can employ to protect their profits – while continuing to ride the gold bull.

Whether investors hold physical gold, trade in gold futures contracts or own the shares of major gold-mining companies, they can “insure” nearly all of their profits against a short-term price decline with the help of a very simple options hedge.

To find out how it works, simply read “Hedging Strategies: At a Time of Record Gold Prices, This Simple Option Play Will Protect Profits”.

(**) Please feel free to repost this story on a website. If it is posted, though, please include a link to the original article on Money Morning.

William Patalon III
Executive Editor
Money Morning


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