Hedge Extended Exposure in Gold Mining ETF (GDX)

about 2 months ago

Mike Preston

"We have half of it written with short covered calls on GDX to bring in income because we know at some point we're going to have a pullback. GDX went from 52 to 65 in just a few weeks, and now it is trading well above its 21-day and 50-day moving averages."

GDX, a gold mining ETF, has experienced rapid gains from 52 to 65 over a few weeks. Due to its extended condition above key moving averages, the recommendation is to hedge the position by writing short covered calls. This approach is intended to secure income and mitigate downside risk in a potentially volatile market environment.

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