Extolling the Spread Trade

I know that spread trades aren't as sexy as one-way calls, but they sure are a lot safer while still allowing one to capture the volatility of these markets. I have written before about the spread trade between the Market Vectors Junior Gold Miners ETF (GDXJ) and a short gold position, either shorting gold outright through the SPDR Gold Shares (GLD) or the iShares Comex Gold Trust (IAU), or even via the PowerShares Db Gold Short ETN (DGZ) if you have a non-margin account. The trade is to wait for the spread to widen, and then buy an equal dollar amount of the gold miners while shorting an equal dollar amount of gold.

That trade has worked five or six times already over the past few months for gains of 2% to 3% on each trade. Because it is a spread trade, you can push more money into the trade, and if you are like me, finding a trade that you can push more into right now is not easy....633 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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