Intermediate Trade: VanEck Gold Miners ETF

The tactic is the near-the-money, vertical call spread expiring in December.

The Trade: Buy 1 VanEck Vectors Gold Miners ETF (GDX) December 24 call and sell 1 GDX December 29 call for a debit of $1.15 per spread.

(GDX) is the ticker symbol for the ETF known as the VanEck Vectors Gold Miners. GDX over the past 52 weeks has traded between $18.58 and $28.56. That high price point was made one year ago. The low price point was in December.

GDX has gained a quiet 14% so far this year. This atypical lack of media hype is one reason I continue to like the gold miners. Well, that and the slow but steady improvement of the fundamentals for the gold miners.

Technically, I read the one-year stochastic and relative strength index (RSI) patterns as washed out on the downside, and now possibly readying for another upside run. This particular chart is what I call my washout pattern, which when formed tends to set up plenty of upside potential provided the buyers come back in.

The tactic I prefer now for GDX is the near-the-money, bullishly biased vertical call spread expiring in December.

The trade is as follows: Buy 1 GDX December 24 call and sell 1 GDX December 29 call for a debit of $1.15 per spread. The suggested target to close for a gain is a bid of $1.65. The suggested target to stop out the trade is a bid of 65 cents. It is best to scale into the position using limit orders.

At the time of publication, Raschke had no positions in the security mentioned.