Israel Initiates Military Action In Iran: How To Make One Hundred Million Dollars In Gold

Alicia Badilla By Alicia Badilla, 14th Feb 2012 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Money>Investing

The chances for military action against Iran appear eminant.,,,Read on on how to make $100,000,000 investing in Gold & Oil.

Out Of The Money Gold & Oil Call Option Contracts & The Web Bot Project

Some of the same internet prediction systems similar to "The Web Bot Project" that predicted the Tsunami in Aisia and the earthquake in Haite are now talking about Nuclear action against Iran and minimally Military intervention there in 2012. If you like a more common sense method of predicting war then just look at the economic sancions that as Ron Paul Says almost always happen befor a war. When the sanctions placed on Iran by the international comunity fully kick in over the course of 2012 they will devistate an already devided country.

The Isreali embassy personel that have been recently killed in Georgia and Thailand appear to some as just the beginning of what is to come.

Sad but How can you make a cool hundred million?

One Hundred Million Dollars

Out of the money Gold and Oil Call option contracts can be purchased through the CME Group on the NYMEX. It doesn't take a genious, just some capital

The July 2000 American Call Options were listed today at a max of $1,890 each on the CME Groups website. The CME Group are who own the New York Mercantile Exchange where these options are traded.

If someone wanted to make one hundred million dollars theywould need to invest in 10,000 of the above contracts which are attached to a standard 100 ounces of gold each. The $2,000 July Gold Call Options I could have bought today have an expiration date the 3rd week of July 2012.

There are couple ways of making money here. One you sell before the value of gold hits your $2,000 strike price and second being you sell after the market hits your strike price. The first has several possible outcomes and is called making money in premium which would mean the 10,000 contracts you get into at the push of a button today could be worth more tomorrow if gold moves rapidly up in value. Good thing about options are you can always get a quote from the exchange to get out at anytime. I see the prior days open interest on this particular contract were just 31 contracts! Pushing that up to 10,000 would probably make the news as did a 50 million dollar purchase earlier in 2011 which was spread between different strikes ranging from $1,800 to $1,950. You don't have to reach your strike price to sell. Most out of the money option contracts are sold by traders well before underlying asset reaches the strike price.

Options are extremely complicated and are thus not an exact science but as a rule of thumb and taking into account how the premiums for this type of gold option contract have been behaving over the last month or so, if gold were to jump up a hundred dollars within the span of just a day or two within the first week of purchase, that could push the cost of each of those contracts up to 3 to 4,000 dollars each which may allow you to sell out at a 2,500 to 2,750 range accounting for the spread if you decided to hop out that early pocketing a profit calculated at 10,000 contracts multiplied by 500 to 750 each or about 5 to 7.5 million dollars or 25% to 40% profit respectively. That would put the price of gold at about $1850 with still four months of time value remaining and about 150 dollars out of the money. Here is another scenario, lets say gold gets a slow start out of the gate and makes steady progress towards $2,000. If we see gold jump up to lets say the $1,950 level before the end of November that could put the price of those options up to let's say the $4,000 or more more mark taking into account time decay and my judgement on how these type of premiums have been behaving under present market conditions. The ideal scenario is a very likely one in the opinion of many analyst who are predicting new highs in gold over the next couple quarters. If gold hits $2,300 before your expiration date you've made a cool hundred million. Take the 10,000 contracts of 100 ounces each you have reserved at $2,000 and multiply the $300 value gold reached above it and you get $300,000,000.

Presto your 20 million is now 300 million. The only difference between the 2 is with 20 million you are US senate rich and with 300 million you are Mitt Romney Presidential candidate rich. Huge difference.

Lower your risk? The details of delivery are remarkably simple. You would need to meet the requirements declaring your intention to take delivery at the appropriate times and have on standby 400,000 multiplied by $1,900 or 760 million dollars to take delivery of the gold. Lets say this happens. It would be taking a step back but not off a cliff. Just hold on to your John S Mini Cooper trunk full of gold until your break even point and sell. After fees; penalties, delivery, transportation, insurance, storage, brokerage, currency fluctuations, opportunity cost, you could look at the $2050 - $2,100 as your saving grace. The idea that gold could at some point in the not so distant future trade around the $2050 level seams to be a probabilistic event. Or alternatively you could sink a couple million into Price Waterhouse Coopers and have your own personal ETF licensed ready to go public right about the time your taking ownership of the gold and then it is just a matter of changing the ownership of the gold one investor at a time while your storage costs and exposure get smaller and smaller proportionately to your ETF getting bigger.

To qualify for a trade of this magnitude, an investor would need a liquid net worth of around a couple hundred million of which he or she would be willing to tie up for a couple quarters and put at risk $780 million, $20 million of which would be in very high risk.

Timing is crucial but having a big liquid net worth and a big pair of brass ones are the only necessary ingredients to make a couple hundred million over the next 6 months.


Gold Investing, Iran Kills Israel Embassador In, Israel Bombs Iran

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author avatar Alicia Badilla
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I'm a Traveler/Writer/Investor At times I interview interesting professionals. Thank you for reading.

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author avatar Rathnashikamani
16th Feb 2012 (#)

Hello Alicia Badilla,

Welcome back to Wikinut.

Congratulations on being the Wikinut author of the day.

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