Market Summary
The major equity indexes prices crashed today in a post presidential election sell-off. Stocks rose on Election Day as investors anticipated a President Obama reelection win would remove a major source of market uncertainty. But today prices reversed course as the focus turns to the fiscal cliff, with investors worrying that if no deal is reached over some $600 billion in spending cuts and tax increases due to kick in early next year, it could derail the economic recovery. Pessimism was exacerbated by ongoing economic drama in Europe after the European Commission said the region would barely grow next year, dashing hopes for improvement in the short term.

Traders moved funds out of equities into the relative safety of treasury bonds and gold as an inflation hedge. We plan on taking advantage of the opportunity to generate gains from our November TLT put spread as traders bid up treasury bonds on extremely high volume and triggered the exit rule. Also, gold prices had crashed and triggered the GLD put spread exit rule. But over the past few days gold recovered from being oversold and traders looking to hedge against inflation. The risk profile for the GLD changed after initiating the put spread and it is better to accept a minimal loss now versus taking a larger risk by holding this position into expiration next week. Remember, job one with managing credit spreads is to minimize risk.

TLT Position Update -------------------------------------------------------------
TLT closed at $124.00 on Wednesday – the November position is approx. $2,000 in the black

The October 22nd Couch Potato published a November expiration TLT put spread
Unless treasury bonds gap lower tomorrow we plan on closing out this position for an approx. $1,100 gain (see tables below) . Just buy back the $117 short put contracts to close the position if you have difficulty selling the $112 long puts as part of a spread trade.

GLD Position Update -----------------------------------------------------------
GLD closed at $166.49 on Wednesday – the November position is approx. $300 in the red

The October 11th Couch Potato published a November expiration GLD put spread
Unless gold opens with a gap lower tomorrow we plan on closing out this position for an approx. $300 loss (see tables below)

Exit Plan
As mentioned above we expect to exit the November expiration TLT and GLD put spreads.

Gregory Clay

Couch Potato Trader Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices (though many often do) or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what. It isn't the fault of the strategies.