Income Trade in GLD

[Steven Place]

With the decent drop down 2+%, gold has now defined super clear support and resistance.

Here are a few reasons I like calendars over flys:

– The Aug/Sep term structure is flat, meaning you aren’t getting screwed by selling low vola nd buying high vol.
– If GLD moves again, the calendar will roll up on the volatility smile, so IV rise can hedge against any short gamma losses
– Overall IV is pretty low. It already has run up 2% from 14% to 12% so it could drop (and that’s the risk)

This is a tiered structure. Look to add to the trade iF GLD moves 2.5 points

Buy to Open GLD Aug/Sep 125 call calendar at .77 or lower

[Steven Place]

Didn’t need to do much here…. we can close out at a return of 23% on capital and take the base hit.

[Author]

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