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