• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

IWO Trading Floor

Become a Great Options Trader

  • Customer Center

September Income Trade in GLD

Home › Forums › Income Trades › September Income Trade in GLD

  • This topic has 2 replies, 1 voice, and was last updated 9 years, 9 months ago by Steven Place.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • August 21, 2013 at 3:14 pm #2251
    Steven Place
    Keymaster

    We are going to put on an income trade in GLD that makes money if GLD pulls back, but if it decides to rip higher we will be protected.

    This strategy is called a put fly + call buy combo.

    The put fly is the true income trade and it is a little bearish, and the call buy helps to reduce that bearish exposure.

    Here is the trade:

    gldorder

    gld-riskAdjustment points are 133 and 122.50

    If gold rallies up to 133, we will take the call buy off for a profit and roll the put side of the butterfly higher.

    If gold sells off, we will roll the call down.

    Profit target is +360.

     

    August 21, 2013 at 3:31 pm #2253
    Steven Place
    Keymaster

    With the breakout in gold, our income trade has gone to the outside of our “theta range.” To compensate for this we are going to roll the lower side of the butterfly higher and add a single extra bear call spread.

    Here is our current risk

     

    gld-risk-1

    Here are the new adjustments:

     

     

    gld-roll

     

    gld-spread

    This reduces the cash in this trade and gets us back to delta neutral.

    If GLD pulls back we don’t have to do anything. If it continues to rip (around 133-134), then we will take profits on the long call and then adjust our spreds to get us back on the +theta side of things.

    Here is the risk after:

    gld-risk-2

    August 23, 2013 at 5:32 pm #2252
    Steven Place
    Keymaster

    GLD is breaking out right here, leaving the trade with a small loss. Here is what it looks like right now:

    http://trades.investingwithoptions.com/files/2013/08/gld-before.png

    Because September now has under 30 days left to expiration, there is no reason to try and adjust this trade to try and get back any profits. The best thing to do here is to cut losses while they are still small and move on to potential trades in October.

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

This is the Forum Sidebar Widget Area. You can add content to this area by visiting your Widgets Panel and adding new widgets to this area.

© 2021 Global Profit Systems International