Tiered Income Trade in GLD

[Steven Place]

GLD is getting whacked on the back of (the hotly anticipated) Fed meeeting.

It’s selling off into support and is just about oversold on the short term timeframe.

I do think after the breakout in February, GLD is now settling into a new range a little higher from here.

I want to put on a bullish call butterfly that looks for GLD to drift higher from here.

The trade I like:

Buy May 126/132/138 Call butterfly for 1.60 or better.

This is a tiered income trade. Start with 1/3 size here. If GLD trades down to 126 and 123 we will add to the trade.

[Steven Place]

GLD has come to our first adjustment point at 163, so we will add another round of butterflies.

Buy to open May 119/125/131 Put Butterfly at 2.00 or lower

This turns the trade into a goofy looking iron condor structure.

If GLD sells off to 122.50 we will add a third round.

[Steven Place]

Theta’s finally kicked in and we’re at the 20% profit mark. Take off the trade for a profit.

[Author]

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