[Options] The Trend is Golden
The bet I'm willing to make is that the trend is our friend, and it'll take some work for it to end. The "work" part of my thesis will likely manifest itself in the form of some rangebound trading. From an options trading perspective, this sets up a good opportunity to sell some premium in Gold options.
While volatility priced in $GLD options is off significantly from its highs in March, premiums are still elevated here which affords us the ability to sell strikes a good distance away, giving us plenty of margin of error to be wrong.
Here's the Play:
I'm selling $GLD June 150 puts for approximately $1.30.
If $GLD closes below 150 at any time during my hold, I'll close the trade and move on. I'm not interested in holding naked short in-the-money puts that are going against me. My risk is theoretically unlimited and that would not allow me to sleep at night.
Assuming $GLD hangs around here or goes higher, I'll look to buy back these short puts for about 65 cents. Not looking to be greedy, just tactical. If I'm still holding this position when we get into June, I'll likely close it down and move on, win or lose.
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