A tale of three options

My GLD position is:
short Oct 94 put
long Oct 99 call
short Oct 104 call

The 94 put is equivalent to a covered call position, long GLD, short the 94 call.

I entered the 99/104 vertical call spread when GLD was around 99.0. With a few days of time decay and a one point up move in GLD, the 94 call is up a good percentage, the 99 call is up a tiny bit, the 104 call down a smidge. Again, reinforcing the concepts that time decay works against the option buyer, that buying way out of the money options can be a tough game to make money at.

I mentioned the possibility of a short SPY position. I remind myself that calling top (or bottom) can be entertaining, but rarely profitable. The odds go up after a top is in place and to short the rally failure.

As for gold, looks like a three month bullish period with an upside target of $1150, 20% above the breakout point. Keep in mind that while September is the best month for gold, October tends to be flat to down, and on average October is the worst month for owning gold stocks. As always, the disclaimer is that I find seasonal patterns tend to be among the least reliable of indicators.

Long GDX, GLD (2)