Buy GLD via selling Nov 91 puts, GLD at 101.30, up on rumors about oil trade moving away from dollars. Rumors are denied by major oil producers, but gold still soars. Strike price of 91 is below the support level at 92.
Mark Hulbert over at Marketwatch cites sentiment of gold timer newsletters (link). The timer reading was before the two big up days, still, it means a significant decline in gold is unlikely, which is a good setup for selling puts way out of the money.
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Consider the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended gold market exposure among a subset of short-term gold market timing newsletters tracked by the Hulbert Financial Digest. Its latest value is a quite-low 18%.
Three weeks ago, in contrast, the HGNSI stood at 39.5%. In other words, in the wake of a close-to-zero net change in gold's price, the average gold timer has cut his recommended exposure level in half.
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The HGNSI's current level of just 18% is amazing from another perspective as well: Even though gold is within a few dollars of a record, all-time high, the average gold timer is mostly in cash. Clearly, there is no irrational exuberance in the gold pits.
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Long GLD, SPY
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