Wednesday, May 12, 2010

Buy GLD (sell puts)

Buy GLD via selling Jul 100 puts GLD @121.4. Yes, I am chasing, however, these puts are 20% out of the money, making for another low risk, low reward trade. Again, one way to think of the trade is being paid to place a lowball bid. In the unlikely event (5% chance) that GLD falls to 100 by July, I buy, if not I get a tiny premium.

As GLD moves up, the delta on my existing puts: short May 92, short Jun 97, are close to delta zero. Seasonally, June is one of the worst months for gold, so I may add to the July position if that unfolds.

Long BRKB, GLD, SPY, TLT

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