Thursday, August 23, 2012

Rebalance GLD (sell puts)

Sell GLD Sep 151 puts @162.3
I am surprised by the strength in gold. The short strangle I recently sold (Oct 147 puts/Oct 177 calls) is underwater and taking on more water as gold rallies sharply. To move back close to net neutral I sell some Sep 151 puts. I do so reluctantly, thinking that gold is most likely to fade. Another factor is the hefty margin requirement because the underlying is high priced. On the other side, these puts only have about an 8% chance to come into the money by September expiration, and I have plenty of dry powder from the recent option expiration.

Another recent reluctant move, selling LGF Sep 14 puts to rebalance isn't working out too well, as Lions Gate is taking on water with the rest of the market.

Net long LGF
Net neutral GLD SPY
Net short IWM XRT

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