Friday, June 28, 2013

Buy GLD and sell BA strangles

Buy GLD via selling Aug 91 puts @117.9
I dip my toe in the swirling gold waters. There is a blaring headline on Marketwatch about a -24% quarter for gold. On the other side is yet another missive about manipulation just below it. This is another worm trade, way out of the money, low risk, low reward. For these puts to come into play, it would take another -24% down move in the next seven weeks. It could happen, but the option odds are in the 5% range based on implied volatility, probably more like 1% based on historical volatility. 

Like all my trades this week, I don't really like this one either. I am holding my nose and deploying capital, because I don't want to sit mostly in cash through the upcoming July 4 holiday. Decay often works in favor of premium sellers during holiday weeks, especially if the markets are quiet.

So far this move looks miss-timed, as GLD is back to 117.4 dropping .5 during the time it takes me to type this up. (With the Boeing update, GLD is now up to 118.5. The market giveth and taketh.)

Later in the day, I sell some BA strangles @103.0
Sell Aug 87.5 puts and Aug 115 calls

Again, a short strangle is a bet on staying in a trading range.

Net long APC SPY

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