Bought +2 Strangle GLD 100 JUL 09 91/90 CALL/PUT @3.15 ISE, GLD mark $90.11

GLD tanked further and then hovered around $90 today. Seeing that $90 is a major pivot point and is in the middle of a large trading range (Figure 2), I’m placing an options strangle to bet that it’s going to move outside of the immediate $90 region. The breakeven move required is below $86.85 or above $94.15. Which is about 3.5%.

Note the Bollinger Bands on the daily chart, Figure 1 right-side, depicting the lower and upper boundary to be $88.30 and $95.91. Furthermore, the Bollinger Bandwidth is near the bottom of the channel, which means volatility has been low.

I have set an alert at $3.00 on the strangle premium. This should signal looking for an exit. However, it’s obvious now that I’m horrible at setting stops on a strangle. For this trade, I’m going to treat the long and short side separately. So once a move has started, I’ll place stops for the in-play side of the trade.

Gold Shares SPDR

Gold Shares SPDR

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