If you've been watching the SPDR Gold Shares (GLD), you know the yellow metal has been consolidating and appears to be bouncing off its 150-day moving average (support).
If you've been watching the SPDR Gold Shares (GLD), you know the yellow metal has been consolidating and appears to be bouncing off its 150-day moving average (support). If one prefers to use the 200-day moving average, that support level is just below $400, which is also approximately the 50% Fibonacci retracement level.
Here's how to trade the technical setup: the June $395/$445/$480 call spread risk reversal.
This strategy provides a low-decay bullish play for a total net debit of just $4.00 per contract, or 1% of the current price. Of course, selling that lower strike put will tie up a lot of cash, but less so than simply buying 100 shares of GLD.
The risk reversal will tie up slightly less capital than buying GLD stock at $433, lets you capture a massive chunk of the anticipated "gold rush" for next to no premium outlay. You get defined, subsidized upside, and a meaningful buffer on the downside, and a trade that works with the dynamics of the options market, not against it.
Get long, use the skew, and let the 150-day moving average do the heavy lifting.
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