GLD is one of the few ETF’s in this market that has good volatility. As a result, the options are more expensive giving us more opportunity as an options seller rather than a buyer.
For this week’s Options Trade Of The Week we are going to take a look at selling an Iron Condor on GLD which is the Gold ETF.
Over the last few weeks GLD has been on an impressive run to the upside leaving it in very overbought territory. When this happens, we will often times see a period of consolidation or even a pullback.
We are selling an iron condor to benefit from a sideways move over the next few weeks. We are heading into the summer months which tend to be a slower time of the year for markets.
Using an iron condor would allow us to make money from:
- Time decay adding up. Every day that passes allows us to make money
- Volatility decreasing. If volatility starts moving back down that will cause the options to get cheaper.
For this trade we will be selling the 16-Aug-19 137/138 call spread and the 129/128 put spread at the same time.
We are looking to collect $.48 or $48 per spread while risking $52 per spread.
For a complete break down of our Trade Of The Week make sure you review the video below. You will learn the details of how we are placing trade trade including how we plan on managing it from start to finish.
We are still holding EBAY and we closed out of LYFT for a partial loss this week.
Feel free to contact me directly with any questions you might have. Mike@netpicks.com.