GLD Analysis

SPDR Gold Shares (GLD)

GLD by my count using Elliott wave analysis has began an upward push in a countertrend correction. A sharp rise on Friday, continued with an upward gap today, seems to confirm my assessment.

I shall use options that trade for the last time 39 days hence, on Nov. 17.

Implied volatility stands at 11%, which is 1.2 times the VIX, a measure of the volatility of the S&P 500 index.

GLD’s IV stands in the 13th percentile of its annual range and the 3rd percentile of its most recent broad movement.

The price used for analysis was $121.94.

Premium: $0.44 Expire OTM  
GLD-vertical Strike Odds Delta
Puts
Long 118.00 82.8% 16
Break-even 120.44
Short 120.00 69.2% 31

The premium is 22% of the width of the position’s wings.

The risk/reward ratio is 3.5:1.

Decision for My Account

The low volatility hurts the potential yield a bit. Even so, GLD is one of the more liquid directional plays I have, and I have entered bull position on GLD as described above. The stock at the time of entry was priced at $121.91.

By Tim Bovee, Portland, Oregon, October 9, 2017

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

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