Trading Gold Shares ETF (GLD) Price Pullback

Gregory A. Clay • by Gregory Clay

Option Trading Strategist & Financial Writer • Mar 31, 2017 at 12:24 PM EDT

Gold prices are beginning to pull back from being overbought.

TheOptionPlayer.com sets up a Gold Shares ETF (NYSE: GLD) 22-day April 21^st expiration long put option strategy. The suggestion is to submit an order to purchase the option strike price below (Thursday’s closing quoted bid/ask mean) Please confirm the correct option symbols with your broker.

Our target price to exit trade is $114

Exit price projects to an approx. $3 gain (Excludes commissions and fees)

Projected gain is an approx. 300% profit

Why we recommend it:

As evidenced in the chart below gold prices are beginning to pull back from being overbought. The dollar had sunk to lows for the year and commodities prices rose in response. Also, investors recently had a case of nervousness about the outlook for the domestic economy and moved funds from equities into “risk-off” assets like bonds and gold. The dollar is starting to recover and investors may be regaining an appetite for riskier assets as the stock market has rebounded this week. Also, earning season begins next week and if all goes well expect money managers to bid up stocks at the expense of commodities.

52-Week High: $130.52

52-Week Low: $107.34

Exit Plan

Near term support for the Gold Shares ETF (NYSE: GLD) stock is $114, which is our target price where we will look to close out this trade (sell the put contracts). If somehow the GLD ETF price jumps and it appears this particular trade won’t work out, we may be able to adjust the position to make it profitable.

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