Our SPDR Gold Trust (GLD) April, 2016 $109-$112 in-the-money vertical bull call spread expired over the weekend.

Since the barbarous relic galloped right into the close we were able to capture the maximum expiration value of $3.00.

This means we earned a 12.35% profit in 18 trading days. In this environment of minimal low risk, high return trades that is much better than a poke in the eye with a sharp stick.

I am now back in the mode of attempting to get back into the yellow metal on the next $50 dip in the price.

Gold is one of the very few investments that absolutely everyone wants to own this year.

Almost all economic scenarios going forward are gold positive. Negative interest rates mean the opportunity cost of owning gold has dropped to zero for the first time in history.

Any chance of a sudden swoon in the markets and a big “RISK OFF” move means gold instantly picks up a “flight to safety bid”.

Sounds like a classic “heads I win, tails you lose” kind of trade.

If you can’t buy options, just pick up the (GLD) outright. Don’t touch the Market Vectors Gold Miners (GDX) on pain of death. It has run too far, too fast.

Best case, gold breaks out to a new one year high on the next stock meltdown, which could be only days away. This would make (GLD) the perfect hedge for any long stock positions you may have.

Remember, the reasons we like the yellow metal now are that it is the biggest beneficiary of a NIRP (negative interest rate) world, production will fall 20% over the next four years, and China and India are ramping up their reserve buying.

If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Bull Call Spread”. 

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.

Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.

Here are the specific trades you need to execute this position:

Buy 37 April, 2016 (GLD) $109 calls at………….….……$8.92

Sell short 37 April, 2016 (GLD) $112 calls at.…………..$5.92
Net Cost:………………………………………………….....$3.00

Profit: $3.00 - $2.67 = $0.33

(37 X 100 X $0.33) = $1,221 or 12.35% profit in 18 trading days

Buy the Dip