Strategic trade
Trade view / 07 June 2016 at 13:55 GMT

#SaxoStrats: Take profit on SPDR Gold Trust option trade

Global Head of Listed & OTC Derivatives Sales / Saxo Bank
Instrument: GLDD:xnas
Price target:
Market price:

The SPDR Gold Trust ETF touched both the 20-day moving average at 119.08 and the 50-day moving average at 119.17 today with 119.17 traded at the highest point. 

The ETF will find some strong resistance at that level so let's take our profit on the Jun16 116/118 Call Spread we bought on June 1 at $0.77.

SPDR Gold Trust Daily Bar Chart

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Source: Saxo Bank

Entry: Sell back 10 Jun16 116/118 Call Spread (we bought at $0.77 on June 1st) at $1.35
=> Sell back 10 Jun16 116 Call at $3.01
& Buy back 10 Jun16 118 Call at $1.66

Profit = Exit Price - Entry Price
= $1.35 - $0.77
= $0.58 or $580 for 10 Call Spread

Return on investment
= Profit/Premium Paid X 100
= $0.58/$0.77 X 100
= 75.3%.

Five-year chart:
SPDR Gold Trust 5 years chart
Source: Saxo Bank 

— Edited by Michael McKenna

For more on contract options click here.

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