New Options Strategies Emerge for SPDR Gold Trust Investors

Investors in SPDR Gold Trust (Symbol: GLD) were greeted today with new options for the July 18th expiration. Time value plays a crucial role in the pricing of options. With 98 days until expiration, the latest contracts provide sellers of puts or calls an opportunity to secure a higher premium compared to options with closer expirations. According to Stock Options Channel, the YieldBoost formula has identified a notable put and call contract within the new July 18th set.

The put option at the $295.00 strike price currently bids at $10.45. If an investor opts to sell-to-open this put contract, they commit to buying the stock at $295.00 and collect the premium. This arrangement effectively reduces the cost basis to $284.55 per share (excluding broker commissions). For investors already looking to acquire GLD shares, this strategy offers a potential advantage over purchasing at the current market price of $298.32 per share.

The $295.00 strike price is about 1% below the stock’s current trading price, indicating it is out-of-the-money by that percentage. The analytical data suggests a 60% probability that the put contract could expire worthless. Stock Options Channel plans to monitor these odds over time, providing a chart of this data on their contract detail page. If the option expires worthless, the premium would yield a 3.54% return on the cash commitment, or an annualized return of 13.19%, which Stock Options Channel refers to as the YieldBoost.

Additionally, the chart below shows SPDR Gold Trust’s trailing twelve-month trading history, with the $295.00 strike indicated in green:

Now, examining the call side of the options chain, the call option at the $305.00 strike is currently priced at $11.55. Should an investor buy GLD shares at the current price of $298.32 and sell-to-open this call option as a covered call, they would obligate themselves to sell the stock at $305.00. When considering the premium collected, this yields a total potential return of 6.11% if the stock is called away by the July 18th expiration (excluding dividends and broker commissions). However, substantial upside may be lost if GLD shares rise significantly, underscoring the importance of analyzing both historical trading data and business fundamentals.

The chart below illustrates GLD’s trading history over the past twelve months, with the $305.00 strike marked in red:

The $305.00 strike price is approximately 2% above the current trading price, meaning it’s out-of-the-money by that amount. There’s a possibility that this covered call contract could expire worthless as well, allowing the investor to retain both their shares and the collected premium. Current analytical data suggests a 52% chance of that outcome. Stock Options Channel will continuously track these odds, posting updates and a history chart on their website. If the covered call expires worthless, the premium represents a 3.87% increase on the investment return, or an annualized rate of 14.42%, another YieldBoost indication.

The implied volatility for both the put and call options is approximately 22%. In contrast, our calculations show the actual trailing twelve-month volatility—based on the last 251 trading day closing values and today’s price of $298.32—is about 16%. For those interested in exploring more put and call option strategies, visit StockOptionsChannel.com.

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Also see:

• Mergers and Acquisitions
• WWR Insider Buying
• PFIN market cap history

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.