XAUUSD is off nearly $18, taking GLD with it. Although this is not a good premium selling play, it is a good "buy on weakness play." And the way I'm going to attack it is via short put verticals, laddered 45, 75, and 105 days out using the monthly options expirations.
Here are the rungs of the ladder:
Dec 18th 98/101 short call vert Jan 15th 96/99 short call vert Feb 19th 95/98 short call vert
All of these have the short put set up around the 1 SD line for that particular expiry and are worth about 30/contract (give and take). Should gold rip to the upside, I'll go ahead and match these up with short call verticals to create iron condors ... . (Point in fact, I should have sold GLD via short call verts, laddered or otherwise, on the rip to the upside, but got distracted by other plays ... . Oh well, can't catch everything.).
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Forgot to post this earlier. First a major correction -- these are short put verticals, not short call verticals. Secondly, with price moving precariously close to my Dec 18 98/101, I rolled it out and down to March 96/99 for an additional credit. Now the question is: Will 100 hold?
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My how time flies when you're having fun. I originally put this GLD short put vertical ladder on 2 months ago. I had to roll out the Dec "rung" down and out to March, but the Jan 15th 96/99 short put vertical was covered today for a .05 debit. This leaves two rungs: a Feb 19th 94/97 short put vertical and a March 18th 96/99 short put vertical. After I get those closed out at some point, I'll turn to using GDX or GDXJ to play gold; they're much cheaper to put on ... .
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Finally covering the last two rungs of my ladder here for a small profit to redeploy my buying power on setups closer in time ... .
If price ramps up, I will roll up the short puts within the spread to take additional advantage of the upmove if it makes sense/is profitable to do so, particularly on those back months when there is plenty of time to work with. With these, there is such little profit in them that I will look to take them off at or near max profit or allow them to expire worthless if I'm certain that's going to happen ... .