A Bullish Trade on Gold

Here is a quick bullish trade idea on gold.

Gold has been trending downwards in 3 defined channel (2 in the pictures) (I am using channels as rough definition for 2 trending lines, not necessarily in a symmetry). However, during the past few days, Gold futures moved beyond the short-term downward trending channel.

So what’s next?

The first real test is yesterday’s high. if Gold futures can close above that, I think there is high probability it is heading towards 1700-1705 before meeting the next resistance which is defined by another intermediate channel.

If Gold can continue to move past the intermediate down trending resistance line, there is increased likelihood that we might see 1750 sooner than later.

How to trade-

I shall prefer to trade this move via vertical debit spread which then I will continue to roll upwards as gold prices continue to move from zone 1 (~1,700-1,705) to say zone 2 (~1,740-1,750). For zone 1, I shall prefer a March (40days to expiration) 1700/1710 bull call spread (roughly $3.50 debit/$6.50 max gains) and once Zone 1 is cleared, I shall prefer a 1725/1750 bull call spread.

Stop Loss- If however, Gold futures drops below 1666, I shall book whatever the loss maybe and re-enter the trade only when it can move past yesterday’s high.

Should you decide to follow this trade, please post in the comment section and we can stay connected should there be a need for adjustments.

Update on Apple (NON-OPN Trade)-

As some of you asked me to share what was shared with OPN members just before market close yesterday. Here is the snapshot and trade idea on Apple yesterday (booked gains in excess of +125% withing a day)-


The high of the day today, $509.44.

Have fun trading, trade profitably, OP

Disclaimer– As of this writing, I am in Gold bullish positions but I may change my positions anytime. Please do your due diligence before investing any money based on the information provided above.






2 responses to “A Bullish Trade on Gold”

  1. Milachka Avatar

    OP, what exactly is the instrument you trade here?

    Is this it?

    GC FOP Apr’13 1700 CALL (OG)
    GC FOP Apr’13 1710 CALL (OG)

    What is the multiplier for this contract? 100 per contract ?

    Also, since gold closed below yesterday’s high. Is the trade no longer on?

    1. OptionPundit Avatar

      @Milachka- Instrument is /GC; Multiplier->1,000/contract, since it didn’t close above yesterday high, the trade is no longer on.

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