Hello Investors,
Today we discussed the relationship between bond prices, yields, Fed fund rates and other factors. We are in the camp of higher overall rates for a longer period of time. With that, we think Gold prices are due for a correction in the coming months. We have entered into a put butterfly spread as detailed in class.
Buy to open: GLD March 21st (monthly) 235.00 strike put (ratio of 1)
Sell to open: GLD March 21st (monthly) 220.00 strike put (ratio of 2)
Buy to open: GLD March 21st (monthly) 205.00 strike put (ratio of 1)
Debit: 2.05
Max risk = 2.05 or $205.00 per spread
Max reward = 12.95 or $1,295.00 per spread
Have a great week!