If you believe the recent run in US Dollars is sustainable and don't feel like you've completely missed the move, consider the following strategy to profit from it: sell credit spreads... in gold.
Dollars move inverse to gold. And while there's certainly no perfect correlation there, the basic relationship is fundamentally sound. The next two graphs illustrate this:
US Dollars (DXY)
GOLD (GLD)
There has clearly been a breakdown in the gold rush. The question is whether it'll stay broke.
I think a low risk way to profit from this is to sell the 85/89 Sep GLD Call Spread (aka Bear Call Spread) for a $600 credit - with a stop above 85.65. Here's what the trade calc looks like:
Theoretically you're risking $3,400 to make $600 but in actuality, your intelligent STOP would limit your risk to a fraction of that.
So why not just sell Bull Put Spreads (credit spread: bullish) or buy Bull Call Spreads (debit spread: bullish) on DXY? For one, options don't trade on DXY. Also, the GLD charts looks a lot nicer in terms of support/resistance.
Have a great Labor Day weekend.
OptionSpot
I think a low risk way to profit from this is to sell the 85/89 Sep GLD Call Spread (aka Bear Call Spread) for a $600 credit - with a stop above 85.65. Here's what the trade calc looks like:
Theoretically you're risking $3,400 to make $600 but in actuality, your intelligent STOP would limit your risk to a fraction of that.
So why not just sell Bull Put Spreads (credit spread: bullish) or buy Bull Call Spreads (debit spread: bullish) on DXY? For one, options don't trade on DXY. Also, the GLD charts looks a lot nicer in terms of support/resistance.
Have a great Labor Day weekend.
OptionSpot
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