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Friday, June 24, 2016

Gold (GLD) Call Options

Friday, 6/24/2016 (7:16:24 am, PT)

sold (to open) -10 June 24, 2016  $126.50 calls at $0.22

Why did I place this trade?
  • GLD shot up over 5% this morning after the "BREXIT" results were announced in the middle of the night (i.e., after 11:59 pm of Thursday, June 23)
  • when GLD shoots up like this, its "implied volatility" (IV) also goes up
  • a higher IV means higher call premiums (OPPORTUNITY to make some quick $$$)
  • 76% probability of success

Comments:

  • GLD was extremely "choppy" all day long on 6/24, so my call's premium remained high throughout the day (even though it was expiration Friday)
  • GLD hovered below my strike price of $126.50 all day long (good thing!)
  • I placed a limit order to buy back my short calls at $0.01 and waited and waited ....
  • at 12:58 pm (with 2 minutes left), the bid was $0.01 and the ask was $0.07 even though my short calls were OTM (those darn market makers!)
  • at 1:00 pm (closing bell), the ask was still at $0.05, so my limit order never filled!  I couldn't believe it!
  • GLD closed at $126, so my short calls expired "worthless"

PROFIT:  $220 (in 6 hours)

SUCCESS!