Friday, February 19, 2010

Fed raises rates: using GLD for gold going up or down

With the Fed raising the discount window yesterday, gold took  a minor tumble. Below you will see straddles for the popular GLD ETF which tracks the price of gold. Gold is highly volatile and it could really be trading anywhere between $500 and $5,000 an ounce. This is why straddles are so attractive.


They are however risky as they may cause 100% loss if the underlying does not move ther indicated amount. These were calculated with StraddlesCalc tool.

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