Steve Meizinger SPDR GOLD Trust GLD ETF

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Steve MeizingerSPDR GOLD TrustGLD ETF
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For the sake of simplicity, the examples that
follow do not take into consideration commissions
and other transaction fees, tax considerations,
or margin requirements, which are factors that
may significantly affect the economic
consequences of a given strategy. An investor
should review transaction costs, margin
requirements and tax considerations with a broker
and tax advisor before entering into any options
strategy. Options involve risk and are not
suitable for everyone. Prior to buying or
selling an option, a person must receive a copy
of CHARACTERISTICS AND RISKS OF STANDARDIZED
OPTIONS. Copies have been provided for you today
and may be obtained from your broker, one of the
exchanges or The Options Clearing Corporation. A
prospectus, which discusses the role of The
Options Clearing Corporation, is also available,
without charge, upon request at 1-888-OPTIONS or
www.888options.com. Any strategies discussed,
including examples using actual securities price
data, are strictly for illustrative and
educational purposes and are not to be construed
as an endorsement, recommendation or solicitation
to buy or sell securities.
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GLD shares

• The Gold Shares represent fractional, undivided
  interests in the Trust, the primary asset of
  which is allocated (or secured) gold
• For many investors, the transaction costs related
  to the Gold Shares are expected to be lower than
  the costs associated with the purchase, storage
  and insurance of physical gold.
• There exists a 24-hour global over-the-counter
  market for gold bullion, which provides readily
  available market data. The price, holdings and
  net asset value of Gold Shares, as well as market
  data for the overall gold bullion market, can be
  tracked daily at www.spdrgoldshares.com
• Flexible Gold Shares (NYSE GLD) are listed on
  the various stock exchanges and trade the same
  way ordinary stocks do. It is possible to buy or
  sell Gold Shares continuously throughout the
  trading day on the exchange at prices established
  by the market. Additionally, it is possible to
  place market, limit and stop-loss orders of Gold
  Shares

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Option selling

• The goal of selling options is to try to earn
  additional income in stabile markets, by the
  willingness to receive certain obligations, the
  obligation but not a guarantee to sell (call) or
  the obligation to buy but not a guarantee to buy
  (put)

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Covered call defined

• The Covered Call strategy consists of buying
  stock or an ETF and simultaneously selling calls
  on a share-for-share basis.
• (Selling calls against stock that is
  alreadyowned is known as covered writing)

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Buy GLD _at_96 sell 4 week 97 c 2.60
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Maximum risk for a covered call is the debit

• Theoretically, if the ETF is purchased at 96 and
  an upside call is sold for 2.60, the maximum
  risk in that position is 93.40

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Values of covered call strategy at expiry
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Bullish on GLD but want some downside protection?

• Buy GLD at 96.00 and buy an insurance policy on
  GLD, a put option
• The 93 put can be purchased for 1.60

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Values of GLD in conjunction with a 93 put
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How about a bull call spread?

• Buy a lower strike call and sell a higher strike
  call, 95/100 bull call spread for 1.85

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Values of 95/100 bull call spread
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Bearish on GLD and want limited risk?

• One choice could be purchasing a 97 put for 3.40

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Values of GLD 97 put
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How about a bear put spread?

• Buy the higher strike put and sell a lower strike
  put, 97/92 bear put spread for 2.20

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Values of the 97/92 put spread
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How about an OTM bear put spread?

• Buy the higher strike put and sell a lower strike
  put, 93/88 bear put spread for 1.10

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Values of the 93/88 put spread
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Looking for volatility, how about a strangle?

• Buy a 101 strike out-of the-money call (1.30) and
  a 92 strike out-of-the-money (1.20) put hoping
  for a large price move in one direction or
  another

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Values of the 101/92 strangle
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Looking for a reduction in volatility, how about
selling an iron condor?

• Iron condor definition- Selling an OTM 101/106
  call spread (0.90) and simultaneously selling an
  91/86 OTM put spread (0.70)

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Values of the 101/106/91/86 iron condor
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Summary

• Options allow investors many more choices for
  their particular investments
• Options allow for investors to hedge investments,
  target increased income or even creating their
  own unique payoffs based on their own risk reward
  choices when using the options strategy of
  spreading
• Most importantly, investors should try to learn
  all the particular options strategies in order
  for them to select the strategy that is most
  appropriate for them based on their own financial
  goals and their own risk tolerances

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Steve Meizinger

• smeizinger_at_ise.com
• www.ise.com