It’s been awhile since bulls have been optimistically buggy for the likes of Comex Gold (GLD). But a combined technical setup and some less fast, kind of patient and very large call activity on Thursday suggest an intermediate low could be in place and a spot for other bulls to consider as a safer and more precious haven as we move towards and into the dog days of summer.
Figure 1: Comex Gold (GLD) Weekly Bull View
“More precious?” For readers that follow our daily Wall Street Lunch Option column, we began discussing GLD as bottoming back on Wednesday as shares came fractionally within their five month lows set back in late December. The potential for a weekly double bottom coupled with shares in the uncommon position of being outside the lower Bollinger Band while sporting an oversold daily RSI 13 looked enticing enough to put the pen to the proverbial paper.
A slightly more thorough examination of the chart also revealed an existing W4 completion and EBOT signal from our designated test of the December low and an enticing mid TAPP of about $210 by early January. That said, but maybe in appreciation of GLD needing to crawl first before it jogs aggressively higher to fresh all-time-highs, one or two larger traders positioned "to open" with the slightly out-of-the-money July 160 calls.
Discussed in Thursday’s “WSLO”, two prints of 23,000 and 15,000 contracts priced for $2.25 and $2.35 with roughly 5,000 in smaller prints in tow were spied. We assumed the activity to be opening buyers based on low open interest and modestly bid implieds. And if we look above to the annotations in Figure 1 and of shares needing to rally just 8% with still 63 days on the calendar to reach, but not necessarily stretch to about 165; the bullish view looks even less buggy with this kind of limited risk play on gold.
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
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