Trading $GLD Options

$GLD Chart

As day traders, we have the unique opportunity to trade the style that fits us best. In late October, Theta Warrior identified a swing opportunity in $GLD. Swing trading takes a more measured and patient approach, but any trade carries its share of risk.

Join us below as we delve into the world of swing trading through recent activities surrounding $GLD (SPDR Gold Trust ETF), unveiling strategic moves and the reasoning behind our swing entry.

Swing Play Decision

On 10/26/2023, Theta Warrior noticed the Net Options Delta (NOD) for $GLD at +471K. If you need a refresher on NOD, read more about NOD here. Such a surge indicates active call buying throughout the day, signaling a strong bullish sentiment among traders.

Based on this information, the decision was made to Buy to Open (BTO) a 17NOV23 185C call option in $GLD at a price of $2.75. This was not meant for a day trade; it was a swing play—a strategy that banks on short to mid-term price swings in the market.

A bull flag appears

Beyond the NOD, the decision to enter the swing trade was bolstered by technical analysis. $GLD was currently consolidating in a bull flag pattern, positioned just below the psychologically significant 2K level. Historically, this level had posed challenges for $GLD, but given the current market environment, there was optimism about its potential to break higher.

The bull flag pattern is a bullish continuation pattern, suggesting that after a consolidation phase, the asset may embark on an upward trajectory. With this analysis in mind, the trader’s swing trade was carefully positioned for the upside, aligning with the deliberate approach of swing trading.

Above Ask Sweeper Alert

The next day, the trading landscape continued to evolve. An “Above Ask Sweeper Alert” was sounded, drawing attention to a substantial options order executed at prices exceeding the market’s ask. Such alerts are known to highlight significant market interest and may hint at a bullish outlook

On the same day, the Net Options Delta (NOD) for $GLD reached an impressive +257K. This figure was shared with the trading community, signaling a flurry of call options being purchased. It was clear evidence that traders were actively positioning themselves for potential gains, further supporting the bullish sentiment.

Navigating the Gold Rush

As the $GLD trade progressed, our swing trade started to turn in our direction. On the date of 10/27/2023, we started to trim our position to lock in profit. Theta Warrior executed a series of Sell to Close (STC) orders for the 17NOV23 185C call options at various price points, realizing gains along the way. These exits were a testament to the precision and timing inherent in swing trading. As the trade played out in alignment with the bullish outlook, the trader made the strategic choice to trim positions, locking in profits and ensuring a successful outcome.

Below are the closing alerts sent out on Theta’s private Twitter and Discord:

  • $GLD STC 17NOV23 185C at $3
  • $GLD STC 17NOV23 185C at $3.3
  • $GLD STC 17NOV23 185C at $3.6
  • $GLD STC 17NOV23 185C at $3.85

The move in $GLD aligned perfectly with the initial positioning, with $GC_F (Gold Futures) surging past the psychologically significant 2K mark. With their trades yielding fruit, the trader shared their success with the trading community, acknowledging the favorable outcome and the need for prudent risk management over the weekend.

Congratulations echoed through the digital trading room, marking the conclusion of a well-executed swing trade. In the realm of $GLD trading, every move tells a story of strategy and adaptability. This journey underscores the importance of staying alert to unusual options activity, leveraging technical analysis, and making timely decisions based on evolving market conditions.

Trading is a nuanced art, where risk and reward must be carefully balanced. While success is never guaranteed, traders learn and grow with each trade. In this ever-changing landscape, every decision is a step forward in the pursuit of trading excellence.

Disclaimer: Trading involves risks, and past performance is not indicative of future results. Always conduct thorough research and consider seeking advice from qualified financial professionals before making any investment decisions.

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