GLD Follow Up

Although I can imagine more downside for GLD, the puts I used were $162 May expiration. A bounce and continuing time decay makes this particular position not the ideal one to take advantage of a possible larger move down in GLD. If we get a bounce in GLD, I'll look at a potentially longer expiration put position.

Here are the charts from Friday that persuaded me to take on the leveraged position (as you know I've been moving more toward equity shorts without leverage and away from short term options trades that have worked so well in this volatile and choppy market).

 I know the appeal options trading has, a 600% move is addictive, however when I was trading full time with no other source of income, I lost an options portfolio by doing all the wrong things which it seems many people do. Remember that options are a derivative product that came from Wall Street, they are set up like Vegas, give you a taste of the action and then keep you in the game chasing that action until the house finally wins. For this reason I've changed my options strategy, I buy in the money puts and calls, I use them for leverage and only when the trade looks high probability, but doesn't offer enough potential gain to take the risk; this is why in the past several months I have placed so many of these trades, we have huge volatility, but very short trends. I also tend to go out a little longer than I believe is necessary as the market always seems to throw some surprises your way and finally, I'm not looking for the home run of 600%, 20 trades that have made from 7 -244% (most being around 30-50%) is not a bad way to make money. Wall Street wants you to hold these as long as possible, every additional day gives them a greater statistical edge, so I want to get out of these options trades as soon as I have a decent profit.

 As of Friday the 30 min chart was looking bad, looking like GLD would head toward the lower boundary of the recent range.

 The 15 min chart saw a sharp negative divergence as price was lateral

 The 5 min chart showed the same strong negative divergence in the same area, as price was flat, they were engaged in heavy distribution.

 Finally, the 1 min chart went strongly leading negative at the end of the day, which looked like GLD was ready to break down from the flat range.

Current charts...

 First there's the gap in GLD, most gaps are filled, so that is a negative for the trade.

 Today's 2 min positive divergence looks like GLD wants to fill that gap.

 While the 30 min chart is still very negative as it was on Friday...

The 15 min chart at least suggests that this could be more than just a gap fill. I'm not willing to risk the profits with these charts in place.

I will consider opening a new put position on a decent move in GLD.