Hedged Long Gold Position via Option Risk Reversal

24 days ago

Patrick Ceresna

"Now if paying about $16 an ounce for peace of mind over the remainder of the year makes sense to you, this certainly is a structure worth considering."

The trade call lays out an options-based hedge for an existing long gold position of approximately 100 troy ounces (roughly $390,000 at current levels). The strategy involves buying a $3,800 put, selling a $3,600 put to offset part of the cost, and financing this hedge by selling a $4,300 call. This structure protects against an 8% downside correction (about $300 per ounce move) while capping upside gains at around 10% above current levels, with a net premium cost of about $16 per ounce.

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