How to trade options gold

The NASDAQ Options Trading Guide. Equity options today are hailed as one of the most successful financial products to be introduced in modern times. Options have proven to be superior and prudent investment tools offering you, the investor, flexibility, diversification and control in protecting your portfolio or in generating additional investment income. We hope you'll find this to be a helpful guide for learning how to trade options. Understanding Options. Options are financial instruments that can be used effectively under almost every market condition and for almost every investment goal. Among a few of the many ways, options can help you: Protect your investments against a decline in market prices Increase your income on current or new investments Buy an equity at a lower price Benefit from an equity price’s rise or fall without owning the equity or selling it outright. Benefits of Trading Options: Orderly, Efficient and Liquid Markets. Standardized option contracts allow for orderly, efficient and liquid option markets. Options are an extremely versatile investment tool. Because of their unique riskreward structure, options can be used in many combinations with other option contracts andor other financial instruments to seek profits or protection.

An equity option allows investors to fix the price for a specific period of time at which an investor can purchase or sell 100 shares of an equity for a premium (price), which is only a percentage of what one would pay to own the equity outright. This allows option investors to leverage their investment power while increasing their potential reward from an equity’s price movements. Limited Risk for Buyer. Unlike other investments where the risks may have no boundaries, options trading offers a defined risk to buyers. An option buyer absolutely cannot lose more than the price of the option, the premium. Because the right to buy or sell the underlying security at a specific price expires on a given date, the option will expire worthless if the conditions for profitable exercise or sale of the option contract are not met by the expiration date. An uncovered option seller (sometimes referred to as the uncovered writer of an option), on the other hand, may face unlimited risk. This options trading guide provides an overview of characteristics of equity options and how these investments work in the following segments: Enter a company name or symbol below to view its options chain sheet: Edit Favorites. Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.

Customize your NASDAQ. com experience. Select the background color of your choice: Select a default target page for your quote search: Please confirm your selection: You have selected to change your default setting for the Quote Search. This will now be your default target page unless you change your configuration again, or you delete your cookies. Are you sure you want to change your settings? Please disable your ad blocker (or update your settings to ensure that javascript and cookies are enabled), so that we can continue to provide you with the first-rate market news and data you've come to expect from us. Gold Options Explained. Gold options are option contracts in which the underlying asset is not Gold Bullion but a gold futures contract. You can trade gold options in the same way as you would a traditional securities option, so both calls and puts are available. As usual with options you’re under no obligation to buy the futures contract at the strike price. If you don’t wish to exercise the option you can simply let it expire. Where Are Gold Options Traded? Gold option contracts are traded on both the New York Mercantile Exchange (NYMEX) and the Tokyo Commodity Exchange (TOCOM). NYMEX Gold option prices are quoted in dollars and cents per ounce and their underlying futures are traded in lots of 100 troy ounces of gold. TOCOM Gold options are traded in contract sizes of 1000 grams (32.15 troy ounces) and their prices are quoted in yen per gram.

Call and Put Options. Gold Options are available in both calls and puts, calls should be bought buy traders who think that the overall trend is bullish. Traders who believe that the overall trend is bearish should buy put options instead. Calls and puts can also be combined together by simultaneously buying and selling options to create what’s called a spread. How to Trade Gold Options. Let’s say that a near-month NYMEX Gold futures contract is trading at $114.00 per ounce. A NYMEX Gold put option (bearish) with the same expiration and a strike price of $100.00 is being priced at $1.30oz. Since each underlying NYMEX Gold futures contract represents 100 troy ounces of gold, the options premium you need to pay to own the put option is $130.00. Upon expiration, the price of the underlying gold futures has fallen by 15% and is now trading at $96.90 per ounce. At this price, your put option is now in the money. If you exercise your put option, you get to assume a short position in the underlying gold futures market at a strike price of $100.00. That means you get to sell 100 ounces of gold at $100.00oz upon delivery. If you wanted to take profit from the trade you’d need to enter an offsetting long futures position for one contract of the underlying gold futures at the market price of $96.90 per ounce, resulting in a net profit of $3.10oz.

Since each NYMEX Gold put option covers 100oz of gold, your gross profit from the long put position is $310.00. After deducting the initial option premium of $130.00 your net profit from the long put option will be $180.00. In reality you wouldn’t wait to exercise the put option to realize your profit. You could simply close out the position early by selling the put back to the market. The above example doesn’t include any commissions that you’d have to pay your broker to execute the options trade. These commissions vary from broker to broker but usually amount to around $10 to $20 per trade. Gold Options vs. Gold Futures. Looking at the above example you might be wondering if it would be easier to just trade the underlying Gold futures and forget about options altogether. But options have significant advantages over futures, including additional leverage and lower risk. For instance if you were to buy gold options you’d gain additional leverage over the equivalent futures contract, since the premium payable is typically much lower than the margin required to open a position in the underlying gold futures market. And since you’re under no obligation to buy the futures contract upon expiry, your maximum potential loss is limited to the price you paid to purchase the option. If you purchased the futures outright your potential loss would be unlimited. As you can see if you’re already used to trading options, Gold options are fairly straight forward.

But if you’re new to options, you might be feeling a little confused. The best thing for you to do is sign-up for an account with optionsXpress once approved they’ll give you a virtual $25,000 to play with. Use what you’ve learned here and carry out a few test trades. It won’t take you long before you’re up to speed. You’ll also find a whole lot more training resources and tutorials to help take your trading to the next level. How To Buy Gold Options. Buy gold options to attain a position in gold for less capital than buying physical gold or gold futures. Gold options are available in the U. S. through the Chicago Mercantile Exchange (CME), so if you've wondered how to invest in gold, here's a shorter-term and less capital intensive way to do it. How to Invest in Gold: Calls and Puts. Use options to profit whether gold prices rise or fall. Believe the price of gold will rise? Buy a gold call option. A call option gives the right, but not the obligation, to buy gold at a specific price for a certain amount of time (expiry). The price you can buy gold at is called the strike price. If the price of gold rises above your strike price before the option expires, you make a profit.

If the price of gold is below your strike price at expiry, you lose what you paid for the option, called the premium. (For more on how to decide which call or put option to use, see " Which Vertical Option Spread Should You Use? ") Put options give the right, but not the obligation, to sell gold at a specific price (strike price) for a certain amount of time. If the price of gold falls below the strike price, you reap a profit of the difference between the strike price and current gold price (approximately). If the price of gold is above your strike price at expiry, your option is worthless and you lose the premium you paid for the option. It is not necessary to hold your option till expiry. Sell it at any time to lock in a profit or minimize a loss. Gold Options Specifications. Gold options are cleared through the CME, trading under the symbol OG. The value of the options is tied to the price of gold futures, which also trade on the CME. 40 strike prices are offered, in $5 increments above the below the the current gold price. The further the strike price from the current gold price, the cheaper the premium paid for the option, but the less chance there is that the option will be profitable before expiry. There are more than 20 expiry times to choose from, ranging from short-term to long-term.

Each option contract controls 100 ounces of gold. If the cost of an option is $12, then the amount paid for the option is $12 x 100 = $1200. Buying a gold futures contract which controls 100 ounces requires $7,150 in initial margin. Buying physical gold requires the full cash outlay for each ounce purchased. To buy gold options traders need a margin brokerage account which allows trading in futures and options, provided by Interactive Brokers, TD Ameritrade and others. Gold options prices and volume data are found in the Quotes section of the CME website, or through the trading platform provided by an options broker. Calls and puts allow traders a less capital intensive way to profit from gold uptrends or downtrends respectively. If the option expires worthless, the amount paid (premium) for the option is lost risk is limited to this cost. Trading gold options requires a margin brokerage account with access to options. how+to+trade+options. Narrow Your Search. Tech Culture (10343) Tech Industry (7022) Internet (3948) Mobile (3830) Phones (1570) Security (1157) Software (1121) Sci-Tech (1050) Gaming (823) Computers (776) Smart Home (626) Applications (618) Gadgets (562) Auto Tech (505) Mobile Apps (455) How to record phone calls.

Remember the story about the guy who recorded a hilariously horrific customer-service call with Comcast? If I was on the receiving end of such disastrously bad service, I'd want audio proof as. By Rick Broida 05 April 2017. How to watch the Masters 2017. Jason CiprianiCNET Later this week, the world's best golfers will vie for the honor to wear the coveted green jacket at the Masters. You have a few different options to watch an entire weekend. By Jason Cipriani 03 April 2017. How to set up a backup phone. Enlarge Image Josh MillerCNET Well, it happened. Your phone is lost. Or broken. Maybe even stolen. And because your entire life is contained in that thing, now you've got problems. Your. By Rick Broida 04 April 2017.

How to make pod coffee cheaper. My-Cap When my Aeropress broke recently and I was jonesing for my morning shot of espresso, I bought a Nespresso Vertuoline espresso maker. It was on sale and makes great coffee, but I quickly. By Richard Baguley 07 April 2017. How to look like a big business. In 1999, Rob Cheng left a comfortable job heading up sales, marketing and support at Gateway, one of the biggest PC makers of the era, to open his own company. The idea -- a website offering an. By Charles Cooper 29 March 2017. How to connect Lifx bulbs to Google Home. Google has been slowly closing the gap between what Amazon's Alexa speakers and its own Google Home are capable of. Among other small additions along the way, since its launch in November, Google. By Taylor Martin 28 March 2017. How to switch from iPhone to Samsung. Evan BlassTwitter Are you ready to give Samsung another shot after last year's exploding Galaxy Note 7 scandal? The troubled electronics giant is set to release its next flagship phone, the. By Matt Elliott 22 March 2017.

How to recycle old appliances (with little to no effort) Taylor MartinCNET Landfills take up space, add to the greenhouse gasses in the atmosphere and they smell awful. Plus, they will only get bigger if your old refrigerator, oven or washer get sent. By Alina Bradford 02 April 2017. How to use a Chromebook: Tips, tricks and shortcuts. Kicking the tires on a Chromebook purchase? As a cheaper alternative to a Windows laptop or a MacBook, a Chromebook is an attractive option for budget buyers. The simplicity of Google's Chrome OS. By Matt Elliott 07 April 2017. How to make a good movie even better. For the past several weeks I've been sharing my favorite YouTube channels because I want people to know there's way more to Google's video site than the stuff most people search for. Today, I. By Jason Parker 30 March 2017. © CBS Interactive Inc. All Rights Reserved. Gold Futures and Options. Trade COMEX Gold futures and options contracts for a globally relevant, liquid financial instrument to help you hedge against inflation.

A safe haven in times of financial uncertainty, our suite of gold products includes full (100 oz.), E-mini (50 oz.), E-micro (10 oz.), and kilo size contracts to provide market users with flexibility, transparency, and choice in tailoring their risk management programs. Key Benefits. A central point of price discovery, price transparency, risk management, mitigation of counterparty credit risk, and CFTC oversight Price managed separately from physical supply Contracts are listed for 60 months forward, enabling the establishment of a forward price curve. Electronic futures trading available on CME Globex, facilitating risk management opportunities for market participants around the globe. Unparalleled flexibility to conduct off-exchange business, negotiate prices, and take advantage of central counterparty clearing with OTC clearing through CME ClearPort. Get Started with COMEX Gold Futures. Welcome to COMEX Gold Futures. As you look to add liquid and actively-traded contracts to your portfolio, COMEX Gold futures lead the charge for benchmark, efficient risk management opportunities in today's global gold markets. Understanding COMEX Gold futures can help you to more accurately manage your risk and benefits from thse liquid markets. Product Information.

Thank you. Your message has been received. Someone will contact you shortly. CME Group Liquidity Alerts. Subscribe to receive real-time Instant Message notifications when trades are executed for Gold futures and options. More in Precious Metals. Silver Futures & Options. Precious Metals Spot Spread. Platinum and Palladium Futures & Options. Send Us Feedback. CME Group is the world's leading and most diverse derivatives marketplace.

The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX. Learn How To Trade Gold In 4 Steps (GLD, GDX) Whether bull or bear, the gold market offers high liquidity and excellent opportunities to profit in nearly all market environments due to its unique position within the world’s economic and political systems. While many folks choose to own the metal outright, speculating through the futures, equity and options markets offers incredible leverage with measured risk. (See related: Gold Price: Catching Resistance off of the 2015 Trend-Line.) Market participants often fail to take full advantage of gold price fluctuations because they haven’t learned the unique characteristics of world gold markets or the hidden pitfalls that can rob profits. In addition, not all investment vehicles are created equally, with some gold venues more likely to produce consistent results while others frustrate most attempts to profit. Trading the yellow metal isn’t hard to learn, but the activity requires skill sets unique to these markets. While broad-based experience assists bottom line results, seasoned professionals will benefit by incorporating four strategic steps into their daily routines. Meanwhile, novices should tread lightly, experimenting until the intricacies of these complex markets become second-hand. 1. Learn What Moves Gold. As one of the oldest currencies on the planet, gold has embedded itself deeply into the psyche of the financial world.

Nearly everyone has an opinion about the yellow metal, whether or not they’re taking risk, but gold itself reacts only to a limited number of price catalysts. Each of these forces splits down the middle in a polarity that impacts sentiment, volume and trend intensity: Market players face elevated risk when they trade gold in reaction to one polarity when another polarity is controlling price action. For example, a selloff hits world financial markets, and gold takes off in a strong rally. Many traders assume that fear is moving the yellow metal and jump in, believing the emotional crowd will blindly carry price higher. However, inflation fears may have triggered the decline, attracting a more technical crowd that will sell the rally aggressively. Combinations of these forces are always in play in world markets, establishing long-term themes that track equally long uptrends and downtrends. For example, the Federal Reserve (FOMC) economic stimulus begun in 2009 initially had little effect on gold because market players were focused on high fear levels coming out of the 2008 economic collapse. However, this quantitative easing encouraged deflation, setting up the gold market and other commodity groups for a major reversal. That turnaround didn’t happen immediately because a reflation bid was underway, with depressed financial and commodity-based assets spiraling back toward historical means. Gold finally topped out and turned lower in 2011 after reflation was completed and central banks intensified their quantitative easing policies. VIX eased to lower levels at the same time, signaling that fear was no longer a significant market mover. 2. Understand the Crowd.

Gold attracts numerous crowds with diverse and often opposing interests. Gold bugs stand at the top of the heap, collecting physical gold and allocating an outsized portion of family assets to gold equities, options and futures. These are long-term players rarely dissuaded by downtrends that shake out less ideological players. In addition, retail participants comprise nearly the entire population of gold bugs, with few funds devoted entirely to the long side of the precious metal. Gold bugs add enormous liquidity while keeping a floor under futures and gold stocks because they provide a continuous supply of buying interest at lower prices. They also serve the contrary purpose of providing efficient entry for short sellers, especially in emotional markets when one of the three primary forces polarizes in favor of strong buying pressure. In addition, gold attracts enormous hedging activity by institutions, who buy and sell in combination with currencies and bonds in bilateral strategies known as “risk-on” and risk-off.” Funds create baskets of instruments matching growth (risk-on) and safety (risk-off), trading these combinations through lightning fast algorithms. They are especially popular in highly conflicted markets in which public participation is lower than normal. 3. Read the Long-Term Chart. Take time to learn the gold chart inside and out, starting with long-term history that goes back at least 100 years. In addition to carving out trends that persisted for decades, the metal has also trickled lower for incredibly long periods, denying profits to gold bugs.

From a strategic standpoint, this analysis identifies price levels that need to be watched if and when the yellow metal returns to test them. Gold’s recent history shows little movement until the 1970s, when it took off in a long uptrend, underpinned by rising inflation due to skyrocketing crude oil prices. It turned lower near 700 in the early 1980s, in reaction to restrictive Federal Reserve monetary policy. The subsequent downtrend lasted into late 1990s when gold entered the historic uptrend that culminated in the 2011 top. A steady decline since that time has relinquished more than 700 points in 4 years. Liquidity follows gold trends, increasing when it’s moving sharply higher or lower and decreasing during relatively quiet periods. This oscillation impacts the futures markets to a greater degree than it does equity markets, due to much lower average participation rates. New products offered by Chicago’s CME Group in recent years haven’t improved this equation substantially. CME offers three primary gold futures, the 100-oz contract, a 50-oz. mini contract and a 10-oz micro contract added in September 2011. While the largest contract traded close to 200K lots per day in 2015, the smaller contracts were not widely traded, averaging less than 500 lots per day for the mini and less than 2500 for the micro.

This thin participation doesn’t impact long-dated futures held for months but strongly impacts trade execution in short-term positions, forcing higher costs through slippage. SPDR Gold Shares (GLD) shows the greatest participation in all types of market environments, with exceptionally tight spreads that can drop to one penny. Average daily volume stood at 5.39 million shares per day in September 2015, offering easy access at any time of day. CBOE options on GLD offer another liquid alternative, with active participation keeping spreads at low levels. Market Vectors Gold Miners ETF (GDX) grinds through greater daily percentage movement than GLD but carries higher risk because correlation with the yellow metal can vary greatly from day to day. Large mining companies hedge aggressively against price fluctuations, lowering the impact of spot and futures prices, while operations may hold significant assets in other natural resources, including silver and iron. Trade the gold market profitably in four steps. First, learn how three polarities impact the majority of gold buying and selling decisions. Second, familiarize yourself with the diverse crowds that focus on gold trading, hedging and ownership. Third, take time to analyze the long and short-term gold charts, with an eye on key price levels that may come into play. Finally, choose your venue for risk taking, focused on high liquidity and easy trade execution.

(See also: The Effect of Fed Fund Rate Hikes on Gold.) how+to+trade+options. Narrow Your Search. Tech Culture (10343) Tech Industry (7022) Internet (3948) Mobile (3830) Phones (1570) Security (1157) Software (1121) Sci-Tech (1050) Gaming (823) Computers (776) Smart Home (626) Applications (618) Gadgets (562) Auto Tech (505) Mobile Apps (455) How to record phone calls. Remember the story about the guy who recorded a hilariously horrific customer-service call with Comcast? If I was on the receiving end of such disastrously bad service, I'd want audio proof as. By Rick Broida 05 April 2017. How to watch the Masters 2017. Jason CiprianiCNET Later this week, the world's best golfers will vie for the honor to wear the coveted green jacket at the Masters. You have a few different options to watch an entire weekend. By Jason Cipriani 03 April 2017.

How to set up a backup phone. Enlarge Image Josh MillerCNET Well, it happened. Your phone is lost. Or broken. Maybe even stolen. And because your entire life is contained in that thing, now you've got problems. Your. By Rick Broida 04 April 2017. How to make pod coffee cheaper. My-Cap When my Aeropress broke recently and I was jonesing for my morning shot of espresso, I bought a Nespresso Vertuoline espresso maker. It was on sale and makes great coffee, but I quickly. By Richard Baguley 07 April 2017. How to look like a big business.

In 1999, Rob Cheng left a comfortable job heading up sales, marketing and support at Gateway, one of the biggest PC makers of the era, to open his own company. The idea -- a website offering an. By Charles Cooper 29 March 2017. How to connect Lifx bulbs to Google Home. Google has been slowly closing the gap between what Amazon's Alexa speakers and its own Google Home are capable of. Among other small additions along the way, since its launch in November, Google. By Taylor Martin 28 March 2017. How to switch from iPhone to Samsung. Evan BlassTwitter Are you ready to give Samsung another shot after last year's exploding Galaxy Note 7 scandal? The troubled electronics giant is set to release its next flagship phone, the. By Matt Elliott 22 March 2017. How to recycle old appliances (with little to no effort) Taylor MartinCNET Landfills take up space, add to the greenhouse gasses in the atmosphere and they smell awful. Plus, they will only get bigger if your old refrigerator, oven or washer get sent.

By Alina Bradford 02 April 2017. How to use a Chromebook: Tips, tricks and shortcuts. Kicking the tires on a Chromebook purchase? As a cheaper alternative to a Windows laptop or a MacBook, a Chromebook is an attractive option for budget buyers. The simplicity of Google's Chrome OS. By Matt Elliott 07 April 2017. How to make a good movie even better. For the past several weeks I've been sharing my favorite YouTube channels because I want people to know there's way more to Google's video site than the stuff most people search for. Today, I. By Jason Parker 30 March 2017. © CBS Interactive Inc. All Rights Reserved.

Gold Options Contract Specs. 100 Troy Ounces troy ounces. Gold futures are hedging tools for commercial producers and users of gold. They also provide global gold price discovery and opportunities for portfolio diversification. In addition, they: Offer ongoing trading opportunities, since gold prices respond quickly to political and economic events Serve as an alternative to investing in gold bullion, coins, and mining stocks. Things to know about the contracts: Physically delivered Block-trade eligible American-style options Can be traded off-exchange for clearing only through CME ClearPort. Contract Related. Delivery Notices. Subscription Center. Who We Are.

CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX. How to trade options gold 10 Critical Option Trading Mistakes Every Trader Must Avoid. Boost Your Trading Consistency By Up To 70% To Add Income. Save Potentially Thousands Of $ By Skipping Amateur Errors. Know What NOT To Do And Be 50% Of The Way To Success. Fill in your Name and Email Address below and receive the link to Access this FREE information INSTANTLY (Value: $97) ! 5 Massive Reasons WHY Options Outshine Stocks. Have you ever traded the Stock Market ? Which Stocks did you buy and at what Cost ? How much have you invested in total over the years and what does your portfolio look like at the moment ? Are.

10 Answers to Help Jumpstart Your Options Trading. Does Stock market jargon confuse you and make your head spin ? Are you curious about how to invest in and get returns from the market, but have no clue on how to take the first step even ? Have. 4 Keys To Trading Discipline You Need To Know. We have all heard the word Discipline several times throughout our lives. And more often during our teens when it was routinely thrown at us by parents who had grown tired and annoyed by the lack of it in our. Understanding The 4 Options Greeks. When trading Stocks one needs to pay more attention to Company fundamentals and a bit of charting here and there. However, with Options there’s a learning curve – understanding the so-called ‘Greeks’ is one of the keys to success with. Subscribe. Get Our FREE Checklist. Pls Enter Your Name And Email Address Below To Receive A Link To The FREE Checklist. You have Successfully Subscribed!

Quick Links. Contact Us. Got something to say? Please click on the Contact Us page to submit a query. How to Trade Gold with ETFs and Options. By Larry D. Spears , Contributing Writer , Money Morning &bull March 21, 2012. Start the conversation. With few exceptions, most leading financial gurus agree that every portfolio should include some physical gold. But while the yellow metal itself is great as a long-term hedge against turmoil and inflation, it's a lousy trading vehicle. For shorter-term trading purposes, most gold investors look first to the futures markets, generally focusing on either the CME Group's full-size COMEX contract, which represents 100 ounces of the metal, currently valued around $165,000, or its little brother, the 50-ounce miNY gold future. However, that can be a fairly costly proposition, with initial margin requirements on a single 100-ounce contract running in excess of $10,000. And, as anyone who has held those contracts in recent weeks can attest, it can also be an extremely risky one.

For example, the single-day loss on a 50-ounce miNY future on Feb. 29 was $3,845, with the intraday trading range topping $5,200. Similarly, last Wednesday's one-day decline of $51.30 an ounce in the price of the full-size April future would have cost traders on the wrong side of the move a whopping $5,130. Even recent intraday moves have been scary. On March 9, April gold futures plunged $27.70 an ounce shortly after the open, only to rebound and trade as much as $39.50 an ounce higher later in the day. That swing had a total value of $6,720 – in a single 5-hour and 10-minute trading period! So, if those numbers give you pause, but you'd still like to mine for profits in the gold market, what can you do? How to Trade Gold ETFs. For trading purposes, you can find some pretty good proxies for gold futures that require substantially less cash up front and carry significantly lower risk. Tops on my list of alternatives to futures are exchange-traded funds (ETFs) linked to gold, and the highly liquid put and call options available on the leading ETFs. There are now more than two dozen ETFs tied to the gold market in one way or another – either backed by physical gold, portfolios of futures and options positions, or linked to gold and mining stocks. Some almost precisely mimic the price movements of the metal itself. Others are leveraged to produce price changes two or three times as large as physical gold, and some are structured to move in the opposite direction from the yellow metal (so-called "inverse" funds). The two largest and most actively traded gold ETFs – and the two that most accurately mirror gold price movements – are: The SPDR Gold Trust (NYSEArca: GLD), recent price $160.73 – Backed by holdings of physical gold, this is by far the largest of the gold ETFs with a market capitalization of around $68 billion and an average daily trading volume of more than 150,000 shares.

The fund's shares, which are issued by the Trust in minimum blocks of 100,000, are priced at roughly one-tenth the one-ounce price of physical gold, less management expenses equaling 0.40% of assets. The iShares Gold Trust (NYSEArca: IAU), recent price $16.13 – IAU is a grantor trust that's also backed by holdings of physical gold. Shares are initially issued in minimum blocks of 50,000 and are valued at roughly 1% of the gold's current market price. IAU is the second largest gold ETF with a market cap of around $9.2 billion and an average daily trading volume approaching 100,000 shares. The fund's expense ratio is one of the lowest in the business, running at just 0.25% compared to the industry average of 0.53%. Shares of both funds trade just like those of any common stock or other ETF, with prices quoted on a per-share basis. Thus, if you want your gains and losses to roughly mirror those on a single ounce of physical gold, you would buy 10 shares of GLD or 100 shares of IAU. So that you can see exactly how these ETF shares track actual gold prices, Table 1 compares prices for GLD and IAU with the price of the nearby April COMEX gold futures contract at key points over the past couple of weeks: For cost-comparison purposes, 100 shares of GLD would cost about $16,150, or half that if purchased on margin, versus the $10,250 margin deposit and $165,000 value for a COMEX gold future. A hundred shares of IAU would cost just $1,620 or so, again about the value of one ounce of gold. More importantly, with both funds, the losses would be proportionately smaller than the risks on a gold futures trade – a key consideration when the market is highly volatile as it has been recently. As an example, when April futures prices plunged $51.30 last Wednesday to give contract holders a loss of $5,130, the owner of 100 shares of GLD would have lost just $256 ($162.13 – $159.57 = $2.56 x 100). Of course, any gains would also be proportionately smaller, but the percentage returns would be roughly the same – or even larger if trading on margin. Trading Options with Gold ETFs. As noted earlier, if you don't want to plop down the cash to purchase 100 shares of GLD, the ETF also has actively traded options over a wide range of strike prices and expiration months.

( Note: Options are also available on IAU, but because of the lower share price only the first couple of months and nearest strike prices are actively traded.) That means, based on quotes early in Friday's trading session, you could purchase an at-the-money GLD April $161 call option for around $3.30 a share, or $330 for a full 100-share contract. That option would give you the right to buy 100 shares of GLD at a price of $161.00 a share ($16,100) at any time between now and the April 20 expiration date. If gold rebounds to its March 1 level of $1,720 in the next month, carrying GLD to around $167, that call would increase in value to $6.00 a share (or slightly more), giving you a gain of $270 or so – a return of more than 80% on your initial $330 investment. In under a month! Similarly, if you've turned bearish on the yellow metal for the short term, but don't want to unload your physical gold, you could buy put options on GLD. As quoted Friday, an at-the-money June $161 GLD put would cost you about $5.25, or $525 for the full contract. That option would give you the right to sell 100 shares of GLD at $161.00 per share any time between now and June 15, at least partially offsetting the losses on your gold holdings should the price continue to drop over the next three months. To illustrate how the option premiums track both GLD share prices and the overall price of gold, Table 2 shows the price changes in the April $166 GLD call and put (the at-the-money options on March 2) in response to gold price movements over the past couple of weeks: Obviously, both the outright call purchase and the outright put purchase just described would be speculative plays, but that's not the only way you can use them. The options on gold ETF shares can be used in any of the conservative or hedging strategies detailed in the "Options 101" articles Money Morning has published the past few months, or with any of the techniques discussed in our earlier "Defensive Investing" series. Editor's Note: If you want some alternative gold ETFs to GLD and IAU – or would prefer to try the leveraged or inverse funds – you can access lists of each via the related story links below. Binary Options Trading VIDEO Tutorial – How To Make 75% Every 15 Minutes. Here Are the Easy First Steps to Get Started Investing.

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