Half size this week: 2.5 percent of the account at risk instead of 5, because a call spread wins less often than our condors and its loss stop sits at two thirds of the price paid.
What Is a Call Debit Spread. You buy a call at 400 and sell a call at 430 to make it cheaper, for 635 dollars per contract. That price is the most you can lose, and the most you can make is 2,365 dollars, with GLD at or above 430 at expiry.
Enter all two legs as one order at the mid, net debit, day order. A few cents more debit is fine to get filled.
The Setup
Gold has had a bad autumn. GLD, the big gold fund, closed at 382.15 on Monday, October 12, a quarter below its January 29 high and under its 40, 50 and 200 day averages. The dollar sits at its highest since May 2025, and Goldman's trend model (Oct 12) puts systematic funds at the 0th percentile of their gold exposure over the past year. Everyone who chases trends has already sold.
The buyers who matter kept going. China's central bank added 23 tonnes in September, its 23rd month in a row, and central banks together bought 289 tonnes in the second quarter, a pace near 1,155 tonnes a year. Goldman's desk (Oct 12) now calls adding gold increasingly attractive. GLD options price 23 percent volatility, cheaper than three quarters of the past year. So I buy a call spread into January: 635 dollars at risk, up to 2,365 if gold trades near 4,680 by then.
Where You Win, Where You Lose
GLD call debit spread, 6.35 debit: the grey line is the profit or loss at expiry, the orange curve on Nov 29, the exit day, with breakevens at 389.80. Max loss $635, max gain $2,365 per contract.
What you are betting. You are betting that gold trades above 4,420 dollars on January 15, which puts GLD above 406.35, where the spread breaks even. At 430 or higher it pays its full 2,365 dollars. Below 400 at expiry it is worth nothing.
When we are wrong, and what we do then. The story breaks if the dollar keeps climbing: an October hike, a hot inflation print or a Republican surprise on November 3 would do it. It also breaks if gold loses its summer low near 363 on GLD, the floor the central banks have defended. The exit rule: when the shares close above 430 the target is reached and we sell the position; when the loss reaches two thirds of the 6.35 paid we close it; otherwise we hold to expiry, since the price paid is the whole risk.
The Chart
Gold Trust (GLD), daily candles over six months with the 40, 50 and 200 day averages. The box is where the whole credit is kept, the band between 389.80 is the profit zone on Nov 29.
Trend: down from the January 29 high of 509.70 to 382.15, a quarter lower, and below its 40, 50 and 200 day averages (EMA40, EMA50 and EMA200).
Levels: the summer low of 363.32 on June 24 is the floor the central banks defended; the 400 strike sits above the 200 day average and below the September high of 413.54.
The Big Picture
I like to buy what the trend crowd has just finished selling while a slower buyer keeps going. That is gold now: the trend models are empty, the central banks are not. UBS (Oct 9) puts their buying at 750 to 1,000 tonnes a year and sees a floor near 4,000 dollars. Lyn Alden (Oct 11) wants gold to hold 4,000, and it has.
The catalyst has a date. Prediction markets price a 64 percent chance of a Democratic sweep on November 3, and Bank of America's Michael Hartnett (Oct 11) expects the dollar and bond yields to fall into year-end if it comes. A weaker dollar is what gold waits for. The spread runs to January 15 so it is still open then.
Three Things That Matter Before Nov 29
September inflation lands on October 14 and the Fed decides on October 28. Markets price a hike at 17 percent then and 81 percent in December (BofA, Oct 11). A surprise October hike would lift the dollar and push this trade toward its loss stop early.
The dollar sits at its highest since May 2025 while GLD trades about 4 percent below a month ago. Goldman's futures desk (Oct 12) notes the positioning reset is complete, with managed money back to average and systematic funds at zero. Nobody is left to sell.
Speculative length in silver futures halved from 24 billion dollars to 12 billion, and trend funds hold their shortest silver position in a year (Goldman, Oct 9). The last reset like this came in August; silver rose 15 percent from late July to early September.
Sources: Goldman, Oct 11. ICE dollar index, Oct 12. Goldman, Oct 12. World Gold Council, Oct 11. Morgan Stanley, Oct 11. UBS, Oct 9. Lyn Alden, Oct 11. BofA, Oct 11. Goldman, Oct 9. Prices: mid quotes, Oct 13.
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