On Friday’s CNBC’s Options Action, the crew analyzed the performance of Gold against the S&P 500 over the last 15 years. Gold has outperformed stocks since both the Tech bubble in 2001 and the financial crisis 2008, even after factoring into dividend reinvestments. Despite lagging over the last year, it has outperformed compared to all commodities over the same timeframe. Gold has reached an apex of a year long triangle and looks to break out to the upside. Additionally, gold is attractive as a downside hedge for equities, providing some support as markets reach all time highs. Expecting gold to break above the $120 resistance level, Michael Khouw suggested buying an Aug 121/127 Call Spread for a $1.80 Debit.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: CNBC Options Action