Gold implied volatility of the ETF shows that premiums for options are still relatively elevated compared to the highest levels excluding the April period. A level of 20% implies that gold prices will move at least 20% on an annualized basis from current levels. At a spot gold price of nearly $1,400, traders are estimating that gold will either be near $1,680 or $1,120 within a year.
Traders who are looking for the gold ETF to further break down can take advantage of a Vertical Put spread, which would allow them to capture $5 on the GLD. The July 130-125 put spread would currently cost an investor $1 per contract and would give the investor a risk-to-reward profile of 5-to-1. The benefit of this strategy is that the investor simultaneously purchases a 130 put and sells a 125 put. The high level of implied volatility is mitigated by choosing a spread instead of just an outright put position.