Posted by forex at 3:34 AM
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1. Open up an account with a stock and options broker. You should make sure that they are members of both FINRA (financial regulatory authority) and the SIPC (stock investment protection corporation). These organizations help to monitor brokers. A few that you might wish to consider are Etrade, OptionXpress and Ameritrade.
2. Check to see that gold is trading above its 200 day moving average (DMA). This is a technical indicator that most professional traders watch to determine if a stock or, in this case, a commodity, is bullish or bearish. If a stock is trading above, it will have a tendency to go up. If it is below, it it is more likely to go down.
3. Buy an options contract on an ETF (exchange traded fund). A few funds that you can consider include the SPDR Gold Trust (ticker symbol-GLD), ProShares Ultra Gold (UGL) and Market Vectors Gold Miners fund (GDX). Type in the fund ticker symbol into the trading software from your broker. Click on the 'Options' tab and this will bring up a list of the available contracts along with their strike prices and expiration dates.
4. Select the contract that you wish to purchase. The strike price is the price that the option contract can be exercised at and the expiration date is the month that it expires in. For example, if gold is currently trading at 980 and you purchase one with a strike price of 1,000, it won't have any intrinsic value until it moves above 1,000.
5. Enter the price that you are willing to pay for the contract and the number of contracts and click the 'Submit' button. You will get a summary of the order. Confirm it and the order will be placed.