Gold's Next Big Move: Analyzing the $2825 Strike and Insider ActLet me start with a disclaimer that I firmly believe in and adhere to: don’t flip the trend; leave that to those who are just here to play around and get their adrenaline fix while watching their accounts explode.
Now, let’s get down to business.
On August 5, 2024, when gold was languishing in a sideways market around $2400 on the CME, an insider option portfolio dubbed the "Call Butterfly" emerged, set to expire on February 25 of the following year. The central strike of this portfolio was chosen at $2825. Due to the nature of such an options portfolio, this specific price level will yield maximum profit at expiration.
To keep the readers engaged and prevent them from dozing off, let me add that the risk-reward ratio for this portfolio is already 1:4. The Insider can choose to close it, but they are under no obligation to do so and can comfortably watch the value of their portfolio rise as it approaches the $2825 mark based on the April futures—don’t confuse this with the spot price of XAU.
Clarifying the Price Dynamics
It's important to clarify that there is a difference between the spot market price, particularly XAU/USD, which forex traders are so accustomed to—thanks to its uninterrupted price movement due to the absence of futures expiration—and the futures price, which includes forward points. Currently, the price of Gold in April futures stands at $2784, just a hop away from the coveted insider portfolio price of $2825.
Why the Confidence in Insider Activity?
Several indicators suggest this is indeed an insider move:
Portfolio Volume: A whopping 9,000 contracts in a distant options series at a far-off strike can only be purchased by a major player, not any average retail trader.
Market Entry Timing : The entry point was during a sideways market, and the news backdrop was, to put it mildly, not in gold's favor.
Immediate Market Reaction: Almost immediately after entering the market, Gold began to climb, doing so with minimal pauses or significant corrections.
Why Bring This Up Now?
You might wonder why I’m highlighting actions that have already occurred, especially since the opportunity to profit from them has passed. The answer is clear: the insider knew when and in which direction to enter, and his exit will likely follow a predictable pattern, leaving traces in the CME reports. If the insider decides to exit, there will be justifiable reasons behind it, which we will only learn about long after the fact.
Starting today, I will actively monitor and analyze the daily reports on gold and specifically this portfolio. Practical experience and statistics suggest that this will provide excellent sentiment regarding the future of the precious metals market.
Good luck to everyone! Stay focused, stay disciplined, and stay committed to your goals.
