A ‘Golden’ Way to Trade the Volatility in Gold Prices for Low Risk, High Reward

I am no gold bug. But that doesn’t mean I don’t like a good collar setup. I do, and I see one in the SPDR Gold Trust (GLD). Gold has transitioned from a parabolic runner to a battlefield between long-term bulls and macro-driven liquidators. After touching an all-time high of $514 per share near the end of January, (spot gold hit $5,595), the ETF has corrected roughly 20%, currently trading near $414. So $100 a share off that top.

This makes GLD a prime candidate for a collar — owning the shares, buying a protective put, and selling a covered call — as the market waits to see if the recent floor near the 200-day moving average holds or if the current “energy hurricane” in the Strait of Hormuz forces a deeper breakdown.

To me, a collar is just the tool, the strategy. It is no good on its own, or just being applied to any situation. In what I refer to as a “dog collar,” where I apply an options collar to a stock or ETF that has been sold off, and thus “in the doghouse,” I see GLD as a candidate.

Here’s the daily chart. It has pulled back, and that percentage price oscillator (PPO) indicator at bottom is still working itself out. So this is no shoo-in for a rally. But it is exactly what makes it a collar candidate. 

The weekly chart is below. And that word, “below” also describes where I see a ton of room. GLD is vulnerable. But this is gold we are talking about. It can move on liquidity in a way that stocks often don’t. So again, it is a candidate to bottom, similar to how it did last September.

And below is the monthly chart for GLD. That’s a very dangerous-looking PPO. It is well above where it has ever been, even during past peaks. 

Bringing things back to the shorter time frame, here is a ROAR Score chart of GLD, for the past 3 months. The ROAR method has been spot-on here, signalling lower risk to start 2026. A 25% rally followed, in just one month. 

Then a period of volatility but stagnation in price. That persisted until March 17, when risk moved to the higher “red zone.” A double-digit percentage loss resulted. 

GLD: Bull and Bear Narratives

The bullish argument for holding GLD through a collar is that the current 20% correction is a secular reset rather than a trend change. Proponents of this view see the recent selloff as a massive gift for those who missed the 2025 rally. Despite the price drop, central banks are still projected to buy over 500 tons per quarter in 2026. This buying by sovereign nations creates a structural floor that traditional retail selling cannot easily break.

The bearish narrative suggests that the gold bull market of 2025 is officially broken by a new regime of higher-for-longer interest rates and an unstoppable U.S. Dollar. With the 10-year Treasury yield pushing toward 4.4% and the Fed trimming rate cut projections to zero for the remainder of 2026, the opportunity cost of holding GLD (which pays no coupon) is at a multi-year high.

And, while the Strait of Hormuz closure (removing 20% of global oil) would normally be a safe-haven trigger, it has instead acted as a bearish catalyst for gold. The resulting oil-led inflation spike has forced the Fed to stay hawkish, strengthening the Dollar and crushing non-yielding assets.

Collaring GLD

Technical ranges mean a lot to me when collaring ETFs or stocks. So with that aforementioned recent range of, in round numbers, $400-$500, here’s one collar pair I picked out of the long list of possibilities. 

I like round numbers, so as you can see above, the range for the call/put combination is $500 and $400. I receive about $6 per share for the calls and pay $20 for the puts, so a net cost at time of transaction of $14 per share. That’s about 3.4% of the current price of GLD as of Monday’s market close. 

That produces an upside cap of 17% versus a 7% downside worst-case. And, this collar only goes out 3 months to 6/30/26. That gives me plenty of flexibility. And in a market like this, after a manic run up and down for GLD, flexibility is required. Or, to put it another way, it is not optional!

Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. For Rob's written research, check out ETFYourself.com.