Selling Covered Calls on gold

[seajay]

Pre 1934 when money was gold it made more sense to hold money deposited into Treasuries as the interest was like the State paying you for it to securely store your gold. A form of gold-dividend.

Nowadays the gold-dividend can arise out of selling Covered Calls, where if your hold the likes of GLD you might sell Covered Calls against that, so no additional margin requirements, and you benefit from the 'time-value' that the buyer of the Option pays.

Following the 2009 financial crisis when interest rates dived it was pretty much pointless doing that, similar to how it was near pointless depositing money into cash-deposit accounts, might as well just have just stuffed money under a mattress. But with rising interest rates so depositing money for interest, and/or selling gold Covered Calls is once again becoming more appropriate.

I've heard that the GLD Options chain tends to yield better rates when selling Covered Calls than the likes of IAU. Is that correct? And if so - why? I would have thought that both would yield similar time-value results, around comparable to 3 month T-Bill yields.

[Cortopassi]

I sold a lot of CCs on GLD earlier this year, not so much lately because I am only holding 100 shares of GLD (rest is physical), other than trying to pull measly amounts on weekly options a day or two before expiration with very low deltas.

It works, sure. GLD has better rates because more option volume. Bid/ask spread are usually only a few pennies for strikes near the money.

[seajay]

Thanks Cortopassi