OPTIONS STRATEGY by ProQuest

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The US Federal Reserve System has poured hundreds of billions of dollars into the American economy. If the velocity of money reverts to the norm, there undoubtedly will be inflationary expectations. Historically, whenever there is inflation, gold becomes a much sought after commodity. Today, everybody is seemingly bullish on gold. Gold already has tripled since early 2005. The spot price of gold closed at $1,309. If the current gold move is nothing more than a bubble, then establishing a bearish position could be wise. Shorting a gold future would he one alternative. Another alternative would be to purchase the gold Dec 1,200 put for 6.90 or $690 and sell the Dec 1,150 put for 3,20 or $320, reducing the cash outlay to $370.

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