Zero-cost-collars for bullion market bulls

The turbulent bullion market seems to be quite controlled in European session.

Bulls looking to capture the swings on the eve of expectation surrounding over good set of US retail activity backed by recent surge in auto sales and rising outlays on housing-related items such as electronics, furnishing and home improvement are likely to influence on US retail sales figures.

As stated in our earlier post the forward-looking investors have been questioning whether consumers are ready to deploy their rising incomes, better savings.

On the other hand improving demand for credit, better job growth, higher wages and salaries during Q2 would determine the consumption.

It was observed that Chinese & Indian gold import volumes were reduced dramatically during 1^st quarter in 2015.

But for now these high consuming gold nations such as China & India are showing vested interest in yellow metal again.

Overall, dollar will play a major role while resilient commodity price matters.

Option Strategy: (XAU/USD)

The zero-cost collar is recommended on verge of surge in the dollar.

This position is established by buying protective 0.5 delta At-The-Money put option while writing 21D OTM covered calls (strike at 1180.30) with around 30+ Theta value.

The strike price at which the premium received (i.e US$ 1087) cushions as the premium of the protective put.