Strong Start for Precious Metals in 2026
Precious metals, particularly gold, are showing significant gains at the beginning of 2026. Gold SPDR (GLD) has risen by 7% since the year started, while the S&P 500 has remained fairly stable. Investors seem eager to dive into major precious metals ETFs, with trading volumes soaring even this early in the month.
Those who’ve held onto the ETF for the last two years have seen returns exceeding $100, or about 124%. Looking at the current landscape, the surging prices for gold and other precious metals present a promising opportunity for profit. But, it’s worth noting that there are various methods to capitalize during a bull market, and one approach might let you snag your favorite ETFs or stocks at a lower price.
So, let’s talk about cash-backed puts.
Understanding Cash-Backed Puts
A put option is basically a contract giving you the right, but not the obligation, to sell an asset at a predetermined price, known as the strike price, within a specific time frame, the expiration date. Usually, buyers hope that the price of a stock or ETF drops below the strike price before expiration, so they can sell the put option for a profit.
If you’re the seller of the put, however, you’re on the hook to buy the asset if the buyer decides to exercise their option, in exchange for a premium. It’s in your best interest for the stock or ETF to remain above that strike price right until expiration.
There are two main types of short puts: naked and cash-backed. A naked put means selling the put without having enough cash set aside to cover the purchase of the stock if you’re assigned. Relying on margin in such situations can be, quite frankly, risky.
In contrast, a cash-backed put requires you to keep sufficient cash in your account to buy 100 shares of the underlying stock or ETF at the strike price. Most investors who engage in cash-backed puts are typically prepared to buy the shares if assigned, which is why it’s advisable to only sell CSPs for quality stocks and ETFs.
While cash-backed puts are safer than naked puts, they still carry risk. They’re used when you’re somewhat optimistic about the underlying asset, and the maximum profit from the trade is the premium you earn upfront.
Finding GLD Cash-Backed Put Trades
Let’s take a look at how to track down CSP deals for GLD on Barchart.
Start by navigating to the ETF profile page and selecting Naked Put under Options Strategies.
From there, you’ll land on a results page displaying various deals with the nearest expiration dates, filtered for a mix of safer and riskier trades.
Currently, when I engage in selling cash-backed puts, I usually opt for contracts that have about 30 to 45 days to expiration. These provide a decent premium while giving you ample time to adjust your trade if needed.
To dive deeper, change the expiration date to February 20th, which is in 37 days.
You’ll see the results ranked by probability of profit, along with the bid column showing the premium you would earn per share if you sold the option at the current market price. Keep in mind that the premium is per share and should be multiplied by 100 for the total amount per contract.
When selecting a cash-secured put, consider your balance of risk and reward. It’s essential to sell a contract that covers your trading costs, making it worth your while. While many traders prefer selling cash-backed puts for a longer duration to maximize income, some may wish to own the stock at some point.
In my own case, I focus on generating income, which is why I find this particular deal appealing.
Breaking Down the Trade
Based on the screener’s data, selling a 400-strike put on GLD would yield $2.67 per share, translating to $267 per contract. This trade is currently 6% out of the money, meaning the underlying asset is above the strike price, giving you a sort of discount if assigned.
If the price stays above $400 until February 20th, you keep the full $267, and the short put simply disappears from your account without any transfer risk.
However, if you’re assigned, you’d be looking at buying GLD for $400 per share—totaling $40,000, not accounting for trading fees. The catch? Whether it’s cheaper or not, you would still pay $400.
If GLD happens to be trading at $350 upon expiration, your position would automatically start at a $50 loss per share. Even after adding the $267 premium collected, you’d still be looking at an overall loss of $4,733, which would keep increasing if GLD drops further.
The silver lining? You won’t face loss on the option itself. Once allocated, the risk simply aligns with owning 100 shares of GLD.
Final Thoughts
Overall, cash-secured puts can be an effective way to generate income while waiting for the right price to buy an asset. This 400-strike trade offers the chance to earn while setting yourself up to purchase GLD at a lower price than its current trading value.
That said, there’s no such thing as “free money” in options trading. If GLD drops sharply, you could end up acquiring shares at a higher price than their market value. But, if you’re optimistic about gold’s future and want to avoid chasing current peaks, selling cash-backed puts might be a sound strategy to consider.
