Why I Tried Selling Puts on Micro Gold
I was bullish on gold and liked the idea of collecting premium while potentially obtaining gold exposure at a lower price. Micro Gold futures appeared attractive because their nominal size was smaller than regular Gold futures, which seemed more accessible for smaller positions and risk management.
How the MGC Position Worked
A put seller accepts the obligation to buy the underlying futures exposure if exercised. In the original article, I described MGC as one tenth the size of regular GC: GC controls 100 ounces and MGC controls 10 ounces. That smaller contract size was the main reason I initially considered MGC options.
The source does not document a specific strike, expiry, premium, margin figure, trade date, or individual profit-and-loss result. This article therefore preserves the product-level experience rather than inventing a trade ledger.
What Became the Problem
The practical issue was lack of liquidity in the order books for Micro Gold futures put options. That affected the parts of options trading that mattered after entry: buying back options, rolling or otherwise adjusting a position, and entering or exiting near the desired price. Low liquidity could create unfavorable execution and slippage, eroding the premium that had made the trade attractive.
Why I Stopped
I stopped using the approach because the MGC options market did not offer enough liquidity for me. Smaller nominal exposure did not compensate for the difficulty of managing a position when the order book was thin.
MGC vs GC vs GLD
- MGC: the original article describes 10 ounces of exposure per Micro Gold futures contract. Its smaller size was attractive, but option liquidity was not sufficient for my use.
- GC: the original article describes 100 ounces per regular Gold futures contract. I considered its liquidity potentially better, but the much larger exposure and capital commitment made me uncomfortable.
- GLD: I shifted focus to the SPDR Gold Shares ETF because it gave me gold exposure with better liquidity and smaller, more flexible capital requirements in my experience.
This is a historical comparison based on the original article's reasoning, not a current specification sheet or a claim about present-day liquidity.
What I Used Instead
Rather than continue with MGC puts or move to the larger GC contract, I moved toward trading GLD. The practical appeal was easier adjustment and more manageable exposure, without the liquidity concern that had led me away from MGC options.
What I Learned
The experience taught me that a smaller contract does not automatically make an options product better. Nominal size is only one part of risk. Liquidity, execution, adjustment flexibility and the exposure created by assignment matter just as much as the original premium.
Related Trading Strategies
For the wider collection, see Trading Strategies. My cash-secured-put stock-selection framework and the Lufthansa cash-secured-put case study show different instruments and trade contexts.
