Predict specific range price with Options?

[amtrak]

So I totally get this is high risk but let’s say I want to predict Gold in a week will be between 1970-1975$/oz. Is there a type of Option for this and what type of payout would one get? Thank you!

 

[flashman57]

A 1970-1975 call spread - long the 1970 calls, short the 1975. Check the prices here. https://www.cmegroup.com/markets/metals/precious/gold.quotes.options.html The 'payout' would depend on exactly where in that range the contract settled. This is on the futures obviously, not spot

Given you don't know any of this, I'd strongly recommend against doing it FYI

 

[amtrak]

Thanks for the response! Is there a way to calculate profit?
I am using numerology. I know it’s crazy but bare with me. ☺️

 

[flashman57]

Well yes, if price settled at $1970 on the expiry date your profit would be $0 less the net cost of the options, and if it settled at $1975 (or more) your profit would be 1975-1970 = $5/oz less the option cost. But the problem is, if you don't know that, you don't know enough to trade options, so if you really want to try to predict a market, can I suggest you keep an excel spreadsheet with the prices at which you would have bought and sold and the date, then you can track how you would have done over time. And if you're consistently making money on paper then you can actually think about moving into real markets.

 

[amtrak]

Got it! And what would that theoretically be with a $1000 max risk perhaps on the trade? Many thanks. PMd you too.