At around US$1,251 per ounce, gold is closing in once again on its record high of US$1,257.20 per ounce, rising 5.6% in August (diametrically opposite to US stocks). Gold generally sees a price surge in the early fall, following slow summer trading and the advent of increased physical demand for gold jewelry from India.

Certainly gold stocks rallied sharply in August, particularly names like Barrick Gold (symbol ABX, recent price $47.09) and Goldcorp Inc. (symbol G, recent price $44.49). And those recent prices are down significantly from the highs of August.

Option traders might be able to capitalize on this aspect of gold’s seasonality, which this year may be exaggerated by investment demand for gold as a safe haven in times of turmoil.

Traders might look at buying calls on big name gold stocks. Specifically the ABX January 48 calls at $3.10, or the G January 44 calls at $3.70.

More conservative option traders might consider writing covered calls or cash secured puts. These strategies have similar risk reward characteristics. The difference being the covered call obligates you to deliver shares that you already own, while the cash secured put obligates you to buy shares at the strike price of the put.

Assuming you either ABX or G, you could write shorter term out-of-the-money calls. For example, with ABX, write the October 48 calls at $1.45. If you own shares of G, write the October 46 calls at $1.10 per share.

As for the cash secured put strategy, you would write slightly in-the-money cash secured puts. The term “cash secured” assumes that you have sufficient cash in your account to buy the shares should the put option be assigned. With G, look at writing the October 46 puts at $2.65, or with ABX, write the October 48 puts at $2.35.