The derivatives bet Armstrong is using to play the gold crash

Armstrong IM managing partner Patrick Armstrong has added a new gold derivatives position to his portfolios to capitalise on the precious metal's escalating price volatility.

The price of gold suffered its worst two-day fall in three decades last Friday and this Monday, dropping 9% on Monday alone to hit a two-year low below $1,350. Armstrong (pictured) moved on Monday afternoon to sell put options with a $1,270 strike price, while also buying call options at $1,370 and selling call options at $1,460. The effect, he said, is to create a strategy which is still profitable at 7% below Monday afternoon levels, but which also enables him to capture a significant upside bounce. "We have sold put options with a $1,270 strike, and receive a premium of almost 5...