How to Ride Gold's Next Move Up

CHICAGO (TheStreet) -- Gold has been doing a fantastic job of holding the line and is consolidating around 1125 on the February futures contract. I think it will head higher again.

First, gold saw dramatic declines in the last two weeks. Given the run this market has had over the past few months, it is not surprising at all to see this type of wipeout.

These moves typically shake out all the weak longs and present a wonderful buying opportunity for bulls and those looking to add to long positions.

When you then see all the pundits on TV talking about how the move in gold is over, you know the market is then going to proceed higher once again.

The other thing I have found interesting is that gold has held its current price in the face of a stronger dollar over the past few sessions.

This tells me gold wants to go higher, because gold and the dollar typically move inversely to one another.

Here is how to participate in the next leg higher while limiting your downside risk:

Buy Calls: For those with low risk tolerance, one can simply participate by purchasing a call option.

I recommend the April 1250 call. It can be purchased now for approximately $2,200. The maximum risk on this trade is the premium paid for the call.

Should gold decide to continue its ascent, this call will increase in value accordingly. It has 99 days until expiration, and therefore allows the move some time to develop.