SPDR Gold Shares Options (GLD): Unusual Trading Activity

| August 1, 2012 | 0 Comments

GLD OptionsOptions in the SPDR Gold Shares (GLD) lit up our tracking system this morning with huge call buying activity. 

The heavy activity is probably due to perceived volatility in the metal with all of the economic announcements due out over the next few days.

Whether stimulus occurs or not, there is an argument that gold could be poised to move higher.  And it seems option traders are ready to take advantage of whatever comes out of the FOMC meeting and the ECB meetings this week.

Even though gold prices are lower this morning with GLD trading down fractionally at $155.13, option volume is about 50% above normal.  

So, the question… is GLD now in an uptrend? 

It seems there are option traders who feel it is.  And this is certainly made readily apparent by enormous trading coming through this morning.

Option traders came in minutes after the open this morning and scooped up November calls in GLD.

More specifically, they purchased 25,000 contracts of the GLD November $180 strike calls for an average price of $1.15.

Just to put that into perspective, the position represents the equivalent of 250,000 shares of GLD at a cost of $287,000. 

Now, if GLD rises above $181.15 by November expiration, it’s off to the races for these traders who have unlimited upside profit potential.

That’s a long way to the upside in a few short months.

Historically, as the market moves lower, gold prices usually move higher.  However, this has not been the case over the past few weeks.

Gold has broken out of a range and continues to move higher whether the market is moving up or down.  And as the broad commodity market continues its volatility, gold prices could continue to rise.

And I’m in total agreement with this trade. 

GLD’s continued surge is a tug of war between fear of inflation and fear of a currency collapse.  So it’s very likely we will not see a reversal anytime soon.

We’ll see how this trade works out, but I’m jumping in.

For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research.  It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio.  Click here to subscribe for free.

Safe Trading,

Marcus Haber

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.