SPDR Gold Shares Options (GLD): Unusual Trading Activity
Options in the SPDR Gold Shares (GLD) lit up our radar with enormous volume right at the close yesterday. And it continues this morning.
Our tracking system is showing heavy put buying concentrated on the GLD May $143 strike contracts.
Here’s the kicker.
Yesterday one trader came in and purchased 20,000 contracts of this May strike for an average price of a mere $0.07 a share.
That’s a long way to the downside in a very short period of time.
In fact, if gold prices do continue to fall at a rapid rate like we’ve seen, this trader will come into some hefty profits.
Even though this strike is close to 8 points out of the money, our tracking system still calculates a 30% probability of this trader making money by the end of the week.
That’s just incredible! To have that high of a probability in only three days time.
So, what could this be telling us about gold prices?
Historically, as the market moves lower, gold prices usually move higher. However, during the last few weeks, this has not been the case.
With as much trouble we’re seeing in the equity markets lately, most investors are astonished this inverse correlation is not more pronounced. In other words, gold should be soaring.
And with the GLD not being able to catch a bid, investors are worried that this thesis of an inverse correlation to the market is just plain broken.
But the fact remains, with the GLD trading at $151 a share, it’s very troubling that option traders actually feel that a $143 price tag can be possible in four days.
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.
Category: Unusual Options Trading Activity
