Call Buyers Make a Beeline for SPDR Gold Trust ETF (GLD)

Calls are hot today, after the SPDR Gold Trust ETF (GLD) hit an annual high

Feb 11, 2016 at 3:18 PM
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Amid a volatile equities market, traders have been making a beeline to gold to seek a safe haven. In fact, April-dated gold futures hit a one-year high of $1,263.90 an ounce earlier, before settling up 4.5% at $1,247.80 an ounce. A close at $1,259.52 would indicate the commodity has entered a bull market. This flight to safety is evident in the price action of the SPDR Gold Trust ETF (GLD) -- last seen up 4.4% at $119.45, and fresh off an annual high of $120.84 -- as well as the activity in the exchange-traded fund's (ETF) options pits.

Buying calls on gold has been a popular strategy of late -- one even Mark Cuban has been waxing optimistic about. Today, calls are trading at five times the average intraday rate, and outpacing puts by a nearly 4-to-1 margin.

What's more, the 615,061 calls currently on the tape is at an annual peak. (As a point of contrast, the previous 52-week record of 404,431 contracts was set on Monday.) Amid this accelerated activity, the ETFs 30-day at-the-money implied volatility is up 37.8% to 27.2% -- a 12-month high.

Drilling down, all 10 of GLD's most active options are calls. Most active is the March 125 strike, due largely to a block of 22,955 contracts. However, open interest is sufficient to cover here, making it hard to tell at this point whether this block is being opened or closed.

Elsewhere, it appears two symmetrical blocks of 20,000 March 133 and 140 calls simultaneously changed hands, and it looks as if one speculator rolled her bullish bet up to wager on bigger gains for the SPDR Gold Trust ETF (GLD) over the next five weeks.

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