SPDR Gold Trust ETF (GLD) Option Bull Bets $4.6 Million

One SPDR Gold Trust ETF (GLD) speculator bought to open a 15,000-contract block of December 130 calls

Jun 22, 2016 at 2:56 PM
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SPDR Gold Trust ETF (GLD) has been on a tear in 2016, up more than 19%. In fact, the exchange-traded fund (ETF) hit a 52-week peak of $125.67 last Thursday, after the Fed's latest monetary policy decision. Although the shares of GLD have lost some steam this week as "Brexit" anxiety eased -- and were last seen fractionally higher at $120.89 -- one options trader today bet big on even higher highs for the safe-have asset over the next six months.

According to Trade-Alert, a massive 15,000-contract block of December 130 calls was bought to open on GLD earlier for roughly $4.6 million (number of contracts * $3.08 premium paid * 100 shares per contract). This also represents the maximum risk on the trade, should the calls expire out of the money at the close on Friday, Dec. 16. Profit, meanwhile, will accumulate on a move north of breakeven at $133.08 (strike plus premium paid) -- territory not charted since March 2014.

Widening the sentiment scope, options traders have been quick to initiate long calls relative to puts in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 170,445 calls have been bought to open over the past two weeks, compared to 66,387 puts. Plus, the resultant call/put volume ratio of 2.57 ranks in the 71st annual percentile.

Echoing this call-heavy backdrop is GLD's Schaeffer's put/call open interest ratio (SOIR) of 0.31. Not only does this show that calls more than triple puts among options expiring in three months or less, but it rests lower than 91% of all comparable readings taken in the past year. Simply stated, short-term speculators are more call-skewed than usual toward GLD.

More broadly speaking, there are currently nearly 2.9 million SPDR Gold Trust ETF (GLD) calls outstanding -- in the 89th annual percentile. For the comparison's sake, put open interest accounts for just 868,582 options, in the middling 54th annual percentile.

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