Gold has been trapped below $1,000 an ounce for 17 months, but now the bulls are looking for bullion to make new highs.
OptionMonster's tracking systems detected the purchase of 15,940 March 100 calls on the SPDR Gold Shares exchange traded fund (ETF). The trade priced at $4.60 and was matched against the sale of an equal number of March 120 calls for $1.60, resulting in a net debit of $3. Volume exceeded open interest in the higher-strike calls.
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The GLD ETF, which represents about one-tenth of an ounce of gold, fell 0.38 percent to $93.29 in early afternoon trading on Monday. Today's call spread trade will earn a maximum profit of 566 percent if GLD rallies to $120 by expiration.
Other trades were less bullish on the name, but had less directional meaning. The busiest strike was the December 75 put, for which investors paid $0.20 to $0.40. However, volume at 40,504 was close to open interest, so the activity may not represent the implementation of new bearish positions.
Overall options activity in GLD was almost twice the average level today.
More Investment Ideas:
Slideshow:
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More Ways to Play Gold:
Market Vectors Gold Miners ETF
Freeport-McMoRan Copper and Gold
Barrick Gold
Newmont Mining
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David Russell is a reporter and writer for OptionMonster.
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