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Trader bets big on more gains for gold

Gold tracked for its biggest one-day rally since last December and surged to a two-week high on Friday, despite an initial sell-off on a better-than-expected jobs number. Gold prices are now up 3 percent this week, and one savvy trader is betting that the rally will fuel even more gains in one particular group of hard hit stocks: the miners.

The GDX, the ETF that tracks gold miners, has fallen more than 21 percent this year, but in an unlikely turn of events this week, one trader bet more than $2 million that the pain is over. The trader bought 20,000 of the June 15/20 call spreads for $1 each. Buying a call spread is a bullish options strategy where a trader will buy a call and sell a higher strike call to offset the cost. The goal is to target the call that you are short, or in this case, $20 by June expiration. That's a nearly 40 percent move in the next seven months.

Read MoreGartman: In 40 years of trading I've never seen this

"The GDX is down about 80 percent from its high in 2011, but in this decline there have been five counter-trend rallies of at least 35 percent," Dan Nathan of RiskReversal.com said Thursday on CNBC's "Fast Money." Nathan noted that the most recent rally was from July to October, where the GDX surged 35 percent. "This trade is targeting a very similar rally in the GDX up to about $20," he said. "History tells you that this thing has counter-trend rallies that rip, but you have to get the time right," he said.


The GDX was up more than 3 percent Friday, while gold was up 2.25 percent.

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