Gold prices are already up nearly 20 percent in 2016, but some traders are betting even bigger gains are on the horizon.
On Tuesday, when gold hit a three-week high, one trader bet nearly $1 million that the GLD, the ETF that tracks gold, could reach levels not seen since 2014. Specifically, the trader purchased 20,000 May 130/138 call spreads for 38 cents each. Since each options contract equals 100 shares of stock, that's $760,000 bet that GLD could rally as high as $138 within a month. That increase would translate to a 9 percent gain from where the GLD is currently trading around $120.
"[Current action] is so levered towards calls" in the GLD, RiskReversal.com founder Dan Nathan told CNBC's "Fast Money" on Tuesday. "There's about 2.7 million calls versus 965,000 puts."