UPDATE: Hot Options Action: Gold


It seems this erratic market has jittery investors putting their money into an old but time-honored asset.

You guessed it. Investors are pouring into gold. The precious metal jumped more than 3 percent on Friday to its highest level in nearly three weeks.

"There is ongoing nervousness in the market about the banking sector," explains Tom Kendall, precious metals strategist at Mitsubishi. "If you are looking to park your cash...there are not many options around and gold is an option."

Pete Najarian has also noticed the momentum. On CNBC’s Closing Bell he says “There’s been a lot of call buying and all the activity is in February. Investors are looking near term.”

In other words options traders are speculating that the price of gold could move even higher by the third week in February – the time of expiration.

Why is that?

Najarian explains that gold is currently trading at a critical technical level and if it breaks higher the move could be sizable. That 's seems likely to him due, at least in part, to investors moving out of currencies such as the pound and euro.

There are many ways to play it but Najarian likes the SPDR Gold Trust ETF best.

Guy Adami concurs. He says gold has broken higher from its penant formation; he also likes longthe GLD with a tight stop.

Pete Najarian's gold trade from the Fast Money Final Call on Closing Bell.

Guy Adami's gold trade from Fast Money

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Trader disclosure: On Jan 23, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MS), (BAC), (C), (TM), (MCD); Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Short Calls; Najarian Owns (GLD) Call Spread; Najarian Owns (GE) Put Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls/Put Spread; Najarian Owns (GNW) Long Calls; Finerman's Firm Owns (DNA) & (DNA) Call Spread; Finerman's Firm Owns (MSFT), (TBT), (UNH), (V); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (ANF), (COF), (USO); Finerman's Firm Owns (ROH) Calls

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