This blog post was written by Chris McKhann.
As gold pulls back roughly 10 percent from its highs of two weeks ago, options trading is pointing to further downside.
Gold futures crossed the $1,000 mark briefly on Feb. 20 but have dropped every day since then and now sit at $912. The SPDR Gold Trust (GLD) exchange traded fund has retraced from $99 to its current level around $89, mirroring the price decline of the precious metal itself.
As least one options trader is looking for more downside, at least on a limited basis. This player bought 4,500 of the April 85 puts for $2.45 and traded a similar number of April 80 puts, according to OptionMonster's tracking systems. The trade appears to be a bear put spread, using the sale of the April 80 puts to offset some of the cost of the April 85 contracts.
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Precious Metals Players:
iShares Silver Shares
E-TRACS UBS Long Platinum
Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.