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February 14, 2013  Thu 4:47 AM CT

GLD: SEE CHART GET CHAIN FIND STRATEGIES
A large trader apparently thinks that it's a great time to get long gold.

optionMONSTER's Heat Seeker tracking program detected the purchase of 11,000 May 172 calls in the SPDR Gold Shares fund for $0.79 and the sale of an equal number of May 188 calls for $0.14. Volume was more than 29 times the previous open interest at each strike, indicating that new money was at work.

Known as a bullish call spread, the trade is a highly leveraged strategy that will earn huge profits--but only if the fund retraces its selloff of the last six months and rallies back to new 52-week highs. With the GLD now at support levels from last summer, the transaction reflects a belief that bullion is getting ready to rally. (See our Education section)

It cost $0.65 to open the trade, which will expand to $16 if the fund closes at or above $188 on expiration--a profit of 2,362 percent. (See our Education section for more on how options can be used to amplify moves in shares prices.)

The GLD fell 0.53 percent to $159.05 yesterday and has been consolidating in its current range for the last 18 months. If the current level holds, it would represent a higher low from 2012's trough, which some chart watchers may consider evidence that the long-term uptrend remains in effect.
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It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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