Options Trading News

A huge call spread looks for new highs in the SPDR Gold Shares Trust as it pulls back from resistance this morning.

The GLD, which represents one-tenth of an ounce of bullion, is down 0.87 percent to $155.13 in morning trading. The exchange-traded fund was unable to break above $158 in the last week, resistance that has been in place since the price gapped lower in early May.

Today's option volume in the GLD already exceeds 130,000 contracts and is about 50 percent above the daily average. A November call spread tops the action, with 25,000 of the 180s purchased at the ask price of $1.17 and, seconds later, 25,000 of the 210 calls sold for the bid price of $0.25 . The previous open interest at each strike was fewer than 150, so this is new activity.

The verical spread cost $0.92 to open, which is the amount that will be lost at expiration if the GLD remains below $180. The maximum gain of $29.08 comes at or above $210 on expiration. This is a low-probability bet that gold will break out.

The delta of the 210 options suggests that there is just a 1 percent probability that the GLD will be above $210 at that expiration. (See our Education section)