OptionsHouse

Options Trading News

December 28, 2012  Fri 12:20 PM CT

GLD: SEE CHART GET CHAIN FIND STRATEGIES
Bullion has pulled back, and one investor is seeing a golden opportunity to get long the precious metal.

optionMONSTER's Heat Seeker tracking system detected the purchase of 10,000 March 170 calls on the SPDR Gold Shares exchange-traded fund for $1.07. An equal number of March 188 calls were sold at the same time for $0.15, resulting in a net debit of $0.92.

Vertical spreads such as this control a move between two prices, in this case $170 and $188. If the GLD rallies to the top of that range, the position would be worth $18--a profit of 1,857 percent. (See our Education section)

The GLD is down 0.44 percent to $160.45 in afternoon trading, continuing to remain trapped in a range in place since August 2011. The fund has lost almost 7 percent of its value in the last three months, especially after selling by hedge-fund manager John Paulson.

The declines have brought the fund back to its 200-day moving average, which could make some chart watchers think it's ready to bounce.

Calls outnumber puts by more than 2 to 1 in the fund so far today, according to the Heat Seeker.
Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

Market Level Making You Nervous, Huh? Part 3

In last week's article, we discussed how important the extra cash you save by using the Stock Replacement Strategy over buying the actual stock is! That extra cash in our account instead of being unnecessarily tied up in a stock position allows us to buy the puts we would need to protect our downside in the case of a major sell-off.

View more education articles »