Options Trading News

January 18, 2013  Fri 9:21 AM CT

The SPDR Gold Shares Fund has been climbing for the last two weeks, and a big option trade is looking for another leg higher.

optionMONSTER's Heat Seeker system shows that a trader bought 18,300 June 175 calls for $2.95 and sold 36,600 June 185 calls for the bid price of $1.40 this morning. Open interest at each strike was under 1,000 contracts at the start of the session, so this is a new bullish spread.

This call vertical, also known as a ratio spread because of the differing number of contracts in the two strikes, cost the trader just $0.15 to open. That is the amount at risk if shares remain below $175, while the maximum profit would come with the GLD right around $185 at that June expiration. (See our Education section)

The GLD is up fractionally at $163.63 today, after trading below $160 in the first week of 2013. The exchange-traded fund hit a 52-week high was just above $174 in October, while the all-time high was set in September 2011 at that $185 strike level.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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