Spread looks for gold to keep shining
Mike Yamamoto | [email protected]
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.