Options Trading News

Volatility for the SPDR Gold Shares Trust has fallen dramatically, but the big option trade of the day sees a break higher.

The GLD exchange-traded is off fractionally to $159.13. The 10-day historical volatility has fallen below 9 percent as the ETF has traded in an increasingly tight range. The range for 2012 has seen the stock start at $155, climb near $175, and then settle back near the years lows.

The options volume for the GLD already tops 58,000 contracts this morning, with a large call spread leading the way. A trader bought 10,000 July 180 calls for the ask price of $0.73 and sold the same number of July 205 calls for the bid of $0.18, according to optionMONSTER's Heat Seeker system. The volume at each strike was more than 5 times the previous open interest, so this is a new position.

The bullish call spread costs the trader just $0.55, which will be lost if the GLD remains below $180. The maximum profit comes if the fund breaks to a new high in coming months, as the trader can make $24.45 if it is above $205 at expiration. (See our Education section)