Options traders are seeing a golden opportunity in one of the most popular ways to bet on bullion.
The GLD gold ETF is up nearly 2% in the past week alone as investors look for ways to protect their portfolios while volatility heats up into November’s presidential election. According to one trader in the options market, now is the time to buy into what could be a solid gold rally.
“[GLD] saw calls significantly outpace puts earlier [on Tuesday], the result of a large buy of the 190/200/210 call butterflies, buying 10,000 of the 190-calls, selling 20,000 of the 200 calls, and then buying 10,000 of the 210s,” Optimize Advisors CIO Michael Khouw said Tuesday on CNBC’s “Fast Money.”
This trader is risking just about $750,000 to make a bet targeting that $200 strike price, which would represent a move of about 12% higher from Tuesday’s close into December expiration.
But it isn’t just bullion itself that has been on a tear, as of late. The gold miners ETF (GDX) and the junior gold miners ETF (GDXJ) have both surged 5% in the last week after a short pullback. Year to date, those plays are both up more than 30%, while GLD has netted returns of about 25%.
GLD was trading slightly higher in Wednesday’s session.
