$GLD bulls raise the bar

Option traders are scoring big gains on upside positions today in the SPDR Gold Trust (GLD).

On Mar. 13, our Unusual Activity Service detected the purchase of 7,000 April $145 calls for $4.06 as part of a bullish roll with shares at $142.85. This was clearly a new position, as open interest in the strike was only 4,667 contracts before that session began.

Those calls changed hands for as much as $17.32 this afternoon, more than 4 times their purchase price. The stock rose 13.64% in the same time period, underscoring how options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

GLD ended the session up 1.71% to $161.41 in afternoon trading, after making a new 52-Week high of $162.36 earlier today. The exchange-traded fund, which tracks the price of bullion, has rallied as investors look to the so called “safe-haven” trade amid broader equity volatility.