$GLD calls double for bulls

Bullish option traders have run up sizable gains in the SPDR Gold Trust (GLD) today, on positions opened late last year.

On Dec. 27, Investitute’s tracking systems detected the purchase of 4,400 June $123 calls, expiring today, for $4.05 to $4.10 above open interest of 2,364 contracts with shares at $120.53.

Those calls traded for as much as $9.15 today, double their average purchase price. The stock rose 9.64% in the same time frame, showing how far options can 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 was up 0.66% to $131.98 today. The exchange-traded fund has rallied as the dollar has weakened.