$GDX calls fly

Bullish option traders tripled their money overnight in the VanEck Vectors Gold Miners Fund (GDX).

Just yesterday morning, Market Rebellion’s Unusual Activity Service detected the purchase of 20,000 Weekly $27.50 calls expiring tomorrow for $0.14 to $0.20 with shares at $27.24. This was clearly fresh buying, as open interest for the contract was only 5,076 before that session began.

Those calls traded for as much as $0.65 today, more than 3 times their purchase prices. The stock rose 3.19% in the same time, a large move but nowhere near that of its options.

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.

GDX is off 0.29% to $27.63 currently but made a new 1-Month high earlier in the session. Gold miners rallied along with the price of gold after the Fed announced yesterday it would keep its benchmark rate stationary.