$GLD bears pile up gains

Bears are piling up gains in downside option positions today in the SPDR Gold Trust (GLD).

On Jun. 17, Market Rebellion’s Unusual Option Activity Service found that 6,500 Weekly $165 puts, expiring tomorrow, were bought for $0.66 to $0.67 with shares at $171.93. This was clearly fresh buying, as the open interest in the contract before the activity appeared was just 399.

Those puts have traded for as much as $2.90 this session, more than 4 times their purchase price. The stock fell 5.67% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

GLD was last up 0.19% at $162.44.