$GLD bulls pile up gains

Bulls are piling up gains on upside option positions today in the SPDR Gold Trust (GLD).

On May. 3, our UOA Service detected the purchase of 3,000 Weekly $169 calls expiring today for $0.50 to $0.52 with shares at $167.70. This was clearly a new position, as open interest in the strike was only 1,016 contracts before that session began.

Those calls changed hands for as much as $3.23 this morning, more than 6 times their purchase prices. The stock rose 2.68% 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 was last up 1.22% this morning at $172.14.