$GLD bulls stack gains

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

On Dec. 1, our Unusual Activity Service detected the purchase of 7,500 January $179 calls for $1.54 as part of a bullish spread with shares at $170.31. This was clearly a new position, as open interest in the strike was only 4,329 contracts before that session began.

Those calls changed hands for as much as $4.63 this morning, more than 3 times their purchase price. The stock rose 7.00% 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 up 2.23% today, closing at $182.33, it’s highest closing level since early November.