$GLD call buyers score at highs

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

On Mar. 17, Market Rebellion’s Unusual Option Activity Service identified the purchase of 10,110 May $282 calls as part of a bullish spread and roll for $5.60 with shares at $276.56. The volume was well above the open interest of 91 contracts at the time, indicating that this was a new position.

Those calls have traded for as much as $26.60 today, a 375% return, while the stock rose 10.81% at the same time, showing how quickly 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.

The GLD was up 3.25% today to close at $307.47.