$GLD call prices double for bulls

Bullish option traders doubled their money in just under a month in the SPDR Gold Trust.

On Dec. 6, Investitute’s proprietary programs cited the purchase of 6,376 February $120 calls for $1.45 as part of a bullish spread with shares at $117.38. Volume was above the strike’s open interest of 29 contracts, showing that it was a new position.

Those calls traded for $2.89 today, almost twice their purchase price. The stock rose 3.27% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

GLD was up 0.16% today to close at $121.25. The exchange-traded fund, which tracks the price of gold, has apparently risen as a save-haven play as volatility in equities has remained elevated.