$GLD calls skyrocket 7-fold

Bullish option traders have racked up huge gains in the SPDR Gold Trust (GLD).

On June 4, Our market scanners identified the purchase of 2,250 January $138 calls for $1.36 as part of a bullish spread with shares at $124.83. This was clearly a new position, as open interest in the strike was a mere 152 contracts before that session began.

Those calls traded for $10.16 this morning, about 7.5 times their purchase price. The stock rose 16.42% in the same time period, underscoring how options can far outperform their underlying shares.

It is the third winning trade in the name posted on Unusual Option Activity this month.

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 reached $145.49 this morning, just off its 52-week high of $145.68, but is off $144.73 this afternoon, off 0.45% to $144.51 in midday trading. The exchange-traded fund, which tracks the price of the precious metal, has rallied with the price of bullion in recent months.