$GLD keeps shining for bulls

Option traders have tripled their money on upside positions in the SPDR Gold Trust (GLD).

On June 6, Investitute’s market scanners identified the purchase of 2,500 August $128 calls for $1.84 above open interest of 1,191 contracts as part of a bullish spread with shares at $126.07. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $6.71 today, more than 3.5 times their purchase price. The stock rose less then 6% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

It is the third winning trade in the name posted on Investitute in as many weeks.

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 is up 1.21% to $133.57 this afternoon, just off a new 52-week high of $133.75 reached earlier in the session. The exchange-traded fund has risen with the price of gold, which investors are buying again apparently as a safety trade.