$GLD shines on for bulls

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

On Thursday, Aug. 1, Investitute’s market scanners identified the purchase of 10,000 October $135 calls in one print for $2.45 above open interest of 8,486 contracts with shares at $133.37. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $5.95 this morning, nearly 2.5 times their purchase price. The stock rose less then 4% in the same time frame, underscoring 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.

GLD closed up 1.4% to $137.79 today, after reaching a new 52-week high of $138.64 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.