Dan Nathan Sees Unusual Options Activity In SPDR Gold Trust (ETF)

On CNBC's Options Action, Dan Nathan spoke about unusually high bullish options activity in SPDR Gold Trust (ETF) GLD. Options trading volume on Tuesday in the name was three times higher than the average daily options trading volume.

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When the ETF was trading at $107, somebody sold to close the March 113 calls and the March 114 calls and bought to open 75,000 contracts of the March 108 / 117 call spread for $1.80. The trader paid $13.5 million in premium for the call spread and the trade breaks even at $109.80 at the March expiration. If the stock jumps to $117 at the March expiration, the trade can maximally make $7.20.

Nathan explained that gold is in a long-term downtrend and he believes that current rally probably won't last. He thinks that traders who believe in a continuation of the rally should use options and have a limited risk.