A trader closed out a large bullish options position in the SPDR Gold Shares ETF (GLD) on Monday, collecting $202 million, then rolled part of that money into a smaller bullish bet. The move comes after gold's best month since 2008 and days before the PCE inflation report and the Jackson Hole Economic Symposium.
A Big Position Gets Rolled Smaller
Twenty minutes after Monday's open, a trader sold out of an existing position of 116,000 420-strike calls in the GLD ETF expiring Sept. 18, contracts that were in the money, collecting $202 million. The trader then bought the same number of 430-strike calls for $144 million, taking in $58 million while rolling into the new position.
The new position is still bullish, but it is a smaller one. According to CNBC: "The probability is very high that gold sees a short-term pullback," said Nigam Arora, founder of the Arora Report. Arora also said GLD had already seen about $60 million of negative net money flow Monday, even as momentum-driven flows stayed bullish. The trade lands ahead of a week that includes the release of PCE inflation data Wednesday and the Jackson Hole Economic Symposium that begins Thursday.
Broader Options Flow Still Leans Bullish
Gold is up 15% this month, on pace for its best month since 2008, rallying even as the 10-year yield tests multiyear highs and real interest rates climb — a combination conventionally seen as a negative for gold, a nonyielding asset.
Yet most other options flows in GLD on Monday leaned bullish, as they have for several weeks. Traders likely bought more than 37,000 calls, compared with fewer than 20,000 puts, according to ThinkOrSwim data. Among the top 15 contracts by volume Monday, 13 were calls, per SpotGamma data. Volume in the GLD ETF ran at almost five times its 30-day average, largely because of the big call spread, according to Cboe LiveVol data.
Source: CNBC
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