gold It has risen 15% this month, rising along with rising interest rates and quietly on track for its best pace since 2008. The biggest trade in the entire options market today shows that run is nearing an end.
Twenty minutes after the market opened on Monday, someone sold an existing position of 116,000 420 strike calls in the market. SPDR Gold Share ETF (GLD) The contract, which expires on September 18th but is currently in the money, has collected $202 million. The trader then used some of that money to buy the same number and expiring 430 strike call for $144 million, earning $58 million and “rolling” into a new position.
While the new position remains a bullish stance, it is smaller in size and a sign of waning confidence in what is perhaps one of the biggest bulls in the ETF’s recent trading history, a week ahead of major macroeconomic events including Wednesday’s PCE inflation announcement and the Jackson Hole Economic Symposium in Wyoming, which begins Thursday.
Nigam Arora, founder of Arora Report, said: “It is very likely that gold will fall in the short term.” “Crowd flows remain very bullish, but smart money flows have turned negative. GLD has now already recorded negative net money flows of around $60 million.”
SPDR Gold Share (SPY) Year-to-date
Gold is rising even as the 10-year bond yield tests multi-year highs and real interest rates rise, traditionally seen as a negative for gold as a non-yielding asset.
It’s also worth noting that most of GLD’s other option flows on Monday were very noticeably bullish, and have continued to do so for several weeks.
Traders may have bought more than 37,000 calls and fewer than 20,000 puts on GLD today, according to ThinkOrSwim data. According to SpotGamma data, 13 of the top 15 contracts on Monday were phone calls.
According to data from Cboe LiveVol, the GLD ETF’s volume has been moving at nearly five times its 30-day average, driven in large part by higher call spreads.
(Correction: Adjusted article to reflect that the “GLD” trade took profit and did not open a new position on the 420 strike call.)
