On Monday in this space we highlighted some upside call buying in the gold etf GLD (here). The buying was concentrated in September quarterly expiration and was playing for a move back towards $140. Today one of the largest options trades in the market was once again in GLD, and also playing for further upside, but this time looking much further out.
When the GLD was $129.50 at 11am a trader paid $3.17 for 46,000 of the June 2017 144 / 172 call spreads. This call spread breaks-even at $147.17, up 14% from the trading levels, offering gains of up to $24.83 between $147.17 and $172, with a max gain of $24.83, or $114 million dollars if the GLD is up 33% in a little less than a year. While that seems like a haul, remember that GLD is up 30% since late December, and the break-even on this trade would not even bring the etf of the shiny metal back to its 2011 highs:
Aside from the GLD print, it appeared there was a serial over-writer of large cap stocks. Here were a few:
GE: when the stock was $31.90, there was an opening seller of 90,000 Oct 33 calls at 54 cents. If the stock is 33 or lower the investor would receive the 54 cents, or $4.86 million in premium over the next 3 months, which would be more than the double the stock’s current 23 cent quarterly dividend, adding 1.7% yield, or nearly 7% annualized.
T: when the stock was $42.50 there was an opening seller of 35,000 Sept 44 calls at 63 cents to open. If the stock is 44 or lower the investor will receive 63 cents, or $2.2 million in premium, or about 1.5% over the next two months, or 7% annualized.
VZ: when the stock was $55.65 there was an opening seller of 37,500 Sept 57.50 calls at 70 cents to open. If the stock is 57.50 or lower the investor will receive 70 cents, or $2.2 million in premium, or about 1.25% over the next two months, or 5% annualized.
CVX: when the stock was $102.65, there was an opening seller of 31,000 Sept 110 calls at 63 cents. If the stock is 110 or lower the investor would receive the 63 cents, or $1.95 million in premium over the next 2 months.