Traders have been using options contracts on a gold exchange traded fund (ETF) to lock in some profits, but they’re also positioning to benefit from further gains in the precious metal, according to a report Tuesday.
In the $60.7 billion SPDR Gold Shares (NYSEArca: GLD), a recurring theme has been “sellers closing out their long call positions and taking some profits off the table and purchasing higher strike calls, looking for continued exposure to upside in the metal,” wrote Paul Weisbruch, vice president of ETF/options sales and trading at Street One Financial, in a note Tuesday.
The gold ETF was fractionally negative in early U.S. trading.
Options traders are also tapping an ETF to profit from a potential rebound in the U.S. dollar, which has been hammered lately. Weisbruch pointed out bullish options flows in PowerShares DB US Dollar Bullish Fund (NYSEArca: UUP).
“Yesterday was no exception, as we saw sellers of June 21 puts in UUP, positioning for a near term bottom in the dollar,” he wrote Tuesday.