Betting on $1000 Gold in September

Have a look at the open interest in September $100 call options for the SPDR Gold Shares ETF (GLD). Open interest at this strike price for other months is a little high, but nothing like September where it is more than 10-to-1 versus any other price.

Options for the world's most popular gold ETF began trading just one month ago and, according to the Chicago Board Options Exchange, they were the most actively traded call options last week.

Full Disclosure: Long GLD at time of writing.

 

Comments

[Stock market bites]

Wow, that's pretty significant. Also worth noting, there's no corresponding large open interest on the put side.

2008 Jul 17 09:09 AM

[CLH]

I think you are on the wrong side for gold. A double top and whoose

2008 Jul 17 03:42 PM

[A.S.D.]

Does anyone have any comments on BANRO (BAA)??

2008 Jul 17 05:33 PM

[Emerald]

I suggest you go long GLD and stay away from the option calls. Drops in oil and a potential bear market rally in the dollar (some reversion to the mean) could easily leave you flat on any GLD calls. GLD will rally once the bear market rally subsides and the longer term credit contraction settles in.

2008 Jul 18 12:15 PM

[bowman711]

Gold has tried to rally three times this week, only to be beaten down by naked short selling by the 'big eight' bullion banks. This has been done repeatedly since March. Gold will probably go nowhere until something so dramatic happens the causes an overwhelming flight to gold, something beyond the control of the bullion banks. The most likely such event (as of now) would be an Israeli attack of Iran's nuclear program. The experts who are speaking out on such an attack seem to think it is most likely to happen between the election and the inauguration. Therefore, if one is looking to buy calls, I'd suggest buying the January calls. I'd say it's the same for oil calls.

2008 Jul 18 12:34 PM

[User 30121]

Bowman711: Your assessment is spot on! I see a three reasons gold (and silver) will go parabolic before 2008 ends, (l) Obama getting elected (God have mercy on us), (2) Israel attacking Iran (a given); (3) the pathetic state of affairs of our economy. In 2009 when the bank failures become extreme, along with the continued subprime debacle, and a new wrinkle, COMMERCIAL mortgages come unglued, ah, a parabolic move in PMs will be an UNDERSTATEMENT!

To CLH: Wise up dammit!

2008 Jul 18 01:52 PM

[Jake2]

To User 30121: It's not "dammit!" It's "damn it!" If you can't spell damn it why should we take anything you say seriously?
PS: God save us from John (Yawn) McCain and his 100-year war.

2008 Jul 18 02:16 PM

[User 30121]

Jake2, your point is well taken. Now, wipe that smirk off your face (smile). Seriously, neither candidate will be the answer, but look at it this way, when the Democrates took over Congress TWO YEARS AGO gas was 2.16 a gallon! With control of Congress what did the Dems accomplish? ZERO! What has Pelosi and Reed done, except take vacations at our expense, and criticize Bush. Remember, the Republican party is the party of BAD ideas. The Democratic party is the party of NO ideas. My rationale for my initial post was that should Obama prevail, this country will take a slide backwards that only serves to spread the infection. Have a nice day!

2008 Jul 18 02:39 PM

[escondidoguy]

Jake2: Only an empty headed liberal would care how "damn it" is spelled in a financial forum. You're "yawn" to McCain and reference to the 100 year war is typical liberal speak for a kool aid drinker that doesn't think for himself. Your candidate Obama is all sizzle and no substance - a perfect match for people who can't be bothered to critique the man and his extensive (3 years. WOW!) in national politics. He's the typical Dem snake oil salesman and God help the markets if that charlatan gets in.
And user 30121: Shame on you for encouraging Jake2 by writing that his pont is well taken. His point is not well taken. It's stupid.

2008 Jul 18 03:59 PM

[rbblum]

In regards to US politics &/or AU:

The central issue just may as well be that if the US higher education is truly the envy of the world, then why hasn't a political scientist or commoner been able to determine an effective manner in which US Congressional representatives act in the best interests of the nation and its citizens; having the conviction and fortitude of not selling their souls to lobbyists, special interest groups and big dollar contributors.

But, on the other hand, shameless & devious deeds of the past coupled with spineless inaction of the US Congress should pay huge dividends with gold in the coming months and years ahead.

2008 Jul 19 01:54 AM

[Nelson_Lai1975]

Very good post, I see all these off topic comments.

The point here is, there is a huge bet of gold going over $1000 in Sep.

The question is, how can we profits from it.

Tim, are you buying those same call options as well.

When there is a buyer, there is a seller. My concerns is, wouldn't the seller be concerned, (that there will lost around $150 millions when gold is over 1000 for spot delivery).

Don't you think the seller will do all that he can, i.e. to prevent gold from going over $1000.

The most likely scenario that a super spike in gold is some thing extra ordinary like Israel strike Iran, but since Israel F-15 needs to first fly over Iraq before it can reach Iran, most people think that cannot happen (unless the US permits) it.

Do you have any reason, theory to believe that a super gold spike can occurs (w/o those extra ordinary events)

Given that oil has corrected some much, gold tried to rally over 1000 and failed (it actually failed 3 times during last 3 weeks), many speculation are some big central banks players are behind it (prevent gold are going higher)

Care to share anything ?

2008 Jul 19 11:03 AM

[nevadaguy]

since gld is a direct reflector of inflation......duh....... which way do you think its headed...nuff said !!

2008 Jul 19 11:55 AM

[alajac]

Those could be "covered call" sales rather than long calls. in that case the market maker would be inclined to find a pretext to spike the price so he can sell the postition; after that he don't give dammit.

2008 Jul 23 06:19 AM

[alajac]

I meant to say "don't give A dammit".

2008 Jul 23 06:20 AM