Huge volatility trade targets gold fund

optionMONSTER

As gold plunges to a 22-month low, one large trader sees even more volatility ahead.

optionMONSTER systems show that a trader bought 25,000 April 140 puts in the SPDR Gold Shares Fund for the ask price of $0.51. The volume is more than double the previous open interest in the strike, clearly showing that this is a new position.

Less than a minute later, a block of 450,000 shares of the GLD was bought for $145.90. The combination of stock and options creates a delta-neutral trade that is betting on higher volatility in the shares and/or a sharp move in either direction. (See our Education section)

The GLD is down 3.62 percent to $145.59 this afternoon, its lowest level since June 2011. Shares were trading at $174 in early October. 

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