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Large downside strategy in gold fund

Chris McKhann (chris.mckhann@optionmonster.com)

A large put trade topped yesterday's option activity in the SPDR Gold Shares exchange-traded fund.

optionMONSTER systems show that a trader sold 10,000 January 143 puts for $0.08 against open interest of more than 21,000 and bought 10,000 February 143 puts for $0.16 in volume far above open interest of 309 at that strike, clearly indicating a new position.

This was very likely a roll forward, with the trader closing the position in January and buying the later-dated contracts to allow more time for the strategy to work. It could be an outright bearish play or a hedge against long shares . (See our Education section)

The GLD closed at $160.78 yesterday, up fractionally on the session but off the best levels of the morning. The fund has been losing ground for several months since its high of $174.07 set in early October. Last week it was trading at the lowest levels since August.

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