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Options Intelligence Report: SPDR Gold Shares Trust (GLD) & Bank of America Corp. (BAC)

GLD – SPDR Gold Shares Trust
Shares of the gold exchange-traded fund, which mirrors the performance of the price of gold bullion, declined 2.15% to $107.93 today. Bullish call buying took place in the May contract today despite erosion in the value of the fund’s shares. It looks like traders purchased nearly 6,000 calls at the May $116 strike for an average premium of $0.97 per contract. Call-buyers are apparently expecting the price of gold to rally within the next couple of months to expiration.

Investors holding the call contracts profit if GLD shares explode 8.375% over the current price to surpass the breakeven point at $116.97 by May expiration. Shares of the underlying fund last exceeded $117.00 back on December 4, 2009. Investors exchanged 220,000 option contracts on the GLD in the first half of the trading day.

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BAC – Bank of America Corp.
Put option action dominated the April contract on Bank of America today, which is perhaps a signal by some bearish investors that its share price could continue to erode through expiration next month. Shares are currently trading 1.90% lower on the day to $16.76.

It looks like pessimistic players purchased more than 30,000 puts at the April $13 strike for a premium of $0.06 apiece. These contracts could merely represent cheap downside protection for investors who are long shares of the underlying stock as opposed to a scenario in which put buyers are placing outright bearish bets that shares are set to sink. Put purchases continued at the higher April $16 strike where 11,600 contracts were picked up for a premium of $0.26 each. Another 7,800 in-the-money put options were coveted at the higher April $17 strike for an average premium of $0.65 each.

We note that put open interest levels at each of the strike prices detailed above exceed put volume generated by investors today. This may mean the buying interest is the work of traders closing out short put stances. More than 220,000 option contracts changed hands on Bank of America by 12:40 pm (ET).

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