A trader bought 20,000 June $145/$140 put spreads at $1.
A trader is making a large bearish bet on GLD. The trader is paying $2,000,000 to execute the spread and chose to use the June expiration instead of a back month. Therefore, time is not on the trader's side. The break even price for the bearish spread is $144. GLD closed trading today at $147.83. Therefore, the trader needs to GLD to drop, sooner rather than later. The max risk for the trader's bet is the debit. The max profit potential is $8,000,000 which occurs at an underlying stock price of $140 or below by June expiration. Therefore, the risk/reward ratio is a favorable 1:4.
The chart shown above is the GLD daily stock chart. The white line shown is the break even price. You can see that the break even price has shown to be a level of support in the past. GLD has traded below the $144 level twice but quickly popped right back above the break even line.
GLD traded 206,523 contracts today compared to average daily volume of 269,640. The 52-week range for GLD is a low of $113.08 and a high of $153.61.
No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.