When it comes to gold, traders including billionaire investor Mark Cuban are turning to the options market.
Billionaire Mark Cuban admitted Thursday that wild market movements have left him "confused." But he has placed a bet on gold — a so-called "safe haven" asset — as investors rush to the precious metal.
Cuban said earlier Thursday that he bought "a lot" of call options on gold. He noted he did not think gold was a hedge, but that people looking for momentum would push the price of the metal higher.
"I think people are so confused about this market. Nobody really understands what's happening, including me. So, things that I thought made sense didn't make sense and weren't working. ... When traders don't know what to do, they go where everybody is. And I thought that would be gold," Cuban told CNBC's "Fast Money: Halftime Report."
The gold ETF, GLD (NYSE Arca: GLD), traded at four times its average daily volume on Thursday, with call options outnumbering put options by 4-to-1. One particularly bullish trader placed a big bet that GLD could surge 19 percent in the next month.
Feb.--On Thursday, that trader bought 20,000 of the March 140-strike calls in GLD for 30 cents per 100-share contract. This is a $600,000 bet that GLD rises above $140.30 by March expiration. |
