On Wednesday, an unknown buyer made a $1.75 Million Options Bet That Gold Would Triple to $4,000.

The gold options market saw $1.75 million in block trades betting the precious metal could almost triple in more than a year, surpassing the record.

Around noon in New York Wednesday, 5,000 lots of a gold option giving the holder the right to buy the precious metal at $4,000 an ounce in June 2021 changed hands. The bets were sold at $3.50 an ounce.

“It’s like 18-month term life insurance; what will the world look like if gold is at $4,000,” Tai Wong, the head of metals derivatives trading at BMO Capital Markets, said in an email. “They are hoping for a quick violent move,” he said, referring to the people who bought the call options.

Gold Headed to $4000?

For the call buyer, it's not a matter of gold hitting $4,000 but rather gold hitting $4,000 by June 2021.

Of course one would not have to hold the options all the way through.


If gold suddenly spiked by $1,000 right away perhaps the entity cold sell the options for $15 or more at least tripling the bet. Otherwise these options will quickly decay.

Let's assume the options are held to the bitter end.

Returns On Options Held Full Term

Image placeholder title

Return Synopsis

  • At a June 2021 price of $4,000 or less, the call buyer will lose $1.75 million.
  • Between $4,000.01 and $4003.49 the call buyer will lose some but not all of the bet.
  • At precisely $4003.50 the call buyer breaks even
  • At $4,000 the call buyer nets $48.25 million ($50 million minus the initial $1.75 million bet).
  • At $5,000 the call buyer nets $498.25 million ($500 million minus the initial $1.75 million bet).

The most likely thing, by far, in any time frame is the buyer losses $1.75 million.

Mike "Mish' Shedlock

Gold Bears Press Bets in Record Numbers

Gold shorts are near a record high as saturating bearishness sets in.

Record Bearishness on Gold as Commercials Go Net Long Fifth Week

Commercial traders are net long gold by the most in 17 years as hedge funds go increasingly short.

Gundlach: "Bet Against Bitcoin and Make Money"

Jeffrey Gundlach, chief executive officer of Doubleline Capital LP sees Bitcoin as the "big rock of silly season".

Gold is Not a Function of the US Dollar Nor is Gold an Inflation Hedge

Swings in the US dollar have no long-term impact in the price of gold. Nor is gold an inflation hedge.

Gold and Bitcoin Hype Hits Stratosphere (Part 1)

The hype and nonsense Bitcoin and gold has blasted through the troposphere into the stratosphere. I suppose hype could get higher. The next target is the mesosphere.

Fed-Proof Bond Bet?

The yield curve is the flattest since 2007. Nonetheless, traders think it will get flatter. The bond bet du jour is the next Fed chair will keep hiking but not as much as the Fed thinks.

Tether's Mysterious Crash: Is the Money Really There?

Tether is a crypto, supposedly pegged to the dollar. On Oct 14, it fell to $0.86. Long-standing concerns surfaced again.

Conservatives Make Huge Gains at Labour's Expense in London

Recent polls show a big uptrend in Tory support in greater London, a traditional Labour stronghold.

In Praise of a Genuine Gold (Not Gold-Backed) Bond

Buffet dismissed gold because it pays no interest. But what if there was a genuine gold bond that paid interest in gold?