This Week in Gold and Oil Volatility

Gold Volatility rose almost 10% last week with GLD dropping out of a recent range and closing at 160.33. That rise was off a very low level of 12.60 and despite moving higher last week to 13.82 this is still a historically low level. Even if you watch the volatility indexes and do not trade GVZ futures or options the low volatility in GLD options may be of interest. To illustrate how inexpensive options on GLD are I took a look at the GLD Jan 160 Straddle which could be bought late Friday for 4.42. There are 18 trading days between Friday and this expiration date and the average 18 trading day price movement for GLD this year was 5.05 points.

OVX was lower on the week trading down to the mid-27 level which has been touched only once in over six months. The price of oil has not been moving around much and the result has been calmer implied volatility on USO options. In addition to a drop in OVX the futures contracts were all lower as well and the curve flattened a bit. What this indicates is a dull energy market or option trading opportunities for those that thing the oil market may heat back up in the near future.

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