After weeks of head fakes in both directions the price of gold finally broke out of the 1600 . The result was the SPDR Gold ETF (GLD – 155.76) losing 3.6% on the week. More importantly to volatility traders was the rise of 21% for GVZ. Last week was also was February expiration for GVZ options and futures. The move in GVZ did occur to late in the week so settlement came in at 14.09. Looking at the action of the curve, volatility players seem to be anticipating this quick move in GVZ is short lived as the curve flattened with March up 8%, April up about 6%, and May up about 5%. Another 20% week in GVZ may push the futures higher, but right now those markets are calling the GLD move over.
USO was almost dramatically unchanged on the week rising only 0.02 on the week. This lack of volatility in the price of oil resulted in OVX dropping about 2% and the curve shifting in a fairly parallel manner. OVX was the outlier last year in volatility trading at an elevated level in the 30’s for a good part of the year. It appears the anticipation for oil volatility is falling in line with the other markets. At least until the next political event pushes oil higher or lack of demand pushes the price down.