This Week in Gold and Oil Volatility – 8/16/2013

Despite being informed that several high profile gold bulls reduced or eliminated their positions recently, the price of gold managed to break through some technical resistance this past week.  The SPDR Gold Shares ETF (GLD – 132.58) managed to climb over the 130 level.  The impact on implied volatility was interesting as GVZ was up almost 7% to 22.97.  GVZ will often react to a move higher or lower.  This is a bit different than equity index volatility changes.  It may be that the mind of the market has GVZ showing that there is uncertainty regarding GLD staying above this support level.

Despite the underlying market climbing, the CBOE Crude Oil Volatility Index (OVX – 23.99) was higher on the week.  OVX rose just under 6% with the United States Oil ETF (USO – 38.40) was up 2.5%.  The curve managed a fairly parallel shift indicating risk concerns for dramatic oil price changes higher or lower well into the fourth quarter.

OVX GVZ

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Russell Rhoads, CFA

CBOE Options Institute

Russell Rhoads, CFA, is a Senior Instructor with the Options Institute at the Chicago Board Options Exchange. He joined the Institute in 2008 after a career as an investment analyst and trader with a variety of firms including Highland Capital Management, Caldwell & Orkin Investment Counsel, TradeLink Securities and…

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