This Week in Gold and Oil Volatility – 1/24/2014

While the rest of the world was panicking over the stock market I was teaching a great group of students from China.  Listed option trading is coming to China is 2013 and over the past couple of years The Options Institute has had a few hundred financial professionals visit to learn about the various aspects of running an option exchange and using options as risk management tools.  The point behind all this is that I was not watching the markets so I’ve been catching up on what happened this past week in order to get my blogs in order.  To my surprise the SPDR Gold Shares ETF (GLD – 122.29) was up on the week.  Hearing that the equity market sell-off was global in nature and based on concerns of slowing economic growth I would have guessed (before looking) that GLD would have been down for the week.  Finally, I noticed that GLD has been up for five consecutive weeks.  That’s the longest weekly winning streak for GLD since August 2012.  I updated last week’s chart showing the weekly GLD prices and added a nice uptrend line.

Gold Chart - Updated

So, Gold was higher, but so was the CBOE Gold ETF Volatility Index (GVZ – 17.54) which rose 22% as well.  GVZ is known to move in sync with the price of GLD when there is a price move in either direction.  Add global economic concerns to the mix and we get higher option volatility.

The CBOE Crude Oil ETF Volatility Index (OVX – 19.46) was up as well last week as was the underlying US Oil Fund ETF (USO – 34.58) was also higher by a little over 2.5%.  Like in the gold volatility arena this is not unusual.