This Week in Gold and Oil Volatility – 3/28/2014

There are certain weeks at The Options Institute where we have too much going on.  This past week was definitely one of those weeks.  We had multiple visitors, webcasts, and classes going on each day.  Do not take that as a complaint, it is more of an explanation that I was not able to really watch the markets as closely as I like to this past week.  I was well aware that the SPDR Gold Shares ETF (GLD – 124.56) was lower on the week, but did not have much of a chance to see what was going on in the CBOE Gold ETF Volatility Index (GVZ – 17.48) until preparing for my weekend blogging duties.  I was honestly very surprised to see that GVZ was still in the teens after GLD broke the uptrend as can be seen in the chart below.  I then checked the action for the full week wondering if the lack of volatility on Friday contributed to a drop in GVZ from higher levels.  Again I was surprised to see the high for the week in GVZ in the low 18’s.  I’m going to take this as the market not being too concerned about a further drop in GLD to new lows or a quick resumption of the previous uptrend.

GLD Chart

Oil was higher on the week probably due to continued political uncertainty.  If you saw the cover of Barron’s this morning you would think that Oil had gotten creamed and the feature story is highlighted with a picture of a barrel of oil and the words $75 OIL in red letters.  There is a fundamental argument for lower oil prices in the future based on an increase in supply, but for the meantime oil remains above $100.  OVX under 20 also indicates that the price of oil will not quickly adjust to this lower level.

GVZ OVX

2 Comments
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…

  • http://breadmoneynetwork.spaces.nexudus.com DEANTHONY TAYLOR

    Lets see the gain

  • john

    good artical..,