GLD Vol Seems Cheap

10/22/2015 8:00 am EST

Focus: OPTIONS

Mark Sebastian

Founder, OptionPit.com

Option trader Mark Sebastian, of OptionPit.com, takes a technical look at how the movement in gold continues to stay ahead of the implied volatility of gold options and points out that he currently favors owning premium and selling wings in GLD.

It seems that—for the time being—SPX IV is going to be high and so will oil vol.  Value will be in some of the other areas like bonds and also gold.  Take a look at how movement in GLD continues to stay ahead of the IV of GLD options:

chart
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I continue to think that GLD is going to creep higher as we continue to see the dollar soften and we should see speculation on where gold might move increase pushing IV higher.  Would not be surprised to see GVZ reach toward 20.

The Trade:

I like owning premium and selling wings in GLD.

By Mark Sebastian, Blogger and Contributor, OptionPit.com

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