Ticker of the week: GLD

Hey Traders,

The SPDR Gold Trust (Ticker: GLD) is a proxy for physical gold. It is also on a monumental tear higher lately with weakness in stocks and bond driving demand for a safe haven. A $20 run in $160 product is not nothing.

1 year chart of GLD with 1 day candles

Many times a lift in a stock or ETF will cause implied volatility to go down as traders and investors sell more options against a profitable position. 

Let’s see what investors are doing with GLD vol now?

A 6 month high in IV that is what!

GLD 30 day IV is way up.  The huge run when IV was in single digits is just adjusting to the massive jump in the month of October.

GLD 30 DAY IV with 20 day realized vol

What is interesting is the SPDR S&P 500 Trust (Ticker: SPY) is flat for October but IV is up to 6  month highs.

SPY 1 Month chart with 1 day candles

I think the big rally in IV is a tell the GLD rally won’t last and the product is setting up for more volatile action down the road. I do think some equity money has poured into GLD recently and that tends to be “hot” money. If the current interest rate jump slows down a bit in the bond market, GLD should come down to earth. If it keeps going, GLD rips higher. In short, more volatility to come.

Questions about that? Leave a comment below!

To Your Trading Success,

AG