How To Look At Gold Options

One of my favorite things to do with my 4 year old son is to read books.  

Currently, our favorite one to share happens to be MY favorite book from when I was his age:  

Richard Scarry’s,  “Cars and Trucks and Things That Go”.

While we like reading the book, the real fun is in trying to find Goldbug (fact:  Ricard Scarry was doing ‘Where’s Waldo’ before Waldo existed).  

Goldbug is always hidden somewhere in one of the cars in the scene, and Valentino cracks up when he finds him…sometimes it is easy, sometimes it is hard to find the little bugger.

I, on the other hand,have a much easier time finding Goldbugs in trading, because many of my readers love gold to either trade or as a hedge against their equity portfolios….

A lot of readers use VIX and Gold hand in hand to hedge.

What you might not know is that GVZ exists.  

GVZ is the VIX for GLD options.

As you know Gold has had a really nice run over the last 6 months.

Since the Covid Story began to unfold, we have seen GVZ trade into the 50’s.  As recently as a few weeks ago, GVZ was in the 30s and high 20s.

Over the last couple of days the implied volatility of Gold Options has gotten hammered…

GVZ is now about to slip into the teens.

The point is,  if one was looking to go long GLD via call options,  prices are close to as cheap as they have been in 6 months.

If GVZ falls into the teens,  I think it presents a great trading opportunity to go long premium on GLD options.

The VIX light is yellow,  meaning that it could go up or down, but will move wildly.

Your Only Option

Mark Sebastian

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.