1. Money

Low Volatility on Gold Options

By December 18, 2012

Follow me on:

Gold has been very quiet lately and the trading ranges have been fairly tight.  Traders don't want to push the market too far in either direction with the fiscal cliff issues hanging over the market. There was a very negative reversal on Tuesday and some support was broken, which I wouldn't want to fight unless the high from Tuesday is taken out in the next couple days.

Option prices have gotten realatively cheap for gold.  This has worked well for those who have been selling options.  Some traders might consider buying gold options at these volatility levels, but you can get burned if the market stays in this range.  Managing the risk on options is a non-stop job, regardless of the volatility.

I have a bias to the upside for gold, especially for the long term.  There was a negative reversal today, but the market has been very quiet.  Markets often make many false moves under market conditions like this.  I would tend to be cautious at this point for short-term trading and look for long term entries.

Comments
Comments are closed for this post.
Leave a Comment

Line and paragraph breaks are automatic. Some HTML allowed: <a href="" title="">, <b>, <i>, <strike>

©2014 About.com. All rights reserved.