The Case for Buying Gold Options

Jun 9, 2022

By The Small Exchange

Overview

Buying options has been deemed, "a sucker play," by many experienced traders who prefer to be on the short side of the market. The story of selling options when volatility is high has been told many times, but Errol and Frank make the case for buying options when volatility is low. They use Gold ETF (GLD) options to show when you might attempt to go buy a strategy like the straddle - IV Rank under 10% - and they rope in futures options on Small Precious Metals Futures (SPRE) to pay and even lower price.

The guys conclude with a way to finance their long option trade with short options in a similar market. Learn about the case for long options and see if Errol and Frank's cross-product long-short option strategy might work for you.

Content

0:05 The Case for Buying Gold Options

2:05 Gold Volatility has Returned to its Lows

2:20 Both Gold IV Rank and IV are Low

2:35 SPRE Options are also Low IV

4:20 A Trade Idea in Gold

Get Weekly Commentary on Small Markets!

Sign up to start receiving free analysis on everything from stocks and bonds to commodities and foreign exchange.

Tags:

Latest Articles

Will Euro Reach Parity with US Dollar?
Video
The Small Exchange06/30/2022

Will Euro Reach Parity with US Dollar?

Currencies are known to be less volatile assets than stocks or commodities, but the euro currently rests in a quite precarious position relative to the US...

Read More →
Why Do Futures Exist?
Video
The Small Exchange06/29/2022

Why Do Futures Exist?

Futures trading is primarily done with a short-term time horizon in mind, as derivatives traders use their leverage to enhance returns on strategies like day...

Read More →
Interest Rate Futures: Eurodollar vs Treasury
Video
The Small Exchange06/28/2022

Interest Rate Futures: Eurodollar vs Treasury

Eurodollar futures present one of the most popular benchmarks for short-term interest rates, and they're currently showing an inversion. Frank helps define...

Read More →

Prices

Loading...