Tuesday, June 03, 2008 9:33:41 PM
Option Watch: June 3 GoLDen Options
Tuesday June 3, 7:50 pm ET
By Chris Tyler
Tuesday’s second straight session of steep intraday declines in the broader averages had investors seeking refuge in the options market once more. That fact was very apparent as the VIX struck fresh one-month highs and closed over 20%. However, the bigger news for many options traders is that listed calls and puts on the streetTRACKS Gold Shares ETF (GLD), which finally made their debut.
As a proxy for the popular Comex gold futures contract, traders of this highly-liquid and listed instrument can now effectively hedge delta or directional bets, as well as construct non-directional positions to their liking. Like many other ETFs, the GLD also offers strikes set one point apart. That of course is an added benefit for designing positions which more closely match the trader’s views.
Looking at the board and trading got off to a fairly solid start, although much of the activity had the earmarks of institutional players. For instance, the July 85 puts with more than 3,750 contracts was the most active on the session. A similar amount of September 85 puts at 3,218 hints at a possible time spread which sports a slightly bearish outlook.
Also pointing at larger interests being first to get actively involved, longer-term OTM bets in the December 77 puts, September 95 calls and September 83 puts all showed volume in excess of 2,000 contracts. Versus a very quiet start in the front month June options, where total volume was around 1,000, the point can be further appreciated.
Figure 1: streetTRACKS Gold (GLD) Daily Chart
Nonetheless, while smaller interests were mostly M.I.A. and some brokers / vendors still need to update their platforms to facilitate pricing and execution, the market makers are doing their part to make the product an increasingly popular vehicle for all investors. Spreads between the bid and offer are off to a rather good start. Checking the board, which runs through December 2008, and the ability to price spreads and trade around fair value does look promising already. For instance, even out in December, most markets are quoted at a respectable 15 to 30 cents spread width. Ultimately too, the liquidity provision becomes all the more attractive as word gets out and those options become an inevitably popular choice for traders. All told, whether you’re a Gold Bug, Bull, Bear or Hedge Hog and whether one sees PS Elliott and W4 set ups or a gruffer daily downtrend in place; the commodity story just got a whole lot more interesting for options strategists.
Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
http://biz.yahoo.com/opt/080603/opt_19624.html?.v=1
My posting is for my own entertainment, do your own DD before pushing your buy/call button
Tuesday June 3, 7:50 pm ET
By Chris Tyler
Tuesday’s second straight session of steep intraday declines in the broader averages had investors seeking refuge in the options market once more. That fact was very apparent as the VIX struck fresh one-month highs and closed over 20%. However, the bigger news for many options traders is that listed calls and puts on the streetTRACKS Gold Shares ETF (GLD), which finally made their debut.
As a proxy for the popular Comex gold futures contract, traders of this highly-liquid and listed instrument can now effectively hedge delta or directional bets, as well as construct non-directional positions to their liking. Like many other ETFs, the GLD also offers strikes set one point apart. That of course is an added benefit for designing positions which more closely match the trader’s views.
Looking at the board and trading got off to a fairly solid start, although much of the activity had the earmarks of institutional players. For instance, the July 85 puts with more than 3,750 contracts was the most active on the session. A similar amount of September 85 puts at 3,218 hints at a possible time spread which sports a slightly bearish outlook.
Also pointing at larger interests being first to get actively involved, longer-term OTM bets in the December 77 puts, September 95 calls and September 83 puts all showed volume in excess of 2,000 contracts. Versus a very quiet start in the front month June options, where total volume was around 1,000, the point can be further appreciated.
Figure 1: streetTRACKS Gold (GLD) Daily Chart
Nonetheless, while smaller interests were mostly M.I.A. and some brokers / vendors still need to update their platforms to facilitate pricing and execution, the market makers are doing their part to make the product an increasingly popular vehicle for all investors. Spreads between the bid and offer are off to a rather good start. Checking the board, which runs through December 2008, and the ability to price spreads and trade around fair value does look promising already. For instance, even out in December, most markets are quoted at a respectable 15 to 30 cents spread width. Ultimately too, the liquidity provision becomes all the more attractive as word gets out and those options become an inevitably popular choice for traders. All told, whether you’re a Gold Bug, Bull, Bear or Hedge Hog and whether one sees PS Elliott and W4 set ups or a gruffer daily downtrend in place; the commodity story just got a whole lot more interesting for options strategists.
Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
http://biz.yahoo.com/opt/080603/opt_19624.html?.v=1
My posting is for my own entertainment, do your own DD before pushing your buy/call button
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