According to Susquehanna, a quantitative trading firm, there is a notable trend among options investors who are willing to pay for potential upside in gold. Chris Murphy, co-head of derivatives strategy at Susquehanna, highlighted that gold prices have been rallying while one-month implied volatility remains low, allowing investors to enhance their upside exposure without incurring higher costs.
A significant trade involved the purchase of 8,000 November 460 calls on the SPDR Gold Trust at approximately $5.55, with the ETF closing at $405.49. Murphy pointed out that the demand for options has shifted, with a marked change in skew away from downside puts towards upside calls, contrasting with the previous summer when put protection was more expensive.
This shift is evident in recent trading activity, including the acquisition of about 25,000 September 350 puts for $0.62, which capitalized on lower costs for downside protection. Additionally, gold funds are experiencing their strongest inflows since January, further supporting the bullish sentiment.
As of the latest data, spot gold is priced at $4,428.43 per ounce, while U.S. gold futures for December delivery have settled at $4,482.40, indicating a positive outlook for the gold market