Surge Of Inexplicable After Hours Selling Takes Gold Volatility Index To All Time Low
MMR
Posts: 372
Surge Of Inexplicable After Hours Selling Takes Gold Volatility Index To All Time Low
In addition to the rout in the ES, VIX and GC which we pointed out earlier, there were some additional fireworks behind the scenes in today's after hours session. The CBOE Gold Volatility Index, the ^GVZ plunged by the most in over a year, as the index hit an all time low of 15.92 without the underlying making much of a notable move. The most curious aspect of the trade was that the entire dump occured in the AH session. Many were left scratching their heads over what caused this monstrous unwind in long vol positions: was this the unwind of a massive long ES/short GC arb? We don't know, although if rumors that a major fund is planning to stand for delivery of Dec gold turn out to be true, then obviously someone got confirmation today. Keep a close eye out on the GVZ. Should this price level persist on Monday, then the front futures contract will likely surge.
The rest of the article can be found here
This could be it folks...
In addition to the rout in the ES, VIX and GC which we pointed out earlier, there were some additional fireworks behind the scenes in today's after hours session. The CBOE Gold Volatility Index, the ^GVZ plunged by the most in over a year, as the index hit an all time low of 15.92 without the underlying making much of a notable move. The most curious aspect of the trade was that the entire dump occured in the AH session. Many were left scratching their heads over what caused this monstrous unwind in long vol positions: was this the unwind of a massive long ES/short GC arb? We don't know, although if rumors that a major fund is planning to stand for delivery of Dec gold turn out to be true, then obviously someone got confirmation today. Keep a close eye out on the GVZ. Should this price level persist on Monday, then the front futures contract will likely surge.
The rest of the article can be found here
This could be it folks...
0
Comments
I knew it would happen.
"Can anyone explain this in simple terms?"
<< <i>I'm in the same boat as one of the posters:
"Can anyone explain this in simple terms?" >>
The SHTF soon, and gold will go up if this indicator is correct.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>
<< <i>I'm in the same boat as one of the posters:
"Can anyone explain this in simple terms?" >>
The SHTF soon, and gold will go up if this indicator is correct. >>
A similar thing happened to the stock market vix a few weeks ago and was due to futures contract rollover.
A low vix also indicates complacency among bulls, which is a danger sign.
This little adage usually works for the stock market..."When the vix is high, one must buy. When the vix is low, one must go."
What one needs to determine though is what is "high" and what is "low".
Knowledge is the enemy of fear
Obviously, I need to re-read the fine print.
I knew it would happen.
<< <i>I'm in the same boat as one of the posters:
"Can anyone explain this in simple terms?" >>
The simplest on the headline, is that someone wanted to sell gold options in size, and those willing to buy forced a low price, bringing the implied volatility down. The sellers of the options are betting that gold will stay in a range. The buyers are taking the other side, that gold will make a big move (up or down) soon.
That said, most simple explanations miss the boat when it comes to options. The gold newsletters in particular spew all sorts of stories and half-truths and flat out falsehoods when it comes to options. It helps sell newsletters, it helps elevate the fear level, but it doesn't help anyone trade--not really. Option folks tend to like spinning twenty plates in the air at the same time, juggling multiple numbers, variables all at once. Even for me, someone who has traded options for over 20 years, it can quickly become overwhelmingly complex when positions are hedged against each other, and against other underlyings. It is far beyond the ken of most of the popular gold newsletter writers. So again, simple explanations tend to miss the main part of the story.
<< <i>
<< <i>I'm in the same boat as one of the posters:
"Can anyone explain this in simple terms?" >>
The simplest on the headline, is that someone wanted to sell gold options in size, and those willing to buy forced a low price, bringing the implied volatility down. The sellers of the options are betting that gold will stay in a range. The buyers are taking the other side, that gold will make a big move (up or down) soon.
That said, most simple explanations miss the boat when it comes to options. The gold newsletters in particular spew all sorts of stories and half-truths and flat out falsehoods when it comes to options. It helps sell newsletters, it helps elevate the fear level, but it doesn't help anyone trade--not really. Option folks tend to like spinning twenty plates in the air at the same time, juggling multiple numbers, variables all at once. Even for me, someone who has traded options for over 20 years, it can quickly become overwhelmingly complex when positions are hedged against each other, and against other underlyings. It is far beyond the ken of most of the popular gold newsletter writers. So again, simple explanations tend to miss the main part of the story. >>
Thank you ...
<< <i>Today is always the lightest traded day of the year. I discount anything that happens on days like this greatly. Monday will come soon enough. We shall see. TD could be right, who knows. MJ >>
Huh?
What did I say?
TD