Volume Spike Investor

Based upon the rise in oil and commodities and the ultimate flight to safety or the ultimate flight to inflation protection, we are seeing again some increased call option activity in SPDR Gold Shares (NYSE: GLD).  This is the ETF that tracks the price of gold by essentially 1/10 of the price.  At 11:08 AM EST we have seen a 3% rise to $82.47 as of 11:12 AM EST in the gold ETF.  With oil up $6.00 on Russian-US tensions, what else do you expect?  The gold ETF options are among the CBOE’s most active contracts as you will see below:

OPTION-STRIKE            Volume    OpInt
OCT08 $85.00 CALLS    12,742    2,429
OCT08 $90.00 CALLS    23,848    28,543

Traders are playing October contracts more than others as the time-value erosion versus the premium paid for time value is maximized.

Jon C. Ogg
August 21, 2008