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Given how the implied volatility has gone up on both /CL and /GC why would you not consider selling deep OTM calls now then get out when things settle down?
Just asking for my ongoing education.
Thanks
V
Can you help answer these questions from other members on NexusFi?
China GDP numbers are out ... Annual growth was 7.7% in the January to March quarter, compared with 7.9% in the previous three months. Analysts had forecast a figure closer to 8%.
Could be new long puts coming in to cover existing long futures, or Goldman Sachs customers who are taking GS downgrades seriously. GS has a history of predicting one thing and then trading in the opposite direction. The Fed and other Central Banks are likely buyers too at bargain prices too.
Cos you won't get more than $20 for 1820 and above June calls and the margins have likely gone up making for a miserly ROI. The price dropping has reduced call prices and volatility increased margins so a double whammy on ROI.
While the China numbers are bearish, GC crashed on Friday. Today's GC crash has more to do with what happened Friday and whatever triggered the new selling of futures.
9:08 EDT - "These usually don't end very quickly," George Gero says of gold's
plunge. "Buyers may take a wait-and-see attitude" as gold futures crumble
nearly $200 a troy ounce in the space of two trading days. Gero should know.
He's been trading gold in New York since the futures contract was launched on
the same day US personal ownership of the metal was legalized in December 1974.
Now a vice president with RBC Capital Markets, Gero says: "In 40 years of
watching gold I have not seen anything like this."
To anyone interested, I am trying to sell off my remaining LONG May CL 78 Puts which were cover for a calender.
Got 3 away at 0.04 today and have orders in for 1 @ 0.05 and 2 @ 0.09
Thought these were doomed to expire worthless but drop in CL has sparked some interest.
Pretty good returns with just 2 more days left?
Have I traded with you again Ron? Anyway watch out if interested.
