GLD hit its intraday high as the U.S. stock market was panning session lows
The SPDR Gold Shares (GLD) hit its intraday high of $122.43 at midday, around the same time the stock market was panning its session lows on news Michael Flynn could testify against President Donald Trump in a possible Russian collusion investigation, after the former national security advisor pleaded guilty to lying to the FBI. While the shares have since pared these gains to 0.4% to trade at $121.60, options volume is still running hot on the gold exchange-traded fund (ETF).
With about an hour left in today's trading, 123,884 calls and 46,877 puts have traded on GLD -- more than two times the expected intraday amount, and total options volume pacing in the 94th annual percentile. February contracts are hot, with call strikes in this series accounting for the three of most active options.
One contract seeing heavy attention is the February 130 call, where it looks like traders may be selling to open the options, betting the strike will serve as a ceiling for the shares in the next few months. Elsewhere, it looks like the February 132 and 139 strikes are possibly being used to initiate a long call spread.
Shorter-term traders are potentially purchasing new positions at the weekly 12/1 122.50-strike and December 125 calls. While the weekly call expires at tonight's close, expiration for the front-month strike isn't until Friday, Dec. 15 -- two days after the Fed is expected to hike interest rates.
More broadly, GLD options traders have been buying to open puts relative to calls at a faster-than-usual clip in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the fund's 10-day put/call volume ratio of 0.75 ranks in the 91st annual percentile.
Regardless of whether it's calls or puts, though, now's a prime time to buy premium on short-term GLD options. While its Schaeffer's Volatility Index (SVI) of 10% ranks in the 13th annual percentile, its 30-day at-the-money implied volatility of 9.5% ranks below 95% of all comparable readings taken in the past year. These two volatility indicators suggest low expectations are being priced into near-term contracts.