Market Turmoil Sparks Rush Into Gold Options

Traders are betting gold’s ascent will continue.

The recent stock market selloff has coincided with a rally in gold, sending prices to the highest level since August 2020. Gold futures jumped around 4% over the past three sessions to $1993.90 per troy ounce on Monday.

The Nasdaq Composite tumbled into a bear market to start the week, while the Dow Jones Industrial Average is now in a correction, and off more than 10% from its high. This volatility has sent investors into relatively safer investments like gold.

In the options market, some of the most popular bets across the entire market Monday were bullish ones that would pay out if an exchange-traded fund tracking gold, the roughly $65 billion SPDR Gold Trust, kept rising. Options activity tied to the ETF jumped to the highest level in at least a year and more than 700,000 call options traded, compared with just around 100,000 put options, according to Cboe Global Markets data.

Calls confer the right to buy shares at a specific price, by a stated date. Puts confer the right to sell.

Some of the most actively-traded options on the ETF were calls that would pay out if the ETF jumped to $235 or $250, a big jump from its level Monday, when it settled at $186.41.

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