The yellow metal has extended its losses this morning, now trading at $1179. The Gold Volatility Index is at 16.88 which is a relatively low level for the year, see graph below.
There are some major data releases and other global news on the front line this week; the Greece situation continues, Iranian nuclear program, EU Consumer Price Index (CPI), US Non-Farm Payroll (NFP) and more.
Gold Volatility Index Chart:
To trade an expected increase in volatility you may buy options because an option's value increases as volatility rises. But also note that Gold is trading at a 10 day low (see chart below). If you expect Gold price to rise and/or volatility to increase then buying a Call option is a suitable trade because a Call option's value increase as market price and/or volatility rises.
The position:
Buy a short-term, XAU/USD Call to expire this Friday at 14:00 GMT, with strike equal to $1185 (out-of-the-money). The option can be traded on MT4 using symbol C#XAUUSDw-2 or on ORE's web platform. The cost of this option on a 100 units (1 lot on MT4) is approximately $600 and this is your maximum risk for the position. Your upside is unlimited.
Web-platform Symbol:
MT4 Symbol:
The below chart and table shows the option trades payout at expiry over a range of market rates:
The content provided is made available to you by ORE Tech Ltd for educational purposes only, and does not constitute any recommendation and/or proposal regarding the performance and/or avoidance of any transaction (whether financial or not), and does not provide or intend to provide any basis of assumption and/or reliance to any such transaction.
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