Gold risk reversals flip for calls

Omkar Godbole FXStreet Contributor

Gold calls are claiming higher implied volatility premium than puts for the third straight day, indicating investors are adding bets to position for strength in the yellow metal.

One-month risk reversals (XAU1MRR), the cost of swapping equally out-of-the-money puts and calls, flipped in favor of calls on Tuesday, as the metal rose more than 4 percent, extending Monday's 3.7% price gain.

Risk reversals currently trade at 2.925 versus -4.5 on March 19. The surge represents a bearish-to-bullish trend change in the options market. At press time, gold is trading near $1,625 per ounce, representing a 0.23% drop on the day.

XAU1MRR

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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