Options investors are increasingly positioning for further upside in gold prices, according to quantitative trading firm Susquehanna [1]. Chris Murphy, co-head of derivatives strategy at Susquehanna, highlighted that gold has rallied while one-month implied volatility remains near recent lows, enabling investors to increase upside exposure without incurring higher volatility costs [1]. This trend is reflected in notable options trades, including the purchase of 8,000 November 460 calls on the SPDR Gold Trust (GLD) for about $5.55, with the ETF closing at $405.49 on Monday [1].
Murphy also pointed out significant changes in options skew, with demand shifting away from downside puts and toward upside calls. This marks a reversal from earlier in the summer when put protection was relatively richer. Recent flows have demonstrated this shift, including a purchase of approximately 25,000 September 350 puts for $0.62, which capitalized on cheaper downside protection [1].
The backdrop for gold is further supported by strong inflows into gold funds, which Susquehanna notes are at their highest levels since January [1]. Spot gold rose 0.3% to $4,428.43 per ounce, while U.S. gold futures for December delivery increased 0.2% to settle at $4,482.40 [1].
No forward-looking statements or analyst opinions beyond Susquehanna's observations were provided in the article [1].
CONCLUSION
Options market activity and strong fund inflows indicate growing investor confidence in further gold price appreciation. The shift in options skew toward upside calls, combined with low volatility and rising spot and futures prices, suggests a bullish outlook for gold. Market sentiment is positive, with significant participation in upside exposure.