Gold Options Bet Suggests Higher Prices Ahead
The COMEX options market has seen unusual activity in recent days, with thousands of contracts added at distant upside strikes. On September 10, open interest increased by 8,168 contracts at the $4,725 strike and 8,184 contracts at $5,225. This is the largest single-day addition to COMEX gold calls since monitoring began.
An options-market observer noted that this activity occurred during a difficult session for precious metals, with gold falling nearly 2% on Thursday due to bond-market pressure and higher yields. However, gold recovered over 1% on Friday, settling near $4,409.
The positioning of these contracts is interesting because they sit roughly 20% above Friday's spot price. Buying calls far above the current gold price can represent a relatively inexpensive way to position for a substantial rally.