Attention again goes in Put Options (Bearish Bets) as Gold Hits its 12-Day Low
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Gold's price knock down to 12-day lows during the night trade, indicating an end of the corrective bounce from $1,196.
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This Price Drop of Gold seems to have revived interest in Put Options.
· Gold knock down to $1,212 in the overnight trade - a point last seen on Nov. 16 - as the greenback picked up a bid on hawkish comments by Fed's Vice Chair Clarida.
· Notably, the drop to 12-day lows point towards the counteractive bounce from the Nov. 13 low of $1,196 has likely ended at $1,230 and the bears have reclaimed control.
· Adding credence to that view is the increase in implied instability premium for the XAU put options. As of writing, the XAU/USD three-month 25 delta risk turnarounds are trading at -0.125 in support of puts vs 0.325 in support of calls seen on Nov. 26
· The negative reading point towards the implied instability premium (or demand) for put options is more than that for calls.
· So, it appears safe to say that the options market has rotated bearish on the yellow metal. In other words, investors are likely expecting a deeper fall in gold and hence are buying downside defense.