CME Launches Gold VIX Options

Tyler Durden's picture

The just reported death of three muni ETFs means that the ever creative developers of synthetic stock CDOs and other volatility indices have to think of even more creative ways to get retail to put their money into guaranteed profit products. Sure enough, the CME Group has just come up with one such product: the Gold Volatility Index Options (GVP) Contracts. From the press release: "Effective trade date Jan. 24, 2011, the Exchange will list a Gold Volatility Index (VIX) Options (GVP) contract for trading on CME Globex and for clearing through CME ClearPort. The Gold Volatility Index will be a 60-day forward looking index value on option implied volatility. Please note that fees will be waived through Jun. 30, 2011." Which means naturally that the CME is anticipating the ongoing spike in gold vol to persist. But if one were to listen to the ethically pristine gentlemen from the CFTC this morning, one would be left with the impression that there is no volatility in the gold space, and it is all in the eyes of the speculative beholders.

More details from the CME:

And just to show that there is no need to worry about any specultive fervor in the commodity space, the CME also noted that the recently launched E-micro Gold Futures Open Interest has hit new highs: "E-micro gold futures achieved a record open interest of 803 contracts on Jan. 7, 2011. This tops the previous record of 769 contracts reached on Dec. 29, 2010."

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Kaiser Sousa's picture
To:   div { margin: 0px; }
"The CTFC (Commodity Futures Trading Commission) has position limits that regulate how many contracts, long or short, any one market participant can hold. At least on paper, anyway. In reality, J. P. Morgan and HSBC hold many times the position limit of silver shorts, and the CFTC has known this for years without taking any action besides holding a few meetings on the subject after much public pressure. Undoubtedly if you or I (or the Hunt brothers) were to try to amass a silver position that breached the position limit, we would be immediately and soundly prevented from doing so. Again, there is one set of rules for the big banks and a very different set for everyone else."

oh, and hope u got to c the nicely timed bash of both metals again today which surprisingly coincided with another 450k US citizens trek to the soup kitchens.   The bankers im sure r very proud of all of ya'll....

66Sexy's picture

more ETF's the bot's can play with, 'cause aint no humans buyin' this crap

heech's picture

Uhm, CME is just launching new volatility products because market participants need them... it doesn't imply in any sense that they have a view on gold volatility.

The CME is also launching crude and (later this year) soybean VIX futures/options.  The CME is also launching FX realized volatility futures.  These are all just different ways of managing risk already in the market place.

Threeggg's picture

Large percentage of the muni stocks hitting their 52 week lows right now !

If we penetrate these lows its going to go into a free fall.

Red, red and more red !!

WALLST8MY8BALL's picture

I speculate that the majority of these trades will occur in Clearport rather than Globex. Clearport is a direct trade entry system - it isnt competitive. That allows the traders to deal direct with each other or through a voice broker, which thus hides from the public view details of the trade - such as price and settlement date. Most Nat Gas basis trading in the last 6 years has been cleared via the Clearport system.

Mr Lennon Hendrix's picture
Gold price Change due to Weakening of USD +16.50 Gold price Change due to Predominant Sellers -20.90 Gold Price: Total Change -4.40
ForWhomTheTollBuilds's picture

So riddle me this:

As a non-derivatives trader I have a very tenuous grasp on what this might mean.  I understand that in other situations (Calls and Puts), activities in the derivatives can have a profound effect on the pricing of the underlying.


So how might going long or short on the "implied volatility of gold" effect the price of gold?


As always, I'm interested in both the textbook answer and the real world answer that takes the incredible corruption surrounding us into account.


Fortunes Favor's picture

Phase Two of the secular bull market in Gold prices is solidly underway and the Gold Vol. story offers more proof. @

Oh regional Indian's picture

I once had an interesting e-mail discussion with one of India's leading economists.

He felt very offended when I said that financial innovation is not really innovation at all.

That it was bad and will kill the system. He had argued in a recent newspaper piece that financial innovation (like in the US) was exactly what India needed.

Look where it got us. And where it's taking us.

We're a gamblign people now and gamblers need things to bet on I guess.


Oh regional Indian's picture

Haha Spalding.

But man, Zakir Husain rocks. And is a total jerk.

Figures, eh?

Thanks for the links.


Spalding_Smailes's picture

: -)


A few more questions.

What's your call on tata they own jag,rover and have a booming market coming online. Are the problems with nano that big of deal and how do most people feel about the company ? Also, they own many businesses it looks like a great stock that should be a keeper am I wrong ??

The Count's picture

What? Another manipulated, contrived piece of paper of which most do not read nor understand the fine print. (I was also once such an idiot that correctly called the direction of crude, bought a bunch of bullish ETFs and still barely made money).


The Count's picture

Why not have a ETF for betting on how many more insane ETFs will be brought to market?

Jason T's picture

how about taking some capital and BUILDING SOMETHING.  Shit, Hitler at least built the AutoBan that exists to this day.  What are we building in the US today??  Besides a soon to be 50 million food stamp roll.

Rusty_Shackleford's picture

I've been thinking about this quite a bit lately.  I think these ETF companies are selling themselves short.  Why limit ETF's to things that actually exist or are a derivative of things that actually exist. 

Why not expand ETF's into "The Imagination".  Why not a "Happiness" ETF?  It's inverse could be the "Sad" ETF.   Or how about the "Bicurious" ETF, since all assets (except PM's) are now based on the greater fool business model. 


Think of the profits!!!

The Count's picture

Happy/Sad? To abstract. Why not ETF on companies that actually once existed like Wang, Enron, Digital, etc. I can guarantee you that even non existent companies will generate quotes.

JW n FL's picture

Over Flow Monies! Bitches!!! keep them in the space! the Lobby wins again!

trav7777's picture

just a hedging product for the finance types to move eMoney back and forth to each other with

JW n FL's picture

price control.. as well my friend.

Acidtest Dummy's picture

There hasn't been enough paper and ink for all the fiat. Soon the limiting factor will be digital storage and CPUs for the easy money. Unfortunately, if the missing mass of the universe was discovered today to be money, Merica's bankrupture would only be forestalled by a matter of years. :)

Silversinner's picture

Gold and silver bugs buying the

physical are the ultimate anti-

speculators.Building our wealth

slowly but surly coin by coin it's

called saving.Plain,simple and REAL.