The yellow metal has extended its losses this morning, now trading at $1179. The Gold Volatility Index is at 16.88 which is a relatively low level for the year, see GVX volatility graph above. There are some major data releases and other global news on the front line this week; the Greece situation continues, Iranian nuclear program, EU Consumer Price Index (CPI), US Non-Farm Payroll (NFP) and more.To trade an expected increase in volatility you may buy options because an option’s value increases as volatility rises. But also note that Gold is trading at a 10 day low, see XAU/USD chart above. If you expect Gold price to rise and/or volatility to increase then buying a Call option is a suitable trade because a Call option’s value increase as market price and/or volatility rises. The position:Buy a short-term, XAU/USD Call to expire this Friday at 14:00 GMT, with strike equal to $1185 (out-of-the-money). The option can on MT4 using symbol C#XAUUSDw-2, see MT4 symbol above. The cost of this option on 1 lot is approximately $600 and this is your maximum risk for the position. Your upside is unlimited, see payout chart and table above.Written By Merav Brenner, Account Manager at ORE.
The material has been provided by InstaForex Company – www.instaforex.com