Gold implied volatility has stayed unchanged at historically low levels during the last week as price action has been confined to a relatively tight range. Whether this depicts a perfect bull market, where no need for protection is sought or emerging complacancy amongst traders ruling out any sharp change in direction, remains to be seen. The skew does point to some tail-end risk protection with both out-the-money (OTM) puts and calls seen trading at elevated levels compared with at-the-money volatility. ' The most traded options strikes over the last week indicate that put buying has been picking up with half the strikes being puts compared with a lower number in recent weeks. The most popular has been Dec12 1800 Call (last at 41.3 USD/oz) followed by Jan13 1700 Put (last at 19.3 USD/oz) WTI crude oil traders have become increasingly concerned about protecting speculative long positions as the momentum has slowed or even turned negative over the last couple of weeks. Implied volatility remains stubbornly higher than historically realised volatility as traders find it difficult to price the potential price impacts of all the uncertainties that surround the energy market, such as slowing fundamentals, geo-political events, QE3 etc. Over the last week we have seen OTM puts been bid higher by more than two percent not least following the sell-off that hit WTI yesterday. During the last week four out of the top five most traded option strikes were puts with the top three being Dec12 80 Put (last 0.93 USD/barrel), Dec12 85 Put (2.06 USD/barrel) and Dec12 75 Put (0.37 USD/barrel)

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