Key Takeaways with Craig

US Equity prices struggled to find a clear direction today and wound up little changed, US Treasury Yields were higher with the Micro 2-Year Treasury up by about 6.5 basis points and the 10-Year up by about 6, but CME commodity prices grabbed the headlines.

WTI Crude Oil futures prices were up by nearly 4% and were trading near $94 per barrel and Gold prices were down by about 1.4% to around $1,875 per ounce.  This marks the lowest price at which Gold futures have traded since March and the highest WTI Crude Oil futures prices since September, 2022. The price action hasn’t been lost on the options market either.  CVOL levels in the options markets for both commodities have moved substantially higher and we’ve seen a shift in the skew in both as well.  The top CVOL graphs below shows the CVOL level (blue) and the Skew (purple) over the last 3 months in WTI Crude Oil options and the bottom graph depicts that in the Gold options.  As you can see, the skew in the WTI Crude Oil options moved higher with today’s price rally while the skew in Gold has been moving lower for about a week.  Remember, an increase in skew is an indication that the Calls are gaining in implied volatility relative to the Puts and a decline suggests the opposite.  

Today's Future Price Action

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