Former StreetTracks Gold Trust Lists First U.S. Options
By Jon A. Nones
03 Jun 2008 at 07:35 PM GMT-04:00
resourceinvestor.com
SEATTLE (ResourceInvestor.com) -- The U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission have approved the launch of options contracts on the SPDR Gold Trust [NYSE:GLD], formerly StreetTracks Gold Trust. Options began trading Tuesday on NYSE Arca and CBOE.
George Milling-Stanley, manager of gold market analysis at the World Gold Council, sponsor of the SPDR Gold Trust, told RI that the most frequently asked question since the fund was launched by World Gold Trust Services in November 2004 was “when will options become available?”
After four successful years, investors now have their options. This is the first U.S. option offering for a commodity-based exchange-traded product.
Milling-Stanley said that the options “add liquidity in the market,” and help to secure GLD’s position as the “most liquid gold ETF in the world.”
For those unfamiliar with options trading, an option is a contract to buy or sell a specific financial product. The contract establishes a specific price, called the strike price, at which the contract may be exercised. The contract also has an expiration date.
Options come in two varieties, calls and puts, and you can buy or sell either type. If you buy a call, you have the right to buy the underlying instrument at the strike price on or before the expiration date. If you buy a put, you have the right to sell the underlying instrument on or before expiration.
As of May 29, 2008, assets under management in the SPDR Gold Trust totalled approximately 597.73 tonnes worth $16.96 billion, making it the largest gold ETF and sixth largest U.S. ETF by assets.
Investment in the SPDR Gold Trust last week rose 1.3% to 591.6 metric tonnes, having declined 6.44 tonnes the week prior. It reached a record 663.8 tonnes on March 17.
“At a time when interest in gold is at a high, this announcement comes as good news for investors and marks another important step in the success story of GLD,” said James Burton, CEO of WGC, in a statement.
Source: SPDR Gold Trust (Got Gold Report, May 25)
Gold prices have risen 6% in 2008, soaring to a new all-time high of $1,030 on March 17. Prices have fallen 12% since then, however, as market participants cashed in to await the next big move.
Gold futures for June delivery dropped $17.90, or 1.9%, to $907.90 an ounce on the New York Mercantile Exchange today, the biggest percentage drop for a most-active contract since April 29. |
