Traders Defensively Positioned As Equities Retrace From Record Highs

2026-01-26 12:24:00 ET

By Ed Tom

Cross-Asset Volatility: Implied volatilities were higher across the major asset classes last week as the markets strove to process the economic implications of the US’ demand for Greenland. Gold volatility led the advance as the safe haven asset shattered the $5,000/oz threshold and surged to record highs. [[GLD]] 1M implied volatility closed at 28.5 (3.5 std. dev. above its long-term average), levels last seen Oct 2025 as gold breached the $4,000 threshold and on par with levels triggered by the onset of the Russia invasion of Ukraine in 2022. GLD option volumes hit a record high last week as well, with over 2.3M contracts trading last Tues (almost 5x the YTD ADV). Option sentiment for the metal was overwhelmingly bullish with the call/put volume ratio at 4.2, more than double GLD’s typical call/put ratio of 1.8. Options activity in silver has exceeded even that of gold with [[SLV]] 1M implied volatilities hitting a high of 82.5 as silver continued its phenomenal breakout above $100/oz. Although SLV options volumes activity is at record highs, options sentiment is decidedly more bearish by comparison with SLV 25- delta put-call skew at a 94th percentile high. Heading into this week’s FOMC, the derivatives markets are pricing in a relatively benign meeting. Interest rate volatilities (VIXTLT) currently stand at 8th percentile lows, and Fed Funds futures currently imply a 97% probability that the Fed will keep rates unchanged....

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