Sell vol in bonds, buy it in gold
A lot of names look oversold on my compass right now. How I'd play a bounce depends as much on the vol in each one as on the chart.
Take the bond names first.
Implied vol there is high. TLT's one-month is at the top of its range, the 100th percentile. When vol's that high, I'd rather be selling it to get the bounce exposure. So that's selling puts or put spreads, or buying call flys.
That's the smarter vol angle to play in Bonds right now. However, if you want a trade with lower risk (limited premium loss) and something you can flip quickly in a bounce on say NFP data today, then you have accept the higher vol and maybe just buy a short term call spread.
The commodity names are different.
Gold, silver and the miners have vol sitting a lot lower in its range. There, it's cheaper to just buy the upside. I picked up some GDX call spreads out to March 2027 on the dip.
So it's the same view in both places: oversold, due a bounce.
The setup is different because you're being offered a different price for the optionality. In bonds the market is paying you to sell vol. So if you can stomach the risk profile and you see vol calming down then selling puts has some edge. In the miners it's letting you buy vol cheaply.
Checking where implied vol sits in its own range is the first thing I do before I pick a structure, and this is part of my framework. What a high percentile is telling you. What a low one is telling you. What to do when the chart and the vol disagree. And most importantly, the efficient trade is not always the one that fits your risk profile and that's ok. You want to be able to see the full menu and make an informed decision about what is the right trade for your style.
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