Options Pending for streetTRACKS Gold Trust

By Heather Bell

According to a recent Barron's article, it looks like streetTRACKS Gold Trust (GLD) is going to be getting options of its own.

Pending approval from the Securities & Exchange Commission, options on GLD could list on the Chicago Board Options Exchange as early as May 30, the article said.

At $17 billion, GLD is the largest asset-owning gold ETF in the world, and the lack of options on the trust has been a sore point for some time. Options allow investors to engage in more sophisticated investment strategies and hedge their investments—something that many find desirable with the gold market in such a volatile state lately.

The options would be one of the new developments to come out of a recent cooperation agreement signed between the SEC and the Commodity Futures Trading Commission, and could be the first of several options on different commodities, the Barron's article said. GLD falls into a gray area as an exchange-traded fund that is backed by an actual physical commodity—about 584 tonnes of gold, to be precise. Although ETFs fall under SEC jurisdiction, commodities are under CFTC jurisdiction.

There are a number implications connected with the launch of options on GLD. For one thing, it means investors will have a full suite of gold-linked investment products—futures, options and ETFs—to use in their investment strategies. It also means that we could be embarking on a new era of cooperation between two major regulatory agencies that may open the door for a host of new investable products.