| Implied volatilities (vol) for commodities are low by historical standards. Sure, traders have to pay relatively more for the vol element of precious metal options. But as Bank of America Merrill Lynch points out, three-month at the money (ATM) implied vols for zinc and lead are near their cheapest since January 2005.
Will vols fall further? BoAML thinks a turn in the monetary policy cycle means they are more likely to rise. “Our analysis suggests that, just as Fed easing tends to drive commodity vols lower, higher interest rates tend to push up volatility.”..............................................Full Article: Source
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