By Marcy Nicholson
Gold investors piled on near-term bullish and bearish options bets on Wednesday, racing to protect against whipsawing prices as Britons head to the polls to decide on the future of their European Union membership on Thursday, data showed.
Implied volatility, a measure of options activity, in Comex July gold calls and puts with strike prices that are as much as $50 higher or lower than current prices soared to record highs on Wednesday.
A vote for Brexit is expected to spur a rush to safe haven assets like bullion.
The frenzied dealmaking and diverging strike prices suggested dueling forces as investors grew nervous about the potential impact of the vote on the market - prices could fall or rise by as much as 5 percent.
It was most evident in bullish bets. COMEX July gold calls that give the holder the option to buy at $1,300 per ounce and $1,325 were some of the most actively traded on the day.
Activity in July puts with strike prices of $1,200 and $1,220 was also almost as busy. They all expire on Monday.
Combined turnover in the four contracts equated to close to 638,000 ounces of bullion worth more than $800 million.
Spot gold prices fell for the third straight session on Wednesday, dropping to a two-week low of $1,261.01 per ounce.
Implied volatility typically rises ahead of expiry, but traders said...