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Well, in the example you stated, you have a described a covered call. With covered calls, you already own the stock, thus it is very simple for you to transfer ownership of the stock, if it is called away. However, the hedgers in the gold mining industry (the mining companies), have hedged against future production, not really against gold they have stored in vaults (which would be easy to deliver). So, if there is a short squeeze caused by those who are long calls, and those longs presumably want to take delivery of the physical metal, there just isn't enough metal to be delivered. Depending on how short the supply of metal will determine how many years of foward production need be mined to deliver. The problem is exasperated by the the CB's declaring a moratorium on sales. |
