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Strategies & Market Trends : Canadian Options
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To: Porter Davis who wrote (1472)2/10/2000 4:27:00 PM
From: tyc:>  Read Replies (1) of 1599
 
I wonder if you could tell us a little about hedging.

I was listening to AG and company today talking about "OTC derivatives" and why they should be excluded from USG controls. I feel sure that one of the points made was that these transactions play no part in "price determination".

I am thinking specifically of Barrick's purchase of call options. It seems to me that the counter party must hedge his position, and the only way to hedge would be to buy gold as a hedge. Just as all downside hedging put downward pressure on the price of gold, so all call-buying must put upward pressure on the price of gold. ?

Is this patently wrong ?
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