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Strategies & Market Trends : Bonds, Currencies, Commodities and Index Futures

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To: Jack of All Trades who wrote (3127)	3/5/2004 10:44:17 PM
From: Chip McVickar	Read Replies (1) of 12410

Monday, August 11, 2003, 1:26:00 PM EST jsmineset.com Which options are Jim Trading? Author: Jim Sinclair Q: It would be most helpful to know what options you are trading. I'm long December gold with 340 &360 calls. You say that you can't deliver next weeks WSJ this week but your TA seems to be doing that for you. Thanks again for all your efforts. They are greatly appreciated. A: 2nd Derivative traders are number crunchers and geeks of the highest order. They sit around with laptops and software programs generally of their own construction. It is the geeks corner of the Comex just as it is on the AMEX. The floor traders are the backfield of the floor-trading crowd. They are the horse-voiced, no-neck brutes with open shirts and ties knotted around where their belly button should be. They are the Animal House Gang as compared to the option nerds hiding from the fray behind their laptops and pocket protectors. Normally the option traders make you pay the offering and the minute the market runs in their direction the geeks pull their bids and run to the gents or ladies room. Therefore options will always move in price gradiently according to strike price. When you the speculator (no option is an investment) clean up is when the laptop blows its top. That means when the market begins to move outside of mathematically predicted norms and standard deviations. This is when the position-taking and hedged option traders turn into your normal, scared-to-death, whacked-out, bug-eyed commodity traders visualizing their Beamers with For Sale signs on them, their kids in public schools and heavy alimony payments requiring them to get a real job. This is always at near tops or near bottoms when the volume builds up. This is why you do not deal in options except in these times. I bought my options when gold was being hammered. I will sell into a period of high demand and high hopes for much higher prices. Then, rather than not reflecting the proper underlying value, they can over value the underlying asset. This is just another reason why 99.9% of the community should not participate in gold options. However, there are some out there that get a strange pleasure out of seeing their life pass in front of their eyes as I do. At one of the nine times that Bert Seligman fired me when I was a kid he said, "You are nothing but a gambler and a wild man." (Not necessarily in that order). Now that was the pot calling the kettle black. I have changed since then. I am not a teenager any more. Now on to a more serious vein. Liquidate some of your Comex listed clearing house- guaranteed gold call option positions along the overbought side of the up channel I am providing you in my daily summaries. Yes, even today as it could happen. I am assuming you are a normal human simply seeking a profit. When any one option nears the up channel top in an appreciating market, all other options do according to their delta. The delta is a name for the options mathematical relationship between the price of the option and the price of the underlying asset as a product of strike price and maturity. Any questions? (I bet I just opened a Pandora's box with that statement).

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