Dutch Central Bank Sale Announcement Imminent? Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Dutch Central Bank Sale Announcement Imminent?

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Bill Murphy who wrote (4232)	3/14/1999 6:58:00 AM
From: ForYourEyesOnly	Read Replies (1) of 81913

This one reaaaly reeeks: Why lower margins for short option writing????? "Let's Make A Deal This is the gist of a press release from NYMEX (New York Mercantile Exchange) which was put out on March 11. Short Option Minimum Margins Lowered On Gold, Silver and Copper NEW YORK, N.Y., March 11, 1999 - The New York Mercantile Exchange will decrease the minimum margins for sellers of options on gold, silver, and copper options as of the close of business tomorrow to $10 from $20 for gold; to $10 from $31 for silver; and to $10 from $25 for copper. Confusing, isn't it. Does that mean that only those offering put (short) options get these generous new margin requirements, or does it mean that everyone writing puts or calls (longs) gets them. Well, there are some things we know for sure. It will now be cheaper to make a market in Gold options (the silver and copper is window dressing). In the lead up to these new margin requirements, the commercial net long position on Gold has entirely vanished. Please note also that these new arrangements were introduced "after the close of trading tomorrow" - that is - after the close of trading on Friday, March 12. It just so happens that Friday, March 12 is options expiry day on the New York market. That means that just as these new margin requirements come in, writers of options have a whole new series of same to come to grips with. With the new lower margin requirements, they are going to be able to write twice as many Gold options for the same outlay. This is known as leverage. We will be covering this issue in more detail in the latest issue of The Privateer - out tomorrow. The interesting thing here is the fact that the people who control the U.S. paper Gold market have decided that traders need more leverage when dealing with Gold. As we have said in this commentary for three weeks now: "The pressure under the Gold price is steadily building". The admittedly small price rise this week is one symptom of this. The decision to halve margin requirements on trading paper Gold is another one. Government's and Central Banks have been at war with Gold ever since the start of the "London Gold Pool" in 1962. There is absolutely no reason why they should declare a "peace" now. " --------------------------------------------------------------------------------

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next