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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: russet who wrote (2610)	5/10/2002 12:37:13 AM
From: tyc:>	Read Replies (1) \| Respond to of 3558

Leave it , russett. When it comes to options, you don't know what you're talking about. MELBOURNE, April 15 (Reuters) - Barrick Gold Corp (Toronto:ABX.TO - news) said on Monday it will sell half its gold output this year at a minimum price of US$365 dollars an ounce, with the balance to be sold on the spot market. This is what I was talking about.... There was an earlier NR that indicated that this intention of selling 50% on the spot market meant less hedging. Obfuscation! If more gold is sold on the spot market, less is available to repay the hedge-borrowings. Only 50% of production is to be used to close forward sales contracts at $365. This is less than would have been closed in normal circumstances. 50% will be sold for the spot price; some of which would normally have gone to close hedges (@$365).

To: russet who wrote (2610)	5/11/2002 9:51:52 AM
From: nickel61	Read Replies (1) \| Respond to of 3558

So Barrick's value added is due to the fact that they hope they can accurately predict where the gold price will be when their calls expire. How would they know that? They are either purely speculating or they have a reason why they think they can guess the gold price better then the buyer of the calls. Correct?

To: russet who wrote (2610)	5/11/2002 8:21:00 PM
From: FuzzFace	Read Replies (3) \| Respond to of 3558

You are correct in your understanding of how options work. Tyke really missed the boat there. 15-20 years experience in options indeed. It doesn't matter whether the commodity is gold or an equity, writing (i.e. shorting) a covered call is a bet that the price of the underlying commodity stagnates. Writing a naked call gives you a fixed profit but exposes you to the unlimited risk of the commodity appreciating in price. Writing a covered call eliminates the risk of unlimited appreciation, but introduces the risk of finite depreciation. Writing covered calls is just a fancy way to cut your profits and let your losses run.