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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: Little Joe who wrote (15190)	7/31/2003 2:57:20 PM
From: LLCF	Read Replies (4) \| Respond to of 39344

<Or put another way, do you think COT can be analyzed so that it is useful in predicting market outcome.> I don't know, and I don't really follow those numbers closely. FWIW here's what I do know: Big Banks buy options and short Comex or physical, or whatever makes sense to put on Vol spreads. This creates the situation where they buy dips and sell rallies. So my 2 cents is that this could certainly creat a situation where they could appear very smart in a choppy up and down market as they increase shorts at the highs and decrease them on the dips. BUT: 1.) This wouldn't mean they are actually playing the POG or have any special 'power' over the market. It would just look like they are always selling the high and bashing it down. In a sense they are, IF buying runs out. 2.) If POG just keeps running due to continued buy interest, it wouldn't mean they are getting killed, they'll start selling again when they accumulate "delta's", or when a mine sells them more calls. 3.) When the options expire, both sides get cleaned up, either by taking delivery or closing out. 4.) Different price levels could see more action due to strike prices and expiration dates of the options. Typically trading desks all over the planet gap on the phone about different expiring structures on different underlyings and punt away on the information. 5.) None of this means that large players aren't ALSO punting away on POG the way the 'conspiracy' folks claim... I have no idea on that... what I DO know is that under a standard vol spread situation it would 'look like' the players are real smart and always buying bottoms and selling tops. When I was an options specialist on the AMEX in some big names the NYSE specialst called me up a bunch of times asking me what I thought of the stocks that he ran the underlying on [I did the options, he was the stock specialist] because he always saw me buying the shit out of the stocks on weakness and selling strength and in his eyes making a boat load. Now, although I often was, I had decaying options to pay for that could easily wipe out those trading profits. DAK