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

To: Andrew who wrote (24330)	11/20/2003 3:00:57 PM
From: Little Joe	Read Replies (2) \| Respond to of 39344

The logic of that statement escapes me. If there are calls at four hundred, it seems to me that since there are two parties to a call contract and there would be just as much interest in keeping the price below 400 as moving it above 400. What am I missing? Little joe

To: Andrew who wrote (24330)	11/20/2003 3:18:04 PM
From: tyc:>	Respond to of 39344

You see the same kind of thing in the stock options market all the time. One possible scenario follows. When a speculator initially bought his call(s), the seller would hedge his (short call) position by buying stock (or gold futures in this case). As the expiry date approaches, the speculator will sell his call to recover some of his money or take his profit, and the pro who buys it from him will sell stock (or gold future) to again hedge the position or to unwind the initial hedge. By the time the option expires, most of the positions have been thus unwound. Thus it is common for the underlying to close at approximately the level that most options have been written.. called the point of maximum pain.