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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (67556)	11/23/2003 12:47:47 PM
From: mishedlo	Respond to of 94695

Preventing gold options from going ITM is no different from preventing equity options from going ITM or currency options from going ITM. This has next to nothing to do with commercials but the options sellers (MUFUs, hedge funds, etc) M

To: Gersh Avery who wrote (67556)	11/24/2003 8:49:28 AM
From: Real Man	Respond to of 94695

I don't think their actions in the gold market are different from their actions in other markets. That's why we get max pain theory. In efficient markets, such things should not work. I also think that the gold market may be the one to start the cascade of derivative defaults, even though it is a very small derivative market. The reason is, if you have to deliver, and you ain't got no gold, you are in trouble. It could be the silver market, because it's rapidly approaching the stage of no silver.

To: Gersh Avery who wrote (67556)	11/24/2003 9:21:21 AM
From: Real Man	Respond to of 94695

In fact, I'm not sure there is concerted manipulation effort at all. The reason for "max pain" is the delta hedging. If you have a lot of OOM puts, you have to hedge them according to Delta hedging formula. However, as time to expiration gets shorter and shorter, you lift the hedges, as OOM put shorts become less risky, so you cover your shorts, which results in a rally. In the gold market, there are lots of 400 calls. So? Now, commercial long positions get sold, as expiration date gets closer. If the market moves fast, they have to put on more hedges, by the same formula. So, nobody will get 50,000 gold coins. -g-