Silicon Investor (SI) -- The First Internet Community

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.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (45980)	11/22/2005 12:28:56 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Tue Nov 22 2005 10:24 trotsky (mugwump, 6:54) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "more people betting on gold than goog" so there's huge call OI building in mining stocks in the January strikes. and how is that bullish? first of all, the author hasn't provided a crucial detail: were these trades largely concluded at ask or at bid prices? for all we know, it could be a bearish rather than a bullish position, initiated by option writers. however, even if we assume that it's call buyers who initiated the positions, then all we know for sure is that there is a surfeit of bullish sentiment. we do not know by any means if those call buyers are 'smart'. in fact, buying NEM January 80 calls is very likely NOT a smart thing to do - at best it is reckless. i don't buy wild stories about mysterious market operators that know better than anyone else where gold is going to trade two months from now. if such operators existed, how come that the best and brightest, with the largest pools of capital at their beck and call , like e.g. Robertson's Tiger fund, or Soros' Quantum fund , not to menion LTCM with its 100ds of billions of leverage and hot shot traders and Nobel laureates at the helm, are known to have made enormously costly mistakes on many occasions? this building of open calls is a red flag imo. otoh, the paucity of enthusiasm for GOOG is actually bullish. when a stock makes new highs on almost a daily basis and speculators are reluctant to commit money to calls, it is a sign that there is still money on the sidelines waiting to jump in. mind you, the action in the gold stocks sure is bullish at present, and if those call buyers turn out to be correct, the open calls could actually boost the rally if the strike prices with large OI do fall. the point i wish to convey is merely that the basic asumption that a big building of far ootm calls is per se a bullish signal is wrong.