Options expiry manipulation of the gold price in one chart

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swissaustrian

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In case anybody doubts that the gold market is beeing manipulated in anticipation of options expiries:
Chart is from Jesse´s café Americain.
golddaily26.PNG
 
Looks like the amplitude of the drops since August are getting steeper. Desperation?
 
PMBug said:
Looks like the amplitude of the drops since August are getting steeper. Desperation?
Click to expand...

Less liquidity. The MF global problems are definitely causing more issues than I originally anticipated.
 
Well, if you have a nice predictable indicator like this, with known relative timing, you can sure clean up trading - this seems to have a pretty high hit rate, only a couple times would you not have made good money going short just before, then covering and back to long just after. Good money management is always key, and with it done right, you don't need much better than a 50% good call rate to clean up. Might be criminal manipulation, but if it's this transparent, we can make money off those crooks - justice of a sort.
And this is much better than 50%.

And oh, real nice chart work, SA!
 
DCFusor said:
Well, if you have a nice predictable indicator like this, with known relative timing, you can sure clean up trading - this seems to have a pretty high hit rate, only a couple times would you not have made good money going short just before, then covering and back to long just after. Good money management is always key, and with it done right, you don't need much better than a 50% good call rate to clean up. Might be criminal manipulation, but if it's this transparent, we can make money off those crooks - justice of a sort.
And this is much better than 50%.

And oh, real nice chart work, SA!
Click to expand...
Not my chart. Got it from Jesse´s café Americain
I´m actually going short every month since August 2007. Have described it here: http://www.pmbug.com/forum/f3/watch-falling-prices-217/#post1196
I´m always going short 5 days before op-ex. Sell my puts on op-ex at 10 am ET (London gold fixing). Gave me a 40 % outperformance to spot gold over the years. I´ve bought physical with the profits.
 
DCFusor said:
Well, if you have a nice predictable indicator like this, with known relative timing, you can sure clean up trading - this seems to have a pretty high hit rate, only a couple times would you not have made good money going short just before, then covering and back to long just after. Good money management is always key, and with it done right, you don't need much better than a 50% good call rate to clean up. Might be criminal manipulation, but if it's this transparent, we can make money off those crooks - justice of a sort.
And this is much better than 50%.

And oh, real nice chart work, SA!
Click to expand...

The problem is that it effectively ruins the options market which is integral to those professionals who use it to hedge. Mining companies do use futures and options to decrease volatility of their balance sheet too...
 
SA - sounds like a great plan, looking at the data - I may add it as one of my strategies (I do different stuff in different accounts as a learning tool). And there are charts aplenty out there to choose from, so even if you didn't make it, you chose wisely. Some of the ones I use don't show this as dramatically, it doesn't leap out at you as well as it does in that one.

I don't know that anything predictable ruins options markets, there's no requirement to roll them at any given instant, right? Not to make a pun, but I thought you had the option...
Further, were I a miner, I'd just not sell gold on the dips...same as I do trading. Or I'd sure try to find some reason not to ship/book it just then.

I think miners do and don't use options to hedge, according to management philosophy. In fact, if trading their stocks, finding that out would be a very important part of one's due diligence homework. It would surely indicate whether to expect them to act as instant leverage on the gold spot price, or not. If they do it too much, they add risk due to them not being as good a trader as someone else, and I've seen plenty of that hubris in other markets.
 
DCFusor said:
I think miners do and don't use options to hedge, according to management philosophy. In fact, if trading their stocks, finding that out would be a very important part of one's due diligence homework. It would surely indicate whether to expect them to act as instant leverage on the gold spot price, or not. If they do it too much, they add risk due to them not being as good a trader as someone else, and I've seen plenty of that hubris in other markets.
Click to expand...

View it from an insurance perspective. They buy insurance in case they are wrong.
 
Oh, that's how I view what little options trading I do - if I'm buying puts on stuff I own, I have no problem if they expire worthless - insurance - I'm glad my house didn't burn down for the insurance to pay off. I don't mind a reasonable insurance premium in that case to get my best risk-adjusted reward.

But that's not all they do to "hedge" and sometimes they lose considerable money over being un-hedged, which there are a lot of ways to do. Some of the airlines successes and failures in hedging fuel prices come to mind there, pretty spectacular in some cases - either way. There's big chance if they go too whole hog, they wind up like GE - which became a hedge fund with a light bulb factory attached to an outhouse on the back and lost its way.
 
DCFusor said:
I don't know that anything predictable ruins options markets, there's no requirement to roll them at any given instant, right? Not to make a pun, but I thought you had the option...
Click to expand...
No requirements to my knowledge.
I don´t use COMEX options, though.
I buy over the counter (OTC) options directly from my bank. It´s cheaper and I can individualize the contract.
 
I don't guess my dinky local bank has "the stuff" to do that - if they did, I'd probably take them to the cleaners on it. As is, I make fair money trading their stock, since it seems only me and about 50 tellers and managers trade it, and they seem to be pretty clueless at it. Makes for a great swing trade, and it's like poker in that I know the other players and their "tells". PM me if you want their ticker - no point ruining this nice little game.
 
DCFusor said:
I don't guess my dinky local bank has "the stuff" to do that - if they did, I'd probably take them to the cleaners on it. As is, I make fair money trading their stock, since it seems only me and about 50 tellers and managers trade it, and they seem to be pretty clueless at it. Makes for a great swing trade, and it's like poker in that I know the other players and their "tells". PM me if you want their ticker - no point ruining this nice little game.
Click to expand...
Hehe. Thanks. No I´ll leave you to that opportunity. I do the same thing with some small Swiss companies over here :cheers:
 
No opex manipulation this month, interesting...
Might have to do with the relatively small open interest.
 
I'm right now feeling dumb I didn't trust my system more when it started to flash "buy" a few days ago (the rationalization is it wasn't a strong signal and did reverse once). Missed that nice big one day runup, and now...maybe more risky to enter.
 
DCFusor said:
I'm right now feeling dumb I didn't trust my system more when it started to flash "buy" a few days ago (the rationalization is it wasn't a strong signal and did reverse once). Missed that nice big one day runup, and now...maybe more risky to enter.
Click to expand...
I think without the FED announcement, we would have seen a different outcome.
Right now pms seem to be close to overbought: http://stockcharts.com/h-sc/ui?s=$GOLD
 
This close to Op Ex it makes me suspicious to see PM's rise. What is it....Tuesday for expiry? We should be getting creamed right now. Something is up. Either they destroy PM's in the access market or they go after them in London and New York on Monday-Tuesday. Either way, we'll likely give back two or more dollars on silver.
 
ancona said:
This close to Op Ex it makes me suspicious to see PM's rise. What is it....Tuesday for expiry? We should be getting creamed right now. Something is up. Either they destroy PM's in the access market or they go after them in London and New York on Monday-Tuesday. Either way, we'll likely give back two or more dollars on silver.
Click to expand...
Today is opex, that's the weird thing...
 
Um.....the calendar shows it to be Tuesday, but I could definitely have made a mistake. If it's today, then it is all the more confusing since the historical norm is for silver to be taken directly to the woodshed the day before and day of OP/EX.
 
ancona said:
Um.....the calendar shows it to be Tuesday, but I could definitely have made a mistake. If it's today, then it is all the more confusing since the historical norm is for silver to be taken directly to the woodshed the day before and day of OP/EX.
Click to expand...
You've probably confused options with futures dates :)

The official CME options calendars have already deleted the january dates

gold

http://www.cmegroup.com/trading/metals/precious/gold_product_calendar_options.html#prodType=AME

silver

http://www.cmegroup.com/trading/metals/precious/silver_product_calendar_options.html#prodType=AME
 
Today is options expiry. Target price is obviously $1775. I think that's why gold spiked yesterday out of nowhere.
 
Don't silver options expire today as well? If so, then someone at JPM is dropping the ball by letting silver climb instead of giving the usual bitch slap.
 
Silver seems to be leaking higher this a.m. I noticed an overnight crunch down, then we see a slow upward drift as of this minute. All of the shiny stuff is down except silver. It almost looks like they're protecting 1776 in gold for some reason, even though OPEX was yesterday. "Someone" doesn't want gold over 1800.
 
Goldcore's take on today's options expiry. I'm not so sure about the sharp gains in the coming days, but who knows...:
goldcore_bloomberg_chart1_24-05-12.png


Gold may struggle to make gains over the coming trading session ahead of the expiry of monthly US options. However, sharp gains could be seen after option expiration – as has often been the case in recent years.
Reuters report that traders said that because the underlying June futures price was trading roughly between $1,550 and $1,600, where most at-the-money open interest was clustered, it was not clear which would exert a greater “gravitational pull” on the gold price.
Most open interest, which reflects investor positioning, is located at $1,550 and $1,600, with a firm bias towards the $1,550 level where gold may be guided towards.
Puts, options that give the holder the right, but not the obligation to sell a predetermined amount of an asset at a set price by a certain date, outnumber calls, or buy options, by nearly 2:1
Click to expand...
http://www.zerohedge.com/contributed/2012-21-24/central-banks-still-significant-buyers-gold-dip
 
opex is coming up on Tuesday (Nov 27th). December is a HUGE delivery month. Friday's surge in pms could be related to opex. Remember, he options underwriters need a round number come Tuesday, so it's either 1750 / 25 / 00 for gold. If a price attack were to be launched, it should happen tomorrow, maybe even beginning tonight once Globex opens at 6pm ET. The price management usually gets done the day before opex. It doubt we'll get a big move, though. Friday was probably already the management day.
 
I don't understand impact of options very well but didnt Fridays surge in PMs happen just a few minutes before they 'officially' announced that the EU summit could not agree a budget - which makes sense as bullish for gold.

I would have bought on Friday but judging from the pattern (and not understanding the role options have yet) the people manipulating to the downside will just short heavily on Mon morning when US market opens to activate all new stop losses as normal, no?
And I can put my order for PMs in round noon.
 
Unbeatable said:
I don't understand impact of options very well but didnt Fridays surge in PMs happen just a few minutes before they 'officially' announced that the EU summit could not agree a budget - which makes sense as bullish for gold.

I would have bought on Friday but judging from the pattern (and not understanding the role options have yet) the people manipulating to the downside will just short heavily on Mon morning when US market opens to activate all new stop losses as normal, no?
And I can put my order for PMs in round noon.
Click to expand...
I can't proove you wrong but the violence of the move up on friday suggests that it was somebody with the power to move the market whereever he wants it to go in the short run. That's typical for an options underwriter.
 
kelly, the article is referring to European options only, the most actively traded COMEX options are American options, however :noevil: :
http://www.cmegroup.com/trading/metals/precious/gold_product_calendar_options.html#prodType=AME
The chart in the first post of this thread is annotated with COMEX options expiration dates.
The key difference between American and European options relates to when the options can be exercised:

A European option may be exercised only at the expiration date of the option, i.e. at a single pre-defined point in time.
An American option on the other hand may be exercised at any time before the expiration date.
Click to expand...
http://en.wikipedia.org/wiki/Option_style#American_and_European_options
 
Unbeatable said:
I don't understand impact of options very well but didnt Fridays surge in PMs happen just a few minutes before they 'officially' announced that the EU summit could not agree a budget - which makes sense as bullish for gold.

I would have bought on Friday but judging from the pattern (and not understanding the role options have yet) the people manipulating to the downside will just short heavily on Mon morning when US market opens to activate all new stop losses as normal, no?
And I can put my order for PMs in round noon.
Click to expand...

IMO.. We rarely see real money get put to work in gold due to "events" such as this one. What you do see are algorithms trading based on that news in hopes of catching short sellers off guard (more often the spec longs though) and take out stops.

Ask yourself.. Would YOU buy or sell your gold based on that news? Does it really change the fundamental outlook for the metal? Ofcourse not. It's emotion and stop hunting. Nothing more.
 
Turns out I was right afterall that last Friday's pump was opex related. Somebody dumped his Friday pump today.
 
Looking at the miners today SA?

Seeing lots of relatively strength there today. Still early in the day obviously.. Seems like they are washed out.
 
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