Tuesday, May 27, 2014

oh and gold opex is today? fine, let's make fun of more anal ysts

Oh and re gold's price drop: OGM14 last trade is 27 May, isn't it?

Speaking of which, here's a funny headline:

Forbes - gold may remain near $1300/oz ahead of Tuesday options expiry - analysts. Embarrassing quote #1:

In the meantime, “the gold market has really endured a period of collapsing volatility. The market has become quite range-bound and quite trapped not too far from this $1,300 mark in the June futures,” said Sterling Smith, futures specialist with Citi Institutional Client Group.

Further, the $1,300 level may serve as a “magnet” due to the open interest in calls and puts, Smith continued. He pointed out that the calls and puts are roughly even around this level – 4,999 puts and 4,996 calls – resulting in a state of “equilibrium” around this price.

Well, Sterling, you were proven wrong. Too bad about the whole looking like a moron thing.

But wait! There's more!:

Prices early Thursday rallied to right around $1,300, pointed out James Ramelli, trader with KeeneOnTheMarket.com, which focuses on options.

“Because the week of Memorial Day is generally pretty thin (trading), I think there’s probably a little bit more likelihood that gold is going to pin somewhere near that $1,300 level,” Ramelli said.

It’s a price level where a large number of traders are involved in the market, he said.

“Some people say the market makers will try to push the underlying there, or whoever is involved in those options. Because at $1,300, they will all go out worthless,” he said.

Well, James Ramelli, looks like you also were proven wrong. Your moron t-shirt is in the mail, I assume you take an XL?

And Smith doesn't know when to shut up:

“The market has a habit…or a repeated behavior of trying to make the most options expire worthless or near worthless,” Smith said. “So right around $1,300 would render nearly everything kaput. The puts up above are limited, so of those that would actually have some value, there aren’t that many out. And by the same token, there are a lot of calls above $1,300 that would meet their maker.

“I don’t see much deviation away from this $1,300 mark unless there is something of an outside political nature that really does something to drive the market,” Smith said.

Ouch. Apparently he bases his argument on max pain theory. Well, it must have been the first time he ever based an argument on max pain theory, because he's about to feel the max pain of realizing max pain theory is bullshit.

And not one to stay out of the fray, Jim Comiskey:

Jim Comiskey, senior account executive at Archer Financial Services, also said gold could remain near $1,300 ahead of expiration, but added often markets will make a big move once expiry is out of the way.

“In my opinion, we’re going to be marking time right at this $1,300 level until expiration,” Comiskey said. “Then the gloves come off. We are so range-bound. Every participant in the metals market these days is frustrated and growing increasingly frustrated because the gold and silver are so range-bound.

Well it sure looks like the market isn't holding to your timetable, Mr. Comiskey.

In summary:

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