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Endeavour Silver Corp. Message Board

  • danbrady danbrady Aug 28, 2013 9:23 AM Flag

    One explaination

    It's just that time of the month.

    Seriously. There are 3 options expirations that effect the metals and miners. Futures (big honking contracts for the metals), options on those futures contracts, and then options on the mining shares (equities). Each expires on a different day in the month, and while they all are interrelated, the PMs pull on the miners is much stronger than the miners pull on the PMs.

    Trading in the Sept PM options came to a halt as of the end of .... yesterday. It isn't uncommon to see the metal's price pull off some counter-intuitive stunt on the day of expiration (options are all about sharks & marks, and while the sharks are outnumbered, their size allows them to tip the scales in their favor month after month, much to the dismay of the marks).

    Equity options (mining shares) expire on the 3rd Thursday of each month, so that was way back on the 15th. In the period between the 15th (equities expiry) and the end of the month (futures & future options expiry), the miners often want to "pull at the bit" but are also often held back by Titanic forces that would stand to lose lots if the metals took off. There is motivation to hold prices at certain levels until things expire in certain player's favor, followed by motivation to almost immediately shift the price to make re-entry by the marks be disadvantageous, followed the next day by a gut-check and flushing of weak-handed marks for a quick 2-day profit. So it's Make Them Pay, Put Them In A Bad Spot, and followed by Make Them Pay Again typically in a 3-day span near the end of every month.

    So to sum up: I sort of almost *always* expect a disconnect between the miners and PM for the last week or two of each month, due to the nature of options expiration, the size of money and profits involved by the bigger players, and the seemingly blind regulators who ignore obviously manipulated markets.

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