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Yamana Gold, Inc. Message Board

  • hapiwondrer hapiwondrer May 14, 2014 9:02 AM Flag

    Options as an indicator of AUY direction

    2015, January Strike, Open Int.
    “ “, 1.00, 1
    “ “, 11.00, 80
    “ “, 6.00, 95
    “ “, 14.00, 100
    “ “, 4.00, 113
    “ “, 3.00, 154
    “ “, 9.00, 349
    “ “, 27.00, 397
    “ “, 7.00, 813
    “ “, 30.00, 1,028
    “ “, 22.00, 1,916
    “ “, 12.00, 1,950
    “ “, 25.00, 2,907
    “ “, 35.00, 2,967
    “ “, 5.00, 3,296
    “ “, 20.00, 4,786
    “ “, 8.00, 5,889
    “ “, 13.00, 7,272
    “ “, 15.00, 10,077
    “ “, 17.00, 11,615
    “ “, 10.00, 19,060

    Note the highest open int. for AUY call buyers are those of Jan., strike 10.00, 2015, indicating that call writers think there is a reasonable chance those will not reach the strike price, but will attract the most buyers. Note, also, the January call is the only one that exists, in contrast to other years.

    The following is the AUY call list for Jan, 2016 (also, the only one existing):

    2016, January Strike, Open Int.
    “ “, 3.00, 377
    “ “, 17.00, 714
    “ “, 5.00, 819
    “ “, 15.00, 1,040
    “ “, 12.00, 1,795
    “ “, 20.00, 1,923
    “ “, 10.00, 7,620
    “ “, 8.00, 9,322

    Bets seem to indicate that reaching a strike price of 8.00 is unlikely on the part of call writers. Buyers, on the other hand, favor a profitable trade.

    The conclusion, as far as AUY calls are concerned, AUY share prices will tend upwards, and call writers no longer have any interest in participating in calls. Due to a lack of ANY direction there is even a paucity of put writers. In contrast there are more call options available than put options, indicating a tendency on the part of buyers to favor calls. Notice that there is no longer a Jan 2015 call at a strike price of 1.00. (perhaps written by caseyboy-even he doesn’t think it will go that low).

    All of the above does not indicate when the open interest arose, merely what currently exists. There is one free website that you can access to determine open int. over time called optionisticsDATcom, if you want to look more in depth.

    Again, char. limitations from here are 1984 (?), though it has been noted that others post considerably more.

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    • Soro buying since Q1.

    • Hap, I'm not sure if you noticed but the open interest in the January 2016 leaps at the $8.00 strike nearly doubled yesterday (from 9,322 to 17,433) as 8,113 contracts were written at $1.20 in one day! FWIW I have been buying these contracts by the hundreds, and intend to hold 500 contracts.

      Sentiment: Strong Buy

      • 2 Replies to goldmanpillageandsack
      • Goldman,

        Yes. You’re correct. Somebody(s) voting with their pocket books. Notice that yesterday’s trade volume was very quiet, and for the 2016 8.00 call volume there were only 34 trades, despite an increase to over 17,000 open int. Until overhead resistance is overcome buyers could be proven wrong. It seems such large increases of option open int. come from very few sources. As previously stated the 2013 January calls had nearly 20,000 of open interest that expired, so they failed to be profitable to a lot of buyers, unless they sold at the right time.

        A lot can happen with our central bank and other mega-banks willing to do most anything to support fiat money. What if the COMEX raises the margin interest rates, for example, because they don’t like to see the PM sector advancing? Yes. It’s corrupt. But anyone actually engaging in options better know beforehand that it is.

        It is better to wait until there is a flood of new money coming in that overcomes overhead resistance. Put options and call options are only available for January 2016. So the large change in open int. means nothing until other months are also available. That’s because options are a wasting asset and PM’s have been trading flat for nearly 3 years. Flat trading is a sure way to lose, as far as the leap option buyer is concerned and there is no way to sell and buy a later option currently, since they don’t exist. It is also very difficult for the short term trader, for that matter. You have these people using Fibonacci analysis and Eliot Wave to try and guess short term direction. It’s all pretty much Voodoo. The only thing that matters is when central banks are truly cornered and have no way out.

        Finally, from what you wrote it is unclear whether you “bought” 500 new call options, as you stated, or you wrote that many, since previously you indicated you only wrote contracts. Full disclosure, please. At any rate, if you bought, good luck with that.

      • I noticed :-)

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