Gold Hammered on Open to OpEx Perfection

By Tom Luongo in Gold and Oil News | November 17, 2012 1:37 | Tags: , ,

If you ever wonder sometimes why some things happen in this life when the data is screaming that the opposite should be occurring, standing around in a state of confusion and railing against the unfairness of it all makes for a pretty futile afternoon.  If you’d watched gold trade this week you had to know there was something out there that was causing the market players to dump gold on the U.S. open in order to push the price towards a certain point.

As zerohedge has been pointing out all week, someone wanted gold stuffed back into a particular range and did so with impunity on the open every day this week until the desired effect was achieved.  What was that outcome?  A perfect close on the GLD ETF for the option-writers, that’s what.  Today was a perfect example of how option pain theory is applied in practice.

The sad part is that on the same day JPMorgan is slapped on the wrist 417 million times for stealing trillions in selling crappy mortgage bonds they execute a perfect close in the gold pits to inflict maximum pain on those who bought puts and calls from them.  It is almost like they are rubbing our noses in it.  Fine us for stealing from you?  Fine, we’ll just make it back setting prices on Options Expiration day and pocketing all of those premiums.  Suckers!

Option Pain number for GLD this month was $166.  The close today?  $165.88.  If they really wanted to rub it in they could have closed it at $165.99, but that would have been gauche.

About Tom Luongo
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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