Question regarding commitment of traders.

Discussion in 'Options' started by TimeCorrosion, Jan 2, 2010.

  1. The new format includes entities such as swab dealers, managed money, producers, etc. It also includes the long and short interests.

    What is still unclear to me is whether under the long or short column more calls or puts are being long or short. Short put is actually a long position, for instance.

    Similarly, the put/call ratio on CBOE tells you the ratio, but not whether the puts or calls are being long or short.
     
  2. Remember, for every buyer there is a seller and vice versa. Look at it this way. Suppose there were 20,000 put transactions and 10,000 call transactions. The put to call ratio is 2. This is volume, not open interest, for transactions occur every day.
     
  3. There is a contract sold for each one purchased but buyers and sellers are not equal.
     
  4. Thanks for the reply. It is clear once I added up the numbers.

    Looking at the historical numbers for silver, any idea why the produce/merchant category are always massively short? I have read somewhere that some of these massive shorts were passed from Lehman or Bear Stern to some foreign counter parties like China.

    http://www.cftc.gov/marketreports/commitmentsoftraders/CFTC009782.html
     
  5. And even if you knew whether the puts and calls were long or short, for example, how would you know if someone was buying puts because they were bearish or buying them to hedge a long position in the underlying (throwaway money)?
     
  6. Suppose you are a silver miner. You would always love prices to rise. But a good CFO will always hedge to protect against declining prices. If prices rise, the silver miner still makes a decent profit, for the spot price increase usually exceeds the futures price. If prices drop, then the hedge is even better. Now suppose I make silver jewelry. I will be long the futures, for I do not want prices increases. So, by buying the futures, I lock in my price. If prices drop, then I end up paying a little more for the silver, but so what? Look at the money I save when prices rise. These folks--the silver miner and jewelry maker--are not speculators.
     
  7. The Silver question is a classic, think have posted about it before :D

    Whilst l do agree most regulators and market operators do not have you best interests at heart, just keep conspiracies at bay please

    http://cftc.gov/ucm/groups/public/@newsroom/documents/file/silverfuturesmarketreport0508.pdf


     
  8. Thank you all very much. I am always amazed at how little of everything I know and how awesome the collective minds of humanity are.