Jeffry Chmielewski's Comments Page 2I sold most of my SLV puts on Thursday and Friday, but I retained some as I think this move is far from over. At this point, I've taken out all of my cost and some very significant gains, so I'm not too concerned if I'm wrong about a further move to the downside. I started aggressively buying puts on GLD on Monday on the back of the silver move, because, as you have correctly pointed out, they are very cheap on an implied vol basis. It then delivers the shares to the trust and receives the metal -- which it uses to settle the previous sale. This keeps the price of the ETF tracking the spot price, but it also results in metal being sold at Spot. When the amounts of creations and redemptions are small gw2 gold, I will agree that the arb does not influence the price. But when redemptions are large, or creations significant and sustained gw2 gold, it can result in very significant price pressure. . In the case of GLD, the trust has purchased almost 7% of all the gold that was mined in the World since inception, leading to upward price pressure. So far little has been sold from the trust, but if you look at 30 day periods where more than 1% of annual production has been sold guild wars 2 gold, the price almost always declines. If you see a scenario like you did with SLV, where a significant portion of the trust is arbed out over a short period, I think you will see a serious move in the price of Gold. Put options of GLD are so cheap (20 implied vol) that a very small purchase can off set a very big downside move. As a fiduciary to your clients, I think you'd be remiss not to consider them, regardless of what you think the cause of a price correction may or may not be.
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