COT Gold, Silver and US Dollar Index Report - May 23, 2014
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COT Gold, Silver and US Dollar Index Report - May 23, 2014
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-- Posted Friday, 23 May 2014 |
The COT
reports which we look at each week provide a breakdown of each Tuesday's open
interest for markets in which 20 or more traders hold positions equal to or
above the reporting levels established by the CFTC. The weekly reports for
Futures-and-Options-Combined Commitments of Traders are released every Friday
at 3:30 p.m. Eastern time. The short
report shows open interest separately by reportable and Non-reportable
positions. For reportable positions, additional
data is provided for commercial and non-commercial holdings, spreading,
changes from the previous report.
Futures and Options
Combined
What does this title
mean? A future is a standardized
contract traded through regulated exchanges where an investor buys or sells a
contract at a specified price for a specific date in the future. The price includes the interest charge due
to the seller by the buyer from the date of the contract to the due date. An option is the ‘right to buy or sell’ a
contract at a fixed date in the future at a specific [strike] price. The difference is that a futures contract
is an agreement to buy or sell, whereas an option gives the holder the right to buy or sell. An option holder can decide not to take up
that right and will only lose the cost of buying the option. His loss is therefore definable at the
start of his investment, while the potential profit has not limit to it. A futures contract is usually leveraged [a
loan provided] up to 90% of the contract. However, with the owner liable to top up
his ‘margin’ to maintain this 10% his potential losses can rise far higher
than his investment. A ‘long’ [buying]
contract limits its loss to the full price of the item, whereas the ‘short’
[selling] contract has no limit except the height that the price of the item
can rise to.
The Commitment of
Traders report [COT] is therefore a report on the overall position of the
Commodity Exchange [COMEX or NYMEX].
Large & Small
Speculators
The word “speculator”
implies that the person is simply making a bet on the way he thinks the price
of the item is going to move. In
essence, he is a gambler. A trader
might be this, but then again he might be an Arbitrageur, buying in one
market and selling in another to capture the price difference between the
two. He wants to deal as fast as
possible so as to minimize his risk of a price movement while he is
exposed. We would not put him in the
same category as a speculator.
Contract
One contract is 100
ounces of the commodity [gold or silver in this case]. The numbers referred to above are
therefore the number of 100-ounce contracts in that position. The net long speculative position is found
by adding the large and small speculators bought contracts and deducting the large
and small speculators sold contracts.
We work on there being 32,150 ounces in a tonne.
Buy [Long]
A long position is
where an investor, trader, speculator buys 100 ounces x the number of
contracts.
Sell [Short]
A short position is
where an investor, trader, speculator sells 100 ounces x the number
contracts.
Spreading
For the
options-and-futures-combined report, spreading measures the extent to which
each non-commercial trader holds equal combined-long and combined-short
positions. For example, if a non-commercial trader in Gold futures holds
2,000 long contracts and 1,500 short contracts, 500 contracts will appear in
the "Long" category and 1,500 contracts will appear in the
"Spreading" category.
Open Interest
Open interest is the
total of all futures and/or option contracts entered into and not yet offset
by a transaction, by delivery, by exercise, etc. The aggregate of all
long open interest is equal to the aggregate of all short open interest.
Reportable Positions
Clearing members,
futures commission merchants, and foreign brokers (collectively called
"reporting firms") file daily reports with the Commission. Those
reports show the futures and option positions of traders that hold positions
above specific reporting levels set by CFTC regulations.
Commercial and Non-commercial Traders
When an individual
reportable trader is identified to the Commodities Futures Trading
Commission, the trader is classified either as "commercial" or
"non-commercial." All of a trader's reported futures positions in a
commodity are classified as commercial if the trader uses futures contracts
in that particular commodity for hedging as defined in the Commission's
regulations (1.3(z)).
Non-reportable Positions
The long and short
open interest shown as "Non-reportable Positions" are derived by
subtracting total long and short "Reportable Positions" from the
total open interest. Accordingly, for "Non-reportable Positions,"
the number of traders involved and the commercial/non-commercial
classification of each trader are unknown.
Changes in Commitments from Previous Reports
Changes represent the
differences between the data for the current report date and the data
published in the previous report.
Number of Traders
To determine the total
number of reportable traders in a market, a trader is counted only once
regardless whether the trader appears in more than one category
(non-commercial traders may be long or short only and may be spreading;
commercial traders may be long and short). To determine the number of traders
in each category, however, a trader is counted in each category in which the
trader holds a position. Therefore, the sum of the numbers of traders in each
category will often exceed the "Total" number of traders in that
market.
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