COT Gold, Silver and US Dollar Index Report - December 11, 2015
COT Gold, Silver and US Dollar Index Report - December 11, 2015
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Posted Saturday, 12 December 2015.
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 gold, or 5,000 ounces
silver. The numbers referred to above
are therefore the number of 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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